Opportunity Knocks for Estate Agents/Brokers/First Time Buyers

It's been quite a repetitive story over the last two years.

"Business has been good, but we just don't have enough stock!"

"Vendors are lacking a confidence to bring their property to market. They just don't feel there is a big enough demand for it given the "current lending proposition" from lenders.

"If only we could do something to stimulate the first time buyers!"

These are just a selection of comments mortgage brokers have become accustomed to hearing from estate agents all over the country in the last few years. As it became harder to obtain finance for first time buyers due to higher interest rates and lower income multiples, the property market stagnated somewhat. Chains could not get established, missing vital links to complete them. Finding a first time buyer or second stepper was as tough a task as a finding a new computer without Windows 8 (don't get me started on windows 8).

However, recent price wars fuelled by the Funding for Lending Scheme, have seen a significant reduction in interest rates at higher loan to values. 90% borrowing currently demonstrates rates at considerably less than they were 2 years ago. Competition from some of the bigger lenders, and a cheap availability of funds, has seen First Time Buyers return to the market. It has also demonstrated to some, that second steppers now have the ability to move property again. In our first quarter of 2013 we have seen more First Time Buyers during this period since pre credit crunch.

There has been a role reversal in the sales process. Gone are the days when clients would "go shopping" for a property, find the place of their dreams and simply offer knowing that the mortgage placement was mere formality. The complexities of the market have educated the public a lot more and the first step is now to visit the broker first, obtain a decision in principle and a generic idea of borrowing and then, once this has been established, the buyer goes out to the market to see what is available. The knock on effect here, is that brokers see the public first, position a maximum borrowing from lenders, and then they commence the "shop". This means that buyers are more educated on their budgets, know in general what they can afford, and also know that "in principle" they are good to proceed with a lender, speeding up the process and bringing back a solid first time buyer to the chains whilst also ensuring there is a confidence with the vendor and agent that the purchaser is "solid".

The reduction of rates at higher loan to values has resulted in many brokers seeing a lot more of these clientele and it would be safe to assume that agents will soon be the beneficiary of an influx of first time buyers/second steppers ready to "get active" in the market again. Logic suggests that as demand starts to outweigh supply, the only thing that can happen to price - is it will raise. Whilst this is basic economics - the concept of demand and supply is never more prevalent than in the the property market and Dr Poole will be encouraged to see me applying this to my trade (Economics, Class of 92, never forget).

There are many other external factors of course that effect this market but right now, as a broker I am encouraged, and as confidence returns to our purchasers, it will also return to our vendors, so estate agents should share our optimism. Demand, in my eyes will increase this year as availability of funds at respectable/affordable rates across all loan to values looks set to increase.

Optimism should be returning to the market with this assistance of the Funding For Lending Scheme and coupled with the house prices increment of 5.2% from February 2012 to February 2013 recently announced, estate agents and brokers look set for one of the busiest years since the crunch. As broker confidence in first time buyers and second steppers has undoubtedly increased, so too should the expectation from agents that the market will soon see an influx of buyers not witnessed for some time.

Sealed bids could soon be back with a vengeance...

Opportunity Knocks for Estate Agents & Brokers

It's been quite a repetitive story over the last two years. 

"Business has been good, but we just don't have enough stock!"

"Vendors are lacking a confidence to bring their property to market. They just don't feel there is a big enough demand for it given the "current lending proposition" from lenders.

"If only we could do something to stimulate the first time buyers!"

These are just a selection of comments mortgage brokers have become accustomed to hearing from estate agents all over the country in the last few years. As it became harder to obtain finance for first time buyers due to higher interest rates and lower income multiples, the property market stagnated somewhat. Chains could not get established, missing vital links to complete them. Finding a first time buyer or second stepper was as tough a task as a finding a new computer without Windows 8 (don't get me started on windows 8).

However, recent price wars fuelled by the Funding for Lending Scheme, have seen a significant reduction in interest rates at higher loan to values.  90% borrowing currently demonstrates rates at considerably less than they were 2 years ago. Competition from some of the bigger lenders, and a cheap availability of funds, has seen First Time Buyers return to the market. It has also demonstrated to some, that second steppers now have the ability to move property again. In our first quarter of 2013 we have seen more First Time Buyers during this period since pre credit crunch.

There has been a role reversal in the sales process. Gone are the days when clients would "go shopping" for a property, find the place of their dreams and simply offer knowing that the mortgage placement was mere formality. The complexities of the market have educated the public a lot more and the first step is now to visit the broker first, obtain a decision in principle and a generic idea of borrowing and then, once this has been established, the buyer goes out to the market to see what is available. The knock on effect here, is that brokers see the public first, position a maximum borrowing from lenders, and then they commence the "shop". This means that buyers are more educated on their budgets, know in general what they can afford, and also know that "in principle" they are good to proceed with a lender, speeding up the process and bringing back a solid first time buyer to the chains whilst also ensuring there is a confidence with the vendor and agent that the purchaser is "solid".

