Thursday, January 8, 2009

UK mortgage market update

L&G forecasts big hit to remortgage market

Legal & General mortgage club is predicting that the remortgage market is set to suffer as SVRs fall in line with base rate cuts. L&G’s Mortgage Purchase Index for Q4 2008 shows that 17% fewer borrowers took up a variable rate than in Q3, despite the recent cuts to base rate.The data, which is based on 18,683 mortgage applications through L&G’s mortgage club, also shows 65% of borrowers chose a fixed rate deal during Q4. This is marginally up from the 63% recorded for the previous three months.The research also shows that the average two-year fixed rate for Q4 was 5.90%, down from 6.38% in Q3.

Posted by jack c @ 07:13 PM (1263 views)
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9 thoughts on “UK mortgage market update

  • This also announced today further evidencing the contraction within the UK mortgage market

    Bristol & West Mortgages to exit broker market

    Bristol & West Mortgages is following in the footsteps of its parent Bank of Ireland and will no longer accept new business from UK brokers. It intends to withdraw its existing product range for broker business from close of business on Friday 9 January 2009.
    All existing Bristol & West customers and pipeline broker business will continue to be processed under the Bristol & West brand.
    Bristol & West Property Finance will also continue to operate under the Bristol & West brand. A spokeswoman for Bristol & West, says: “Essentially both our UK mortgage brands have converged over recent months and it is not effective to operate two mortgage brands at current levels of business. “The Bank of Ireland brand is the core brand of Bank of Ireland Group and we propose to conduct all new customer mortgage lending under this brand.”

    Bank of Ireland pulls from UK broker residential market

    Bank of Ireland will no longer accept new residential mortgage business through brokers in the UK. A stock market announcement today reveals that Bank of Ireland’s distribution in the UK will now only be generated via its joint venture with the UK Post Office and through 44 Bank of Ireland branches in Northern Ireland. As a result, its UK residential mortgage book, which stood at £29bn on 30 September 2008, is expected to reduce significantly over an extended period of time.The plans are part of the bank’s strategy to reduce dependency on wholesale funding through selective balance sheet de-leveraging and to manage its cost base. It is also planning to cut around £30m in annual costs under a restructuring cost which will result in a once-off charge of around £40m. A number of staff are expected to be placed in consultation as the bank looks to close its Solihull and Reading offices.There has been no word yet as to how the changes will impact on Bank of Ireland’s subsidiary brand Bristol & West.

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  • Jack c

    Were these lenders offering good deals and generous LTV’s.

    From the comments you’ve written it looks as though they’ve decided to sell direct and cut out the middle man and increase their margin.

    I assume they’ve decided that over the next few years their isn’t enough business to justify having brokers (and their assossiated commissions) do work for them.

    IE for the amount they payout in commissions they’d be better off spending half of that on direct advertising etc.

    I guess by seeing what products they are now offering gives a good indication as to whether or not they want any business.

    Have you had any news as to how lenders are treating BTLers at present ?

    I was wondering if Portfolios are being down valued when calculating LTV’s if applying for new mortgage deals ?

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  • @str 2007 – valid questions to which I’ll reply 2morrow – in short this will have a big impact on the housing market – just come back on this thread.

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  • @str 2007 – both lenders (same company 2 brands) were competitive and the service from B & West was generally excellent – as you deduce most brokers see the latest announcement as a move to cut out the middleman (shooting themselves in the foot IMO as they do not have sufficient High St presence or other effective distribution channels). Just to put you in the picture the procuration fee (commission by another name) is typically 0.35% of the value of the mortgage – thats £350 gross per £100k borrowed – they might pay 0.5% on a BTL mortgage. We will need to wait and see what the new product offerings are and whether they remain competitive but the broker will be excluded from the deal.

    BTL lending remains very tight so much so that several people I know who focussed on this type of mortgage business have been forced to shut up shop. In short on BTL purchases a bigger deposit is required and it’s almost a foregone conclusion that the property will be down valued.

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  • thanks for the coal face info jack c.

    I’ve been arguing with a BTL bull on another site and his arguement goes along the lines of not actually having lost any money as he hasn’t sold any properties and realised the loss.

    I’ve asked him to let me know how he gets on convincing the Banks his properties are still worth 2007 prices as he hasn’t sold any yet ! LOL.

    You’re not going to the London meet are you next week ?

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  • @str 2007 – thanks for re-visting this one, I’m afraid your BTL “bull” is simply full of bull (LOL)

    I cant get along to the London meet up due to business commitments plus the fact that I’m based North of London (280 miles to be precise !) however I’m sure I’ll get to meet up with eveyone in due course (I have a note of titanic’s e-mail adress from an old post when the meet up idea first came about)

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  • @str 2007 – thanks I’ll drop you a line direct over the weekend – I’m located up in the Newcastle upon Tyne area and can reveal that Newcastle BS have just announced an initial 150 job losses – main reason being the decline in BTL mortgages – you can pass this on to your BTL bull with my compliments (LOL)

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  • Tenyearstogetmymoneyback says:

    I’ve been following this thread with interest and have a couple of updates.

    It was on the local news last night that Bank of Ireland is closing its offices in Reading

    http://news.bbc.co.uk/1/hi/england/7821455.stm

    Being a Bristolian and having had my first savings account and then mortgage with
    Bristol and West I recently read an interesting chapter about them in a book on Bristol commerce
    written in 1989. It was all very upbeat with loads of data on how many branches they had etc etc.
    The thing that struck me was that more recently it is as if they had never existing. All the savings
    accounts were transfered to Britannia so presumably they either relied on dodgy CDOs or funding
    