What the papers say 9th February 2007
There has been a lot of coverage in the press this week about two new initiatives that have launch dates in the diary – March for the Financial Services Authority’s (FSA) ‘Treating Customers Fairly’ (TCF) initiative and June for Home Information Packs (HIPs).
With the FSA’s budget to increase by 10 per cent to allow it to implement the TCF initiatives, FA speculates that it is firms that will be providing this extra money and not the government or the regulator itself. This is in addition to the costs that firms will have to implement the change to a principles-based approach to regulation.
But TCF has come to the fore on the FSA’s paper on ‘Fairness of Terms in Consumer Contracts: Statement of Good Practice’ on mortgage exit fees. MSL has printed a table showing how exit fees have risen significantly over the past 10 years from around £50 to over £200. It’s good to see that many lenders are moving on the subject, adopting the stance that an exit fee is set at the start of the mortgage contract and that it does not change as the term progresses. We wait to see how many letters of complaint the Financial Ombudsman Service receives as a result of consumer press coverage, and what impact this will have on pricing models. The regulator has demanded that lenders have their policies defined by the end of this month, while some feel the review is a warning shot to the industry.
HIPs front
On the HIPs front, MM reports on how industry figures are sceptical about the impact that this new initiative will have in speeding up the house buying process. Indeed there are still questions being asked as to whether HIPs will launch at all due to continued delays by the government. If anything, some industry commentators believe that HIPs will slow the market down quicker than the three Bank of England Base Rate rises in the past six months, with a confused consumer base, hesitant about putting their houses on the market.
Non-conforming news
With 20 per cent of intermediaries looking to increase the amount of non-conforming mortgage business they write this year, it’s surprising to see the number of products in this niche carrying a fee of £1,000 and over, increasing by 50 per cent, as reported in MS. On the other hand, the number of fees-free deals has fallen by 81 per cent to just 13 out of 2,500 available mortgage products.
FA reports on the Council of Mortgage Lenders (CML) figures that show repossessions are up in 2006 by 65 per cent, from 10,310 in 2005 to 17,000. The CML is also predicting that this figure will continue to increase to 19,000 next year as the impact of the recent interest rate increases takes effect and consumers suffer from ‘rate shock’ as their fixed or discounted deals expire. ME has run a survey to understand broker’s views on consumer debt and many blame a lack of financial education for the rise. But with many consumers having a high level of equity, they see this as a ‘get out of jail free’ card, with some brokers claiming half of all their remortgage business is now connected to debt consolidation.
Rate rises
MI looks at the latest interest rate rise, and highlights first-time buyers as one of the biggest losers. Affordabilty is becoming more and more of a constraint on the first-time buyer’s ability to get into the housing market. However, on the plus side, this latest action is designed to slow both inflation and increasing property prices, which should allow salaries to catch up. This will put the first-time buyer in a better position financially and give them the confidence to take their first step on the housing ladder.
No standing still
Finally, technology has advanced again, with MM’s report that Halifax is now allowing brokers to submit applications via Backberry mobile devices. Brokers can now access an affordability calculator, lending criteria and product information in the first phase of the roll out, with applications set to follow.
It won’t be long before the only thing you’ll need to complete a mortgage is your mobile phone.