The reduction of rates at higher loan to values has resulted in many brokers seeing a lot more of these clientele and it would be safe to assume that agents will soon be the beneficiary of an influx of first time buyers/second steppers ready to "get active" in the market again. Logic suggests that as demand starts to outweigh supply, the only thing that can happen to price - is it will raise. Whilst this is basic economics - the concept of demand and supply is never more prevalent than in the the property market and Dr Poole will be encouraged to see me applying this to my trade (Economics, Class of 92, never forget).

There are many other external factors of course that effect this market but right now, as a broker I am encouraged, and as confidence returns to our purchasers, it will also return to our vendors, so estate agents should share our optimism. Demand, in my eyes will increase this year as availability of funds at respectable/affordable rates across all loan to values looks set to increase.

Optimism should be returning to the market with this assistance of the Funding For Lending Scheme and coupled with the house prices increment of 5.2% from February 2012 to February 2013 recently announced, estate agents and brokers look set for one of the busiest years since the crunch. As broker confidence in first time buyers and second steppers has undoubtedly increased, so too should the expectation from agents that the market will soon see an influx of buyers not witnessed for some time.

Sealed bids could soon be back with a vengeance...

 

Now is the winter of our Discontent...

Now is the winter of our discontent
Made glorious summer by this funds for lending;
And all the clouds that low'r'd upon our house
In the deep bosom of the ocean buried.

Happy New year one and all. 

Its not just old tv shows and films we blog about here you know! Richard III, one of Shakespears greatest plays, opens with the above (minus the cunning insert) and I see nothing more fitting that this to sum up the market at present. Many quote this when expressing displeasure, but Bigus Dickus (Richard III) spoke it with satisfaction and content as he was so happy with the peace that fell upon England after a long civil war between the Royal family of York and and of the royal family of Lancaster (that's the end of today's history lesson...class dismissed). I'm happy with the state of the market at present, and i would suggest many mortgage brokers over the UK are as well on the strength of how busy we all seem to be.

The New Year has started very much where it left off, with a host of market commentators asking if the Funding For Lending Scheme is working. I'd like to point out that we still have in effect a year of this scheme to run so it is a little early to evaluate, but i'd urge everyone to look at its merits before berating it as a failure. We will be better served to cast judgement on its success in January 2014, but lets make no bones about it, the availability of cheap funding to lenders has given us brokers some fantastic products at our disposal, even if these savings have not filtered through as significantly as expected to the smaller businesses, it is early days. 

Like Usain Bolt out of the blocks, Clydesdale have launched the new year with great innovation and logic by launching the 80% pure interest only deal. I love it. Its innovation and logical lending that we have been crying out for since "interest only" was first labelled taboo in the industry. Clydesdale we salute you. And when backed up with their underwriting capabilities, they are going to prove strong contenders for "Lender of the year" in 2013 in my opinion. I say this not just because of the brilliance they showed on a case of mine over Xmas (it did help though), but after hearing non stop praise regarding them as a lender from a number of brokers. 

Woolwich have dared to believe as well. Their Family Springboard mortgage looks to lend at 95% albeit with assistance from the family, but lets be honest, most of our first time buyer clients of the past made a swift withdrawal from the bank of Mum and Dad before proceeding anyway, so there is little difference between then and now. The only difference is that Mum and Dad get their gift back PLUS interest after 3 years. Genius. This helps second steppers too and should have a positive step for the property market as a whole as well as the mortgage industry. Welcome back First Time buyers, and bonjour to you too second steppers. Its game on!!

Lenders are doing all they can to support us. Innovation is returning to the market and so too is logic, not to mentioned yet another 10 day sale from Accord (these sales are occuring almost as frequently as a Next sale, but no need to start queuing at 3am folks!) Sure its not 2006 but we are taking steps in the right direction and it would be nice if we all acknowledged that, rather than trying to find flaws in lenders, government schemes, lenders criteria changes. Lets start 2013 as we mean to go on, stop the damn berating, stop the moaning and whinging and appreciate what we have.

Back to Big Dick III, he was happy with the peace that fell upon England first of all. Then it all went pear shaped as he tried to kill everyone with ridiculous and callous ambition. With house sales at their highest levels for 5 years, something is clearly working! I can only see these stats getting better, so lets not get greedy, lets not get over ambitious. Lenders faith is slowly being restored and they are slowly starting to edge up higher loan to value lending at cheaper rates. As the benefits of the Funding For Lending scheme start to trickle in, lets stop the damn whinging guys or before you know it...

"The World is grown so bad, that wrens make prey where eagles dare not perch" Richard III, Act One,,Scene 3.


