Lower than a 4 you say...a 3!!!!

Some of your may remember Play Your Cards Right with Brucey Forsyth and his many catch phrases. "Nice to see you, too see you nice!" "You get nothing for a Pair...NOT IN THIS GAME!" and my old personal favourite "Your such a good audience...so much better than last weeks! Well you remember the game. The card would show and the contestants would guess higher or lower than that card. Imagine you are a contestant, and a 4 shows. "Higher or lower my luvs, want do you think?" Well low and behold, its gone lower. The crowd gasp in amazement...aahhhhhhhhhhhhhhh

Who would have thought early part of this year with the inflation figures as they were that we would have seen 5 yr fixed money go under 4%. Not many of us that's for sure. With inflation getting "higher, higher!!" (okay I'll stop the Play Your Cards Right now) it seemed inevitable that it could only be controlled by The Bank Of England increasing the base rate. Wrong. Mervyn King talked of tackling inflation over the medium term not short term, talk of inflation dropping by the end of the year has built and next thing you know...its bonjour 5yr fixed money at 3.89%.

Its been a crazy week. A great week, if I am honest. Its been a right mixed bag for me. My biggest mortgage to date looks like it may be a goer (8 digits no less!), I've done buy to lets again, New builds, income stretches and even self employed clients with less than one years accounts (a one off and some truly beautiful underwriting from Northern Rock!). I have seen a lot of business this week and I have seen a lot of variety. It fills me with encouragement it really does. As the week draws to a close we say goodbye to the phenomenal "broker only" rates that Abbey gave us for a week (supporting the broker channel is another great thing). A two year tracker at 1.99% (1.49% above base) and also a 2 yr fixed at 2.89%. What stunning deals! Simply stunning.

Whilst they were only with us for a week, they were a welcome visit and we look forward to them coming to stay again soon. In fact, I firmly believe we will see plenty more of these from other lenders. It is no secret a lot of lenders are way down on their targets, and recent attempts to boost lending from Abbey and also Paragon (through their Mortgage Trust channel) with small tranches of very sexy funds, I think, will become more common as the end of the year approaches. Lenders will want a decent pipeline of business to take into 2012 and as the reality sets in that they are behind, these rates will become more common place.

With it, in my opinion will also come a more lenient scorecard too. What is the point of having such great deals if everyone will fall at the second hurdle by failing the scorecards. I have seen lenders becoming a little more flexible in their underwriting lately. I have seen cases that 6 - 12 months ago would not have stood a chance, suddenly get through and it is all because appetite is growing again. Flexible, yet comprehensive underwriting is the key to getting us through these tough times and I genuinely do see some lenders bending over backwards to try and help again. More buy to let products are coming to the market, more 90% deals are appearing and scorecards are most definitely dropping.

So whilst we continue to read of repossessions likely to be higher in 2012, lets look on the market confidently. 5 yr fixed money starting with a 3?! Come on, that is great. I mean how low do we want it to go?!!!! Any lower they'll be giving it away. "Bottomed out" is a phrase I think that is used too often, but lets be honest, banks can't really go too much lower can they. Trackers starting with a 1. 2 yr fixeds starting with a 2 and lower scorecards.

I would like us all to take time out, stand up...come on get up...and applaud the banks this week. They have given us a lot more than they have done all year. It is a good time to be a broker, its a good time to be a borrower (especially if you can secure 5yr money starting with a 3) and its a good time to be an agent. Activity will no doubt increase of the back of the banks scorecards dropping and pricing more competitively.

So, here's to a positive 2nd half of the year. I have a feeling its going to be a good one.

And don't forget...keeeeeeeeeeeep dancing! Oh no, wrong program.

Sorry Bruce.

Erh..Sir Bruce.

I know I shouldn't say it but...

It's been a while since I have done a blog, and I have a feeling this one is about to lose me some friends, some clients and possibly some introducers of business but I pride myself on being an honest broker, and an honest man so something needs to be said...and I am going to say it.

