Its raining, its pouring, the big banks aren't lending...

A very interesting week this week , as we see the banks post their profits for the first half year (you will see this cunningly referred to as "H1" - about as cunning as a fox, from the village of cunning!).  This is a big announcement. It gives us all an indication of how the banks are performing, if they are on target and how it compared to last year. For me, one of the most annoying statements of the mortgage industry is "how did it compare to last year?" This is never a straight comparison. There are so many variables that contribute to the outcome of lending year on year that I find nothing but frustration in these comparisons! However, that said, I can understand why they are reported.

And so it begins. Santander down 21% on gross lending from last year. Market share fallen from 19.1% to 15.4%. Great! Thanks for those stats. But could we look at the bigger picture here please. Why is it down? Barclays down 10% year on year on their gross lending, market share down from 14% to 12%. Oh dear god what is happening?! Northern Rock, down 25% on last years levels of lending over the same period. Don't PANIC! There is a simple answer here. The market was taken over by HSBC. They really went for it and were top of the best buys for a considerable period of time and it had the effect they desired... a big effect!

HSBC have always been the bane of us brokers lives. Why? Because they don't like dealing with brokers! Every now and again a broker will strike up a relationship with them and may get a few cases from them or send some to them but, in large, there is no official relationship between HSBC and the intermediary. Often this means, if HSBC want to take the market by storm it is without the help of us brokers. So when they decided they wanted to bulldoze the market, their headline rates stole the show. They went into 2011 with a good pipeline of business that was the result of outstanding rates, good advertising campaigns and an aggression no other lender was showing. This has seen HSBC publish results that show they are 35% up on their H1 results in 2011 compared to that of 2010. 35% UP! Their market share up 2% from 9% to 11%. Well done HSBC. A fantastic effort. This also, is the truth behind why brokers struggled in terms of written business tail end of 2010 and early part of 2011. HSBC were simply too damn good.

However, lenders are now fully aware they are under target. These stats don't lie, although as I mentioned at the outset, there are many other variables to consider. But we are already seeing lenders lower their margins. We're seeing rates some of us brokers have never seen before and more importantly for us, we're seeing HSBC no longer at the top of the best buys.

It is this aggression from the lenders, and THEIR panic that is of benefit to the consumer. The price wars that have started and the need to sustain a healthy pipeline going into 2012 has quite frankly seen stupid rates come about! 5 year fixeds from as low as 3.39% is lower than anything I have ever seen. Even better than that is the 2 year tracker followed by a 3 year FIXED  at 3.64%! What a deal! Abbey have come along with some very tempting "1 week only" offerings also that have seen service levels creek they have been so inundated with applications.

I guess what I am trying to say in my secret diary is that whilst all these headlines of lending dropping with some of the big boys is a little depressing, the reality is, this is only going to be of benefit to you , the consumer. The pressure to lend will intensify with the lenders. Will Santander or Barclays be happy they have lost market share to HSBC?! Of course not. This will drive them to lower margins, to become more competitive and further more to ensure they are not in the same position next year and that H1 results of 2012 will be higher due to a better pipeline.

So don't get too depressed about the gross lending being low, ladies and gents. Don't spit out your Earl Grey in shock when you read of falling lending in H1, as my prediction will be that H2 will show increases...left, right and centre! Not just with HSBC. That said, I may still take my local HSBC branch manager out for that round of golf...you never know when they may be needed.

"Hi, is Louis there please?"

"Louis...buddy, long time no speak . So that round of golf we were talking about...?"

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?

Celebrate good times... come on!

Far too often, we pick up the papers and read of economic doom and gloom. In 2007, I walked through the City of London each morning and there was a buzz. People rushing to be at work, money to be made, business to be done. In 2008, I did everything possible to avoid London. It was terrible. Everyone looked suicidal, there was a smog of doom and gloom sitting above the inspirational architecture of one of the worlds most vibrant cities. Now, the smog is lifting.

And now, it is time to "bring back the buzz" ladies and gents. We spend too long focusing on the negatives that more often than not, we miss the positives through our dwellings on these adverse conditions. Well, today I have been greeted with encouragement again and again. And I am going to buck a trend and share these positives with you, so that you too may want to, "bring back the buzz!!!!"

Lets start at the top...