.

If Dallas can return, so can we.

Its been a while since my last blog. Writers block, a crazy mortgage market, kids teething, washing my hair - the reasons are numerous. However, inspiration came my way when I sat down to enjoy the return of one of the greatest TV programs of our time - Dallas. Okay slight exaggeration. Maybe it can't claim that accolade, but it can claim the greatest set of eyebrows ever seen on TV. Larry Hagman, aka JR Ewing has returned with two co actors (eyebrow number one and eyebrow number two) and is back on our screens. Something about JR's scheming, Bobby Ewing still whispering every sentence, and Sue Ellen having had so many face lifts her eyes are almost on the back of her head, has motivated me to come out and get blogging again.



 

Perhaps it is the flash cars, the sight of Southfork, or the tone of green I seem to turn whenever I watch the program. Perhaps it is the tall sky scrapers in the opening sequence, or the site of the horses running wild around one of the biggest areas of land ever owned by man that makes me think, you know what; money is out there! You just need to find it.

 

Well lenders certainly seemed to have found it. The rates we have seen of late are simply sublime! NatWest went truly crazy leading the way with their five year fixed deal and even after repricing, are still head and shoulders above everyone else. Halifax got stuck in with a fantastic 90% range for 7 year fixed deals. Lenders seem to be having a go. Perhaps it was Tescogate that triggered this? The emergence of one of the most feared brands in the land now evident in our sector must have made many stand up and take notice. Whilst their initial offering was quite conservative, it didn't take long for them get a little more aggressive.

 

News today that Precise are also joining the prime market with some fairly attractive deals means that price wars are rife and consumers can start saving a few pennies to invest in larger tvs to truly appreciate the splendour of JRs eyebrows. In HD they really are something. If you look hard enough you can even see them blowing in the wind as free as a middle aged man driving a red MG Midget in a country lane after a successful visit to Belgravia Hairloss Centre.

 

SVR Hikes continue to hit our market. So, as SVRs go up, long term funds go down, and economic uncertainty remains, why are we not pushing the remortgage market more than ever? We have read the reports, lenders are mostly below their targets. The funding for lending scheme is working and we are approaching Quarter 4 with more opportunity than we have seen for a while. We win. Our clients win. WE ALL WIN!

 

So, JR is back. Cowboy boots are fashionable again. Get your spurs on, get your belt buckles enlarged enough so that you can receive a signal for sky sports on them, and lets give it a final push for the final quarter folks. If JR can come back, so can we.

 

TRUMPETS PLEASE...

 

Ba baaaaaaaa ba baaaaaaaaaaa ba baaaa da da daaa daaaa...

Can we fix it? Yes, WE CAN!

Bob the Builder is one shrewd cookie. He has been in the construction industry since 1997 and his business has gone from strength to strength. He is multi lingual, and works all over the world and has gone about his business, building his company while other construction companies struggled for funding during the credit crunch. Oh, and his diggers talk.

Wow. What a guy.

Sure, most of his work is in the local community but he keeps employment up in his local areas, never really imports his materials and keeps his petrol costs down by only doing local work. A sound business model.

Is he concerned about the impact of GREXIT? Well, in a recent interview, I asked him about his views on interest rates and Bob said this:

"Can we fix it?"

And I said "Yes, we can".

The man should be prime minister. He really knows what he is talking about. Whilst having a pint together, I discussed with Bob that the pending exit of Greece from the Euro's could make the availability of funds harder for lenders and this would drive up the cost of borrowing. So, with lenders this week cutting their fixed rates, Bob was all over it like a teenage girl at SoccerAid.

Many of the "big boys" have reduced their fixed mortgage rates, and Nationwide have even slashed their arrangement fee by 50% on their five year deals as well, making these options appear all the more tempting. Much pressure has been placed on the Bank of England to cut the Base rate yet again if the Eurozone starts to break apart, but a reduction in the base rate would not necessarily mean that the cost of borrowing would reduce. It would suit people sitting on trackers right now, those that have the smaller margins above base on deals from the past, but the pricing of new deals would simply absorb this reduction and I would suspect we will see variable and tracker products become more expensive. 

"So, can we fix it?"

Yes Bob we can, keep your hard hat on. There are some competitive deals out there right now and it would be a good time to assess your options, especially if you have been sitting on your lenders Standard Variable Rates thinking that it will see you through the tough times.

So, once again mortgage brokers should be actively working the market. Working hard for their clients to get them ready for the turbulence that lies ahead. The captain has asked us to put our seatbelts on, and whilst I am not quite sitting with my life jacket on as well, I expect a rough ride. Fixed rates are starting to make sense again, with an uncertain future to the economy, and rates appearing cheaper, its time to review.

So, another pint Bob? Oh...no, the pump has broken.

