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The Mortgage Works - "best Deal On The Market"

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Just reading the article on the homepage from the Telegraph, Landlords warned of buy-to-let mortgage rate rises.

In the article a mortgage broker source is reported as saying that the best deal on the market for BTLers with 60% LTV is a 2-year fix with a headline rate of 2.49% and a fee of 2.5%, details of the product from The Mortgage Works (TMW) page here, (TMW is a subsidiary of Nationwide.)

Isn't that a fitting tribute to the reality of the Funding for Lending Scheme - a supposed mutual creating a product that is best suited to the needs of a BTL speculator who has (bubble) equity, but also has a problem paying the mortgage with the income generated from letting the property. On the other hand, if the property is generating a handsome rent, isn't this just a housing equity withdrawal instrument? And when did it become the Bank of England's job to make sure that Nationwide could conjure up some profits by getting into the equity withdrawal game. Either way, this caught my eye as evidence that the UK housing/mortgage 'market' is a very, very sick puppy.

[Edit: typo]

Edited by ChairmanOfTheBored

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Just reading the article on the homepage from the Telegraph, Landlords warned of buy-to-let mortgage rate rises.

In the article a mortgage broker source is reported as saying that the best deal on the market for BTLers with 60% LTV is a 2-year fix with a headline rate of 2.49% and a fee of 2.5%, details of the product from The Mortgage Works (TMW) page here, (TMW is a subsidiary of Nationwide.)

Isn't that a fitting tribute to the reality of the Funding for Lending Scheme - a supposed mutual creating a product that is best suited to the needs of a BTL speculator who has (bubble) equity, but also has a problem paying the mortgage with the income generated from letting the property. On the other hand, if the property is generating a handsome rent, isn't this just a housing equity withdrawal instrument? And when did it become the Bank of England's job to make sure that Nationwide could conjure up some profits by getting into the equity withdrawal game. Either way, this caught my eye as evidence that the UK housing/mortgage 'market' is a very, very sick puppy.

[Edit: typo]

Ah, you're one of these people who just doesn't understand what makes Nationwide tick. Those quaint mutual ways ain't going to pay for pop-star salaries. Read it and weep:

http://www.ibtimes.co.uk/articles/494573/20130725/nationwide-chairman-geoffrey-howe-bankers-pop-stars.htm

http://www.thisismoney.co.uk/money/saving/article-2017961/Nationwide-chairman-Geoffrey-Howes-defence-soaring-boardroom-rewards.html

I'd love to see Nationwide get what it so richly deserves. Bankruptcy. Thankfully the hubris being shown by management makes me think it's not completely impossible.

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Ah, you're one of these people who just doesn't understand what makes Nationwide tick.

Nope. Check the OP and the careful choice of the word "supposed". In the past I've been all over the Nationwide accounts looking for stuff on both The Mortgage Works and their BMR debacle, which still rolls on (another Telegraph piece here from May, same author - Andrew Oxlade) and the directors' remuneration had not escaped my attention.

I'd love to see Nationwide get what it so richly deserves. Bankruptcy. Thankfully the hubris being shown by management makes me think it's not completely impossible.

I second that emotion.

There has to be a reckoning sooner or later with the most foolish creditors going to the wall as well as debtors being shaken down for whatever they have to offer - I take lending like this by Nationwide as the placing of long odds bets as they try to gamble their way out of trouble. Maybe a time will come when the Bank of England feel that support for the worst of the zombies should be withdrawn and they may want to road-test their new resolution regime on a decent sized fish. Here's to hoping that before too long a return to something like normal does come to pass and Nationwide fall under the wheels of history. Nationwide would be a good pick for a bit of zombie killing. Small enough to be readily digestible, large enough to be an example to the others that can't just be shrugged off, in the same way that the demise of The Dunfermline Building Society seems to be something that can be shrugged off. BTW, no prizes for guessing who bought the wreckage of Dunfermline from the Bank of England :lol: .

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Just reading the article on the homepage from the Telegraph, Landlords warned of buy-to-let mortgage rate rises.