Inflation in March...FELL to 4.0%. Still double its target but if fell (clapping begins)

Unemployment in March fell by 17,000 to lowest figure since Sept 2010 (the clapping is getting louder)

House prices rose 1% in March ( I can see you all starting to smile)

34% of valuations done in March were for First Time buyers (rapturous applause)

The number of residential Mortgage Valuations increased by 7% year-on-year in March according to Connells (you must be on your feet now!)

Look at the positivity that is flooding our economy at the moment. Sure, there will be some of you out there will want to focus on the negatives still, but why? I know March is always a strong month in the property sector, but that shouldn't mean we should gloss over such incredible stats. I know some of you will have a reason behind each of these comments that means in real terms they don't mean much but to be honest, I don't care. I am going to look at the list, look at what is going on and use this as a personal drive to convince myself a recovery is imminent.

I have been saying it for some time, the level of competition with lenders at higher loan to values is intensifying. This is clearly evident by the increase in valuation instructions for First Time Buyers in March. As I said in my last blog, "I believe" that an economic recovery is on the horizon. And these KPI's given above give a strong indication of that.

Don't be fooled though, despite this fall in inflation it is still too high, savers are still being punished and the inevitable rate rise will occur, if not in May as predicted by many, then surely June or July. But fundamentally we must not lose track of the momentum we have gained. We must not become negative and defeatist if rates do indeed rise by 0.25%, but look at everything that has been achieved in the month of March and believe it is a sign of things to come.

Don't lose heart. Recovery is a marathon, not a sprint. Before recovery comes stability, and slowly we are getting back on track. Day by day, our economy grows stronger and we will take some hits on the way, but we'll just pick ourselves up again and continue to fight. I see the desire in lenders to lend despite the negative press and I know that if we can get through to 2012, strength will return to our economy.

So I urge you all, look at the facts above today and do something you may not have done for a while, step out at lunch, buy yourself a drink, take a deep breath and enjoy. Because today is a good day ladies and gentleman, and lets not let it go unnoticed.

I believe... in an economic recovery.

The good times WILL be back...

I don't know if it is the fact that I thought for a couple of seconds yesterday that my neck was burning in the sun, or the fact that I have four rounds of golf in the diary for April, but things are most definitely on the up in the mortgage industry. I am sitting here at my computer this morning with a huge grin on my face thinking after a couple of years of clinging on for dear life, there is a good living to be made as broker again.

Why is that, I hear you ask?

Well, it has been one of the best weeks I have seen for a long time. Monday we had a good long meeting kicked off with the area managers of Nationwide presenting. They were upbeat, vibrant and energetic in their delivery. They talked of their ambition and of how they see signs of positivity returning to the market. And for that reason, they have entered the large loans market again with lending now available up to £2 million. This is a very positive step. Nationwide were notoriously one of the "conservative" lenders of the past, but they are growing more ambitious and their views (and their rates) suggest that they too, see positive times on the horizon.

This presentation was followed by another lender, one of the best kept secrets in the industry, a lender called Clydesdale. Clydesdale, for me, have always been a fantastic lender. They must have the right type of client but if you provide that, then they will benefit from some great buy to let products and a fantastic residential offset rate. They too, are feeling ambitious and their lending targets are considerably more than they were last year, mainly due to the fact that they also see the market regaining some confidence.

Following on from Nationwide and Clydesdale, I had the pleasure (that's right, you heard... the pleasure!!!) of dealing with Abbey For Intermediaries three times last week. Two applications submitted last Wednesday and one on Friday, all of which have gone to mortgage offer today. That is impeccable levels of service, it really is. Rates were great, levels of service magnificent, and I now have three very happy clients. For the right client, fast track underwriting is amazing but it must be the right client. Abbey understand that and are one of the few lenders that will still fast track cases for clients that tick all the right boxes.

This is how the system should work and I applaud them for this. I know we have had our ups and downs Abbey, but let it be known that right now, I am loving your work. So, everyone...please, a round of applause for Abbey For Intermediaries (that includes you at home sitting there not clapping, get those hands together please!)

