I start this week’s article with news of a price war. Not the usual battle in the residential market, the front seems to have moved into the buy-to-let world. MI reports that a flurry (apt description following the recent weather) of lenders have been using criteria to add a competitive edge. The Coventry and RBS Intermediary Partners have both announced changes with the aim of bringing them into line with the rest of the market.
Also of interest in the buy-to-let market is research published in the new look MSL suggesting that 40 per cent of landlords choose to place their entire buy-to-let business with just one lender. Paragon Mortgages’ investigation also found that the number of lenders used by a landlord depended largely on their involvement in the market. Increasingly the relationship between a lender and a landlord with a portfolio of properties is playing a greater role than simply securing the best rate and product. With Alliance & Leicester (A&L) finding that almost three-quarters of landlords were making a profit and no one suffering a significant loss, then the market is still set for growth, especially if remortgage opportunities reduce as a result of lender retention strategies. This is despite a record low in rental returns in date released by landlord mortgages (MS) that reveals they have hit a five-year low. A&L’s research reveals 38 per cent of landlords will increase rents with only 2 per cent likely to sell some of their portfolio.
European issues
Coverage in both FA and MSL highlights the move to lending across European borders. The European Commission seems to have opened the door to a euro mortgage by advocating a de-regulation equal-access approach for mortgage lenders across the EU. The report is welcomed by the Council of Mortgage Lenders (CML), which believes it is a practical set of measures that promote liberalisation rather than further regulation. However, Mike Bowles raises the fact that regulatory barriers still exist, such as the standards of Key Facts Illustrations coming from France or Bulgaria, or more simply the quality of financial advice outside of the UK.
Green revolution
MSL brings us the news that the Ecology BS is paying proc fees, which could be the seed that starts the green revolution. Carbon neutral and global warming are two common phrases that are not necessarily associated with mortgages but will become more commonplace once we all have to have an Energy Performance Certificate to sell our homes. Chancellor Gordon Brown has commented that for a limited period, zero carbon homes will be exempt from Stamp Duty, but these schemes remain disjointed. Three lenders have products already in the market; reductions in standard variable rates to purchase energy saving solutions, energy reports as part of the product, annual payments to environmental agencies are just some of the ideas already in existence.
Talking about HIPs, we have started to see feedback from the trials the government has been carrying out in six locations across the UK (FA). AHIPPs deputy director-general has claimed that 700 packs have been commissioned since November and that over 60 per cent have included a Home Condition Report.
FSA review
Much of the analysis in the press this week has been around the work the FSA has done in its quality of advice probe. It was brought to the attention of brokers in a presentation by David Beckham at the start of the specialist lending road shows in Glasgow. Clare Frater, of law firm Eversheds, says that the findings represent a warning to the industry, which, if not followed, could lead to enforcement action being taken. She highlighted the topic of affordability as a key area of focus which will come under greater scrutiny and that brokers must have a robust process in place.
The FSA probe revealed three-quarters of small firms did not have the correct procedures in place to ensure customers were getting the right advice with many set to face the wrath of the enforcement division (MM) while larger firms fared much better. In the article, the Association of Mortgage Intermediaries pledged to help its members with factsheets and improved communication right down to record-keeping standards and other admin activities. Sally Laker, managing director of Mortgage Intelligence, thinks it’s a question of interpretation rather than a deliberate intention to cut corners, suggesting that for a small firm there is a lot to do when you are on your own.
Finally, the CML has released guidance on its members on when a ‘hard’ footprint should be left on a client’s credit record that could affect their rating (MM). The CML is calling upon lenders to ask the question asking consumers whether they are seeking a quotation or an application and for this to determine the level of credit search. The government encourages consumers to shop around and this guidance backs up this position by asking its members to only register genuine applications.
Oh and one last bit of news, John Malone has been comparing himself to David Beckham, I’m just waiting for the film to come out Bend it like Malone