In the article a mortgage broker source is reported as saying that the best deal on the market for BTLers with 60% LTV is a 2-year fix with a headline rate of 2.49% and a fee of 2.5%, details of the product from The Mortgage Works (TMW) page here, (TMW is a subsidiary of Nationwide.)

Isn't that a fitting tribute to the reality of the Funding for Lending Scheme - a supposed mutual creating a product that is best suited to the needs of a BTL speculator who has (bubble) equity, but also has a problem paying the mortgage with the income generated from letting the property. On the other hand, if the property is generating a handsome rent, isn't this just a housing equity withdrawal instrument? And when did it become the Bank of England's job to make sure that Nationwide could conjure up some profits by getting into the equity withdrawal game. Either way, this caught my eye as evidence that the UK housing/mortgage 'market' is a very, very sick puppy.

[Edit: typo]

A year's interest as a fee!?

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Nope. Check the OP and the careful choice of the word "supposed". In the past I've been all over the Nationwide accounts looking for stuff on both The Mortgage Works and their BMR debacle, which still rolls on (another Telegraph piece here from May, same author - Andrew Oxlade) and the directors' remuneration had not escaped my attention.

Ah, I was being ironic on the first point btw, your previous good work on Nationwide's base-rate tracker issue is fresh in my head. From the first link:

Nationwide boss Geoffrey Howe has said bankers are like pop stars and footballers in terms of the amounts they get paid, and that the average worker would not understand why they earn such huge sums.

According to the Daily Mail, Howe, who is paid £300,000 per year for working less than three days per week, said the layman would find it too hard to understand bankers' pay and bonuses.

"This is a society problem, this isn't a Nationwide problem," he said. "There is a huge mismatch between what pop stars earn, footballers earn, business people earn, bankers earn and what the man on the street earns.

"A lot of people just find it hard to understand why there is such a big differential between what the man in the street earns and what senior business people earn - whether they're bankers or whether they're in other jobs."

An astonishing quote from someone who is allegedly running a mutual. It just reeks of Supreme arrogance.

I second that emotion.

There has to be a reckoning sooner or later with the most foolish creditors going to the wall as well as debtors being shaken down for whatever they have to offer - I take lending like this by Nationwide as the placing of long odds bets as they try to gamble their way out of trouble. Maybe a time will come when the Bank of England feel that support for the worst of the zombies should be withdrawn and they may want to road-test their new resolution regime on a decent sized fish. Here's to hoping that before too long a return to something like normal does come to pass and Nationwide fall under the wheels of history. Nationwide would be a good pick for a bit of zombie killing. Small enough to be readily digestible, large enough to be an example to the others that can't just be shrugged off, in the same way that the demise of The Dunfermline Building Society seems to be something that can be shrugged off. BTW, no prizes for guessing who bought the wreckage of Dunfermline from the Bank of England :lol: .

Right On. But what will be the trigger? Post- HTB2 crunch following the 2015 election? A risible organisation, whatever their eventual fate.

The twitter feed seems to be attracting some fire regarding Howe's comments. I wonder how they might reply if asked about their BTL roulette...

https://twitter.com/AskNationwide

Edited by cheeznbreed

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Ah, I was being ironic on the first point btw, your previous good work on Nationwide's base-rate tracker issue is fresh in my head.

Oops! Apologies. I've seen that there has been a rash of irony detector failures on the boards, and it seems that mine is also in need of calibration. Fortunately my weapon of choice for re-calibration is real ale, so it's no chore, ;) .

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Oops! Apologies. I've seen that there has been a rash of irony detector failures on the boards, and it seems that mine is also in need of calibration. Fortunately my weapon of choice for re-calibration is real ale, so it's no chore, ;) .

No apology required, I didn't exactly make it obvious. Imbibe away!

edit, have a drink on Diana&Mary:

Edited by cheeznbreed

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The twitter feed seems to be attracting some fire regarding Howe's comments. I wonder how they might reply if asked about their BTL roulette...

https://twitter.com/AskNationwide

Only one way to find out!