The fact of the matter is, the levels of service shown by Abbey, the aggression and ambition recently shown by Nationwide and Clydesdale, and the competitiveness shown by some of the pricing by old favourites like Northern Rock and Halifax now, are filling me with confidence that a recovery is on its way. Rumour has it PWC has predicted the base rate will be at 2.5% by the end of 2012, but fear not world! I am seeing competition in the market again. Something I feared would be lost with the merger of C & G and HBOS, but it is still there. Sure we have lost some of the great mortgage names recently, and seeing C & G was a particular downer for me as I loved them, but competition for market share is gaining momentum.

So, here is a message to all estate agents out there that may have been talking of negativity in lending. Things are improving, lending is starting to find its feet again. As competition grows, so does the consumers ability to borrow and with it their ability to buy. This is always the best time of year to market a house for me. Spring brings with it a freshness like no other time of year. Houses look at their best, gardens show their true potential and the general public is full of optimism. I can assure you, for the right client, lenders are out there and want to lend! Like a cheated partner, they still suffer scars from their previous relationships with some clients, but they are starting to develop trust again and us few brokers that are left, are trying to develop that trust even more.

So agents, get out those mailshots, stick that ad in the paper, and get working on those sales calls, because people want to buy, and lenders want to lend, make no bones about it. We have all been stuck in this depression for too long... but I truly am seeing the signs of a recover. Get your cameras out, re shoot those dreary houses that have been stuck on the market since November when you photographed them in the rain/snow. Buyers, don't let the negative press stop you from speaking to brokers, banks or buildings societies.

So, join with me and write it on your hand...

...you must believe too.

Let me hear you all say it....

I BELIEVE... in an economic recovery.

Phew, all this optimism is a making me thirsty. Frappaccino time.

A First Time Buyers Budget? Erh...no.

Yet again, the budget has passed us by and I am left thinking ah, what if?! Whilst I hate to come across as a pessimist, it wasn't amazing was it? There was nothing in there that lept out and said, "we are tackling the issues of assisting First Time Buyers head on". In fact, to me it looked like a headline grabber plain and simple. A token gesture of assistance to first time buyers if you will. One that they are really hoping no one will delve into, because if they do, they will realise that nothing has been done here at all apart from really assist private landlords. How? By assisting them to corner more of the current repossession market and purchasing more stock which will result in more people renting. Perhaps rental prices will stabilise a little more now as we start to see some of the experienced landlords come out and purchase again but I see no assistance to the purchase market of first time buyers at all.

So lets look a little more deeply into the assistance we have seen. FirstBuy Direct is the new shared equity scheme that will certainly help developers, lets make no bones about that one! Stock that has been hard to sell will be assisted greatly by this scheme so we'll see developers finally offloading some "deadwood" and recouping some cashflow. But what about the first time buyers this is supposedly helping? Well unless things change in the mortgage industry quickly, this will not help them too much. New builds are something lenders try to steer well clear of at present and most lenders severely restrict the borrowing against them due to the way this market was heavily exploited a few years back. Maximum borrowing on these as flats at present is 75% of the purchase price and there are few that want to get involved at this level, meaning lack of competition and high rates only at this stage. This needs to improve for us to see any benefit!

You may remember the ever popular, "buy this flat and we pay your stamp duty", or the "buy now with 7.5% cashback", or "buy now and have a fully fitted new kitchen and floors throughout". All that happened here was that the cost of these incentives were built into the sale price and the resulting factor was simple. The market was flooded with over valued properties that absorbed the incentive into the purchase price. The resulting factor, two years on clients would come to remortgage or sell, look at older properties in the area that had increased in value by 10 - 15% and would be surprised that theirs had actually dropped in value or simply remained stagnant! Why? Because all the other properties had not been overpriced with incentives included and had maintained "real value" rather than being masked in a false economy. Lets not also forget, that we have seen an equivalent FirstBuy Direct scheme already! Wasn't the most popular of schemes now was it. Home Buy i believe it was called and it ran out of funds very very quickly.

What is evident, is that it appears we are growing ever closer to the European culture, whereby renting is simply the way of life and purchasers are few and far between. Germany, France, Italy, rental has always been high there and I believe the average age of a first time buyer is nearing 40. So whilst we evaluate the direction we appear to be heading, whilst we sip our coffee alfresco in the streets of pedestrian only city centres, and the sun shines rather brightly, early on in the Calender year, let us look to our European brothers and sisters and accept this budget hasn't had the effect we had hoped for on first time buyers and realise that perhaps our housing market is starting to get closer to those abroad than perhaps we had hoped.