I have read a lot of press over the last week or two about First Time Buyers, and about the culture of buying and owning in the UK. Stats have suggested 64% of the questioned public between the ages of 20 - 45 have given up on the prospect of buying a home and have accepted rental is the only way. Well, great news for Landlords and also for letting agents who are currently rubbing their hands together waiting for the business. This is followed by talk of greedy banks and the fact they don't want to lend anymore and that it is all the banks fault for not lending.

I have been doing this job for many years now, and I have had many run ins with banks and buildings societies about decisions that quite frankly have been ludicrous. Rejections from some banks on cases that were so good and so easy, it made me think at times that perhaps I should give up the job. But, I am seeing an improvement. Lenders are starting to have a little trust in us as brokers and you as the public.

For first time buyers it is a little different. All of sudden, banks are wary of the issues that surrounded the 125% borrowing that we saw a few years back. A massive gamble that purely relied on the hope that property values were going to continually soar and that the negative equity in a few years would have diminished. And now we have seen stagnant growth. It looks set to stay that way for a while, modest growth rather than 15 - 20% a year that we had seen in the past. Because of this lenders have become a little wary and are suddenly concerned about how mortgages would be repaid, and it has caused uproar with brokers and clients. "What do you mean they want to know how I am going to repay my mortgage?"... "I am buying the property, so I'll take my chances on how it will be repaid"..."I don't have a repayment vehicle, I'll just sell the property to repay the debt"..."Four times my salary will mean I can only buy a shed"..."10% deposit! Where am I supposed to get that from?!" These are just a few examples of things I have heard of late. Clients seem appalled that banks are expecting deposits in order to buy, that they will not lend more than 4 times income in order to get a mortgage and god forbid, that banks expect to see how the mortgage will be repaid.

It seems to me, that some clients and first time buyers have lost track of what debt is? That they are boldly talking about how they will take the risk of repaying the mortgage on the growth of a property value in a slowly advancing market, not realising that it is the banks that are taking the risk on the lending just as much as the client. Come on guys! Lets have a reality check here. I have done a search this morning for a client who is a first time buyer, with a 10% deposit and you know what I have found...167 products! That's right 167!!! If the client can demonstrate affordability, can prove that they have the commitment to repay the loan and that they are in a stable job that will reward them with a stable income...the mortgage will be theirs as will the house. But for those of you out there that expect to be borrow 6 times your salary, to just service the interest due and not to repay your debt at all and rely on the property growing, well answer me this...if it was your money you were lending, would you lend to them in the current climate?

As I said at the outset, I have had many a run in with banks over the past and if the decision they have made is wrong in my opinion I will fight it tooth and nail until I get it overturned. Logic always prevails in this job (barr one or two decisions!). But lets not forget where we are, lets not forget what has happened over the last 2 years and that repossessions in 2012 are set to rise still further than that of 2011 according to the CML. With stats like this, why would banks throw money to first time buyers that have never evidenced they can service debt, are trying to borrow more than they can realistically afford, and without any way of repaying that debt other than the sale of the asset the bank is lending on.

To surmise, 167 available products to a first time buyer with a 10% deposit shows improvement to me. We are lot further ahead than we were this time last year that is for sure. It shows that banks are slowly gaining confidence in us and that we must be encouraged by this. As a friend of mine said, the stat of "64% have given up" will be a volatile stat and will change week by week, but don't feel like banks or brokers are letting you down because we are actually concerned about how debt will be repaid. In the current climate responsible lending is a must and I actually support the banks decisions to ask for this and to exercise caution at this level. We don't want a situation whereby our first time buyers are running before they can walk, tripping up and then losing the property because they borrowed more than they could afford.

That said banks and buildings societies some of your decisions of late have been horrendous, but that is another blog, at another time, but for your view of caution with first time buyers, I agree. For the right clients, with the right attitude to buying, deals are there to be had. However, for those who are willing to gamble on their first purchase, to stretch your borrowing as far as you can without anyway of repaying the debt...now is not the time I am afraid, and I support the banks in this.

Okay, rant over...time to see if i still have any clients...and friends.

Hello....

...anyone there?