@AskNationwide How does issuing a BTL mortgage with a 2.5% FEE help your members, or does it help you? Why do you need help? #runonthebank

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Ah, you're one of these people who just doesn't understand what makes Nationwide tick. Those quaint mutual ways ain't going to pay for pop-star salaries. Read it and weep:

http://www.ibtimes.co.uk/articles/494573/20130725/nationwide-chairman-geoffrey-howe-bankers-pop-stars.htm

http://www.thisismoney.co.uk/money/saving/article-2017961/Nationwide-chairman-Geoffrey-Howes-defence-soaring-boardroom-rewards.html

I'd love to see Nationwide get what it so richly deserves. Bankruptcy. Thankfully the hubris being shown by management makes me think it's not completely impossible.

Was it you who pointed out the big difference between CML and BBA figures? I thought your implication was that a BS was doing a lot of lending and I assumed you meant NW.

In the words of Kevin Keegan, I would ******ing love it.

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I mentioned it in the latest BBA figs thread, but credit for the detective work must go to koala_bear who dug through the CML, BBA and BSA figs.

Did anyone ever make sense of Santander and explain it to us all? The massive land grab on the mortgage market but now back pedalling at a rapid rate of knots under FLS. Why?

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Did anyone ever make sense of Santander and explain it to us all? The massive land grab on the mortgage market but now back pedalling at a rapid rate of knots under FLS. Why?

Well remembered. I can't recall whether it was explained I'm afraid, and I'm on the smartphone so cannot easily search. I'll look tomorrow.

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The twitter feed seems to be attracting some fire regarding Howe's comments. I wonder how they might reply if asked about their BTL roulette...

https://twitter.com/AskNationwide

@AskNationwide say

Nationwide do not offer Buy to Let mortgages however if you choose to rent out a property you already have a residential mortgage on then a 2.5% letting fee will be applied. This is applied to all members who rent out their property.

As a reply I went with

TMW (BTL lender) - Nationwide subsidiary. Ignoring legalistic pedantry, Nationwide offer Buy to Let mortgages

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@AskNationwide say

As a reply I went with

Nouveau Leech likes to remind us about a NW director saying that BTL lending was a better bet than OO. Maybe that would be a better riposte. ( Corrected NW person)

Not sure if there is a more recent example than this, April 2011

http://citywire.co.uk/money/why-nationwide-prefers-buy-to-let-landlords-to-first-time-buyers/a489252

Edited by 7 Year Itch

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Did anyone ever make sense of Santander and explain it to us all? The massive land grab on the mortgage market but now back pedalling at a rapid rate of knots under FLS. Why?

Santander - I haven't had a detailed look but it think the explanation is very simple (probably why no one (including myself) has looked and the accounts always lag significantly so you are always looking at ancient history...).

UK mortgage market expansion was achieved using lots of extra capital/funding from Santander HQ when Santander Spain (Brazil too) were still doing OK (unlike all but 1 other spanish bank [bBVA] at the time). When the sh!t hit the fan for Santander Spain the UK branch had to stand on its own 2 feet with the FSA aggressively on its case i.e. it had to suddenly start behaving sensibly as they were told they weren't going to get bailed out by HMT/BoE directly. Unlike Barc and NW they will meet the new capital rules as they have spent ~1.75 years carefully working in the right direction.

[They also aren't allowed to transfer capital/funds to Spain]

CML figures are on a different basis to BoE/BBA/BSA which all use BoE methodology

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I tried reading the NW annual report last night.

It looks like their loan book has increased by about £7 billion in the last year - which is about a 5% increase in their loan book.

Also, the BoE Bankstat figures show that since January 2012, outstanding mortgages from the major lenders have increased by £19 billion - but £10 billion of this has been from mutuals - even though they are only a fifth the size of the banks overall

So it looks like mortgage growth is heavily slanted towards NW.

Is Adam Applegarth in charge?

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From the May BBA data thread:

http://www.housepricecrash.co.uk/forum/index.php?showtopic=191452&view=findpost&p=909347441

When looking at BBA data we should also look at the BSA data which gets no press coverage (may be deliberatly on their part?) but the level of the data is a bit more interesting that the BBA and appears a few days later.