"Can we fix it?"

Most probably Bob, most probably.

Prisoners of Mortgage War

The Great Mortgage War of 2012 had seized many of my troops. Some converted to repayment, but others were still out there, Prisoners of MortgageWar held captive by their lenders on interest only with no way out, hoping that a rescue mission was coming their way to give them freedom of choice and their independence back. I armed myself with every bit of artillery; Virgin Money, Accord, Aldermore and even Halifax Product transfers, and 'choppered' into the jungle to launch my rescue mission.

Shoe polish on my face, head band on, I began my rescue mission Rambo style to see who I could rescue and bring back home with me. Many had given up hope of escape, with communication lines detailing repayment was the only way out, but Broker Squadron Independence had other options. We needed to show that we had not forgotten our troops, that we had not left them abandoned with their current lenders and that our aim was to offer them alternatives that would grant them their freedom back. Freedom of choice.

The interest only restrictions has left many feeling they are trapped, but brokers offer alternatives. Many of us will not have shoe polish on our face or head bands on, but we will be able to offer guidance in these uncertain times. Quite how we ended up here remains a mystery. Some blame the brokers for mis-selling this niche product, others blame the lenders for being complicit in the advice by actually lending without question in the first place. Some even blame the government! Whoever is to blame, numerous clients are trapped with a lender on interest only, above the thresholds offered by alternative lenders, and are looking for a route out of the war. Inspite of the negative press, their are still options open and we aim to make people aware of this.

As I look down over the jungle, knowing there are more Prisoners of Mortgage War out there, I am happy that I have saved a couple of them this week. Others from Broker Squadron Independence will have also performed such rescue missions, and for those still out there held in captivity, fear not. We will find you, and we will bring you home as we are your Brokers in Arms:

"Through these Apps of repayment,

Interest only has tired.

I've witnessed your suffering

As the payments got higher.

And though they did hurt me so bad

In the fear and alarm

You did not desert you

My Broker in Arms"

The Great Mortgage War of 2012 continues...

A Nightmare on Broker Street

Its pretty easy to spot a mortgage broker these days.

 

Whether you are on a train, walking down the street, or in a Marks & Spencer (hang on, we stopped shopping there post credit crunch) make that Tesco at lunchtime (every little helps), mortgage brokers stick out like sore thumbs.

Why? They are the ones with the unsightly bruises on their faces. The ones walking on crutches, or with a plaster cast on their arm. They are hunched over, their posture is all wrong, or they are limping. Long story short, they are the injured amongst us.

When the credit crunch hit in early 2008 we looked around and thought, "some of us are not going to make it" and many didn't. Some of us, not all, got through it and lived to fight another day but we saw the number of brokers fall to a low of around 8,000.

Now, we find ourselves at this junction again. Criteria changes, broker rates not being comparative when you look at the direct deals, and now the recent reductions in proc fees too. Let's face it, we have taken a beating over the last few months. Some senior people in the industry have even asked whether there is a role for the mortgage broker in today's market.

In a rapidly changing market there is nothing more important than advice. Gone are the days when mortgage broking was simple. Every case is now a puzzle and we are the ones that must complete that puzzle. Sure, sometimes we get the wrong piece, but put it down, pick up another and find the one that fits.

If mortgages were as simple as finding the lowest rate, we would all be out of a job. That is a fact. However, the role of a mortgage broker is so much more than that. Credit profile, income streams, property exposure, unusual build types, agricultural ties, live/work units, there are so many hurdles in this industry. So many the public know nothing about, but we do.

We find ourselves at a point where some are questioning their ability to survive and brokers nationwide should be telling themselves that if we are still in the industry now, if we are still broking mortgages, it is because we are damn good at what we do. It is also because people value our advice. Targets for lenders rise and fall, and right now it is clear that direct business is below target and is being compensated for, but when this is back up to target, our own intermediary offering will become more attractive again.

I speak to many brokers that lose sleep over cases. You are taking that stress away from that client and it is only right that by taking that stress away, you are remunerated for it. IF lenders want to reduce/abolish proc fees, then fine. We will charge because as Cheryl Cole says "We're worth it!"

Freddy Krueger, turned many of our dreams to nightmares in the 80s, and right now it seems some cases are proving more scary than that. However, like most horror films the good guys always win and so long as we are giving, honest, helpful advice to our clients, we are taking away their stresses and getting them to where they want to be, we will pull through whatever this industry throws at us.

Next time someone questions your fee, next time someone questions what you do (you know who you are), or even next time you have an element of self doubt, think about the stress and anxiety you put yourself through to get that case offered and completed and be proud of the work you have done and the service you have provided. This job is no walk in the park anymore, but the sense of satisfaction on that day of completion makes it so worthwhile, and makes you worthwhile to that client.

Now go...and broke like you have never brokered before.