For me, the assistance could have been a simple one. Government owned banks being instructed to offer at least one 5 year fixed rate mortgage at 95% to first time buyers in its product mix. Whats more...offering it on an interest only basis. Being tied to the property for 5 years will mean there should be sufficient time for the property to gain in value, and this would diminish the concern over negative equity. So, mortgages at interest only for the first 5 years would be affordable, no concerns there. Negative equity? No issue there as 5 years should be long enough for a property to gain equity anywhere in the UK. But perhaps most importantly, the more that start to offer this type of deal, the more competition that arises and rates at this level may begin to drop from the current 7% plus deals we are seeing at present, that must be done on repayment. Lets be clear, we want to help the first time buyers but also want to the help the property market as a whole. First time buyers create the chains we need to get the market going again and without the help to get them on the ladder, we are all going to suffer.

To me it seems the budget has assisted developers more than first time buyers, it has also assisted private landlords with the means tested stamp duty on multiple properties. Could the reason for this be that the government know that the more properties are sold to developers and landlords the more capital gains tax, and corporation tax they could recoup? The more income tax they could claim on rental incomes? Surely not...

Lets look at the positives though. At least petrol fell by a penny! Although correct me if I am wrong but, I am pretty sure my local BP had inflated their costs per litre by at least 7p over the last month. Wow. Thanks for that one! That should help balance out the inflationary concerns announced last week which saw it announced at 4.4% for February. That one penny in my back pocket is like a protective armour to get me through this inflationary battle...

Paper armour...

That is wet...

Tescos offered me more this budget with my 5p off petrol voucher I received, so forgive me if I am not singing from the hills right now.

Rome wasn't built in a day thought was it.

Check out my guns!

Arnie, man of a million guns, the ultimate killing machine and all out action super hero of the 80s/90s. I must confess, I am feeling a little like him right now. Not because I have just killed 27 people with an oozy nine millimetre with laser sighting (although sometimes conversations with Woolwich service centres push you close!), but because I am feeling pretty well armed at the moment. The mortgage broker is being given a little more variety again.

As of next week, I will be armed with 95% residential purchase deals, 90% market leading deals starting from a 4.49% tracker for 2 years and even 85% buy to let deals. Now that is an armoury even Stallone would feel good with. I feel like I am being given the ammunition to single handedly start things moving again in the purchase market. The tools to help first time buyers that have been frustrated so long. The weapons that experienced buy to let landlords have been waiting for, to start expanding their portfolios again. Sure, the rates are not amazing, but it is a start.

This week has seen the seeds being planted that will help the mortgage market blossom and the purchase market gain momentum. Northern Rock chancing a 90% product, NatWest trying the same. As each lender dips their toe back into the higher loan to value (LTVs) I really couldn't care what the rate is if I am honest. The fact is, the more that start to do this, the greater the competition. And with greater competition comes price wars and soon we will have rates at 90% borrowing lowering further, because lenders start to get ambition and want to gain market share again.

One of the most commonly used phrases in the mortgage industry has been "green shoots". I hate it. Its an annoying phrase and one that was used for years to give us hope a revival was on its way. But, do you know what? I think it might be. As more and more lenders start to dip their toe in the sea of high LTVs the more confidence builds and the more that will follow. In 2008 lenders started to withdraw products so fast, it was almost impossible to keep up! We lost 93% of the buy to let products we had available in 2007/8 in 2009. There was a mass exodus!

Think of the scene in Jaws, when they all rush out of the sea at the sight of what they thought was a shark...then slowly, one person re-enters the sea for a swim. Followed by another. Then another one in a really dodgy pair of Speedos. Eventually the sea starts to fill up again as confidence grows.

I can see this happening in the mortgage market now. More and more lenders edging up their LTVs and giving us a few more options. Good times, whilst  a way off yet, are certainly going to be back at some point, and the emergence of more and more lenders offering 90% deals and even 95% will help us regain some much needed confidence in a housing market that has taken more punches than Bruno did against Tyson. Smaller deposits will see the first time buyers re-entering the market. It will see chains starting again, and see the property market finally making a comeback almost as good as that of Take That's.

Watch this space. I think we are turning the corner...at last.