A slight aside on the UK mortgage market structure:

The approximate mortgage market share (new lending) Q1 2013 is

BBA ~67%

BSA ~ 24%

Other specialist lenders ~9%

Of the 6 BBA lenders most recent market share (trend vs long term in brackets):

Lloyds 18.5% (down)

Barclays 12.8% (up)

HSBC 11.5% (up lots)

Santander 9.6% (down lots i.e. halved market share)

RBS ~8% (down)

Virgin (NRock) ~6% (up lots)

Of the BSA lenders (~24%)

Nationwide 15.1% (up from ~8% in 4 years)

Coventry 2.8%

Skipton 1.1%

CoOp 1.1%

(remainder of BSA) 3.9%

Specialist lenders ~9%

Yorkshire 2.9%

clydesdale 1.9%

(remainder of specialist) 4.2%

So the only way the BBA statement on re-mortgaging being mostly responsible for the increase in capital repayments is if Nationwide has been doing massive amounts of re-mortgaging to grab the FLS cash. If the brakes get put on that by the BoE requiring more capital to be held...

Interestingly the BSA data releases also cover the BBA 6 but with more granularity of data categories the the BBA own (public) data.

For BSA members redemptions are stable (i.e. people sticking with good existing deals) but BBA redemptions are up in the last few months by £1bn / month so NW might be responsible for £600-800m??? of the extra re-mortgaging when looking at all the data.

Edit to add:

Regular monthly capital repayments rising faster than would be expected with a shift to repayment mortgages (i.e. 100% IO ban) unless the average lending term on a new loan is less than 15 years i.e 50+ year olds re-mortgaging (+MEWing)?

NW need profitable mortgage customers because they have hundreds of thousands of borrowers on unprofitable IRs so they need new customers to cross-subsidise...

NW probably reckoned that re-mortgaging was safer and easier than "new" lending with New Buy etc. and they could pick better than average quality borrowers...

New BTL will also be IO unlike most new OO mortgages so more profitable as more interest paid.

NW were very big into IO and the shift to more (OO) repayment mortgages won't be doing the business model much good.

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I tried reading the NW annual report last night.

It looks like their loan book has increased by about £7 billion in the last year - which is about a 5% increase in their loan book.

Also, the BoE Bankstat figures show that since January 2012, outstanding mortgages from the major lenders have increased by £19 billion - but £10 billion of this has been from mutuals - even though they are only a fifth the size of the banks overall

So it looks like mortgage growth is heavily slanted towards NW.

Is Adam Applegarth in charge?

No but he might as well be :lol:

Nationwide has doubled market share in 4 years - see my post above repost my comment from 1 month ago.

Nationwide 15.1% (up from ~8% in 4 years)

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No but he might as well be :lol:

Nationwide has doubled market share in 4 years - see my post above repost my comment from 1 month ago.

Very interesting

And I've noted you say:

So the only way the BBA statement on re-mortgaging being mostly responsible for the increase in capital repayments is if Nationwide has been doing massive amounts of re-mortgaging to grab the FLS cash. If the brakes get put on that by the BoE requiring more capital to be held...

I think I read a post in the last day or so saying NW have now been given extra time to raise more capital!!

Edited by oldsport

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Very interesting

And I've noted you say:

I think I read a post in the last day or so saying NW have now been given extra time to raise more capital!!

The text box on the DM article states that NW have been allowed to defer plugging the black hole as it might impair lending volumes were they to do it immediately. The rest has to be filled within two years, although that sounds very politically-motivated given it'll push us just beyond an election.

Nationwide has plans to plug the £1 billion hole in its books discovered by financial watchdog the Prudential Regulatory Authority. It will dip into cash and capital reserves rather than the pay of bosses who let the shortfall grow.

The watchdog has ordered the mutual to improve its ‘leverage ratio’, which is a buffer to ensure societies and banks have enough cash reserves if hit by a big financial crisis.

Nationwide had a 2 per cent ratio but was told to raise it to 3 per cent last month. This may cost it up to £1 billion.

Yet last week it struck a deal to find £400 million now and the rest within two years. It is believed the watchdog accepted this after Nationwide said that footing the entire bill immediately might force it to reduce lending.

Nationwide may also tap investors for more capital in the future by issuing bonds known as core capital deferred shares.

http://www.thisismoney.co.uk/money/saving/article-2380019/We-need-directors-care--bosses-snouts-trough.html#ixzz2aKViuaEk

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The text box on the DM article states that NW have been allowed to defer plugging the black hole as it might impair lending volumes were they to do it immediately. The rest has to be filled within two years, although that sounds very politically-motivated given it'll push us just beyond an election.

http://www.thisismon...l#ixzz2aKViuaEk

"Nationwide has plans to plug the £1 billion hole in its books discovered by financial watchdog the Prudential Regulatory Authority."

So, the bank, which has second by second control over its activities via computer accounting systems, didnt KNOW about at leats a £1billion shortfall in capital.

How can anyone beleive anything that comes out of a bankers mouth, report, statement or any other revelation on the banks financial position.

It has been clear for years now that banks are being dishonest....THIS BANK is technically trading illegally.

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Loan book up £7bn in a year,

To fill the £1bn hole, make some money to pay CCDS holders + members who are more savers, it would be nice to see them withdraw lower rate mortgage deals, so more go on to higher SVRs, with more of the competition in a tighter place to offer cheap new deals to transfer over to, such as Co-op.

Yet last week it struck a deal to find £400 million now and the rest within two years. It is believed the watchdog accepted this after Nationwide said that footing the entire bill immediately might force it to reduce lending.

Nationwide may also tap investors for more capital in the future by issuing bonds known as core capital deferred shares.

Seems to me like many companies are trying to tap investors. Racecourse owners, family owned commercial property companies. Does the investors pot or appetite for such higher yielding + higher risk investments never run out?

If the investments come from cash-savings from average joe chasing yield, that also is a negative for many banks/building societies capital ratio. I'm dizzy with deja vu.

Thu, 14 Jun 2012 01:00:00 GMT

Nationwide's PIB replacement is very risky

A new bond from the UK's biggest building society might pay 7% a year, but is highly risky!

Nationwide BS has plans to sell a new high-income bond to its members. Alas, this bond is not a savings account and is much riskier than it first seems.

Not your usual bond

The bond is a new product called Core Capital Deferred Shares (CCDSs).

The attraction of CCDSs is that they pay much higher rates of income than traditional savings accounts and fixed-term savings bonds. Then again, this extra interest comes at a price, because these CCDSs are far riskier than traditional deposit accounts.

CCDSs are Nationwide's replacement for PIBS, the Permanent Interest-Bearing Shares issued by building societies to raise extra capital. The latest edition of the Financial Times lists the details of 40 PIBS from 17 different societies and ex-societies, including eight from Nationwide BS itself.

However, as with shares in listed companies, Permanent Interest-Bearing Shares are a much riskier bet than cash deposits. Indeed, they are much closer to corporate bonds or shares than savings accounts.

More: http://money.uk.msn.com/make-money/nationwides-pib-replacement-is-very-risky

and more recently: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9774263/Nationwide-plans-to-raise-500m-of-capital.html

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Seems to me like many companies are trying to tap investors. Racecourse owners, family owned commercial property companies. Does the investors pot or appetite for such higher yielding + higher risk investments never run out?

They are pretending that they are waiting for a miracle. Really they are just sleepwalking through a fog somewhere near the edge of a cliff.

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Just reading the article on the homepage from the Telegraph, Landlords warned of buy-to-let mortgage rate rises.

In the article a mortgage broker source is reported as saying that the best deal on the market for BTLers with 60% LTV is a 2-year fix with a headline rate of 2.49% and a fee of 2.5%,

Now that's an impressive fee to screw those over with large mortgages, so basically the real combined interest rate is a lot lot higher. I wonder how many will be dumb enough to sign up for that or even have the money to pay for it up front if they aren't helpful enough to bundle the fee all up for you?

Although I wonder how many BTL will actually qualify.

Edited by interestrateripoff

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  • 238 Brexit, House prices and Summer 2020

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      • down 5% +
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      • up 5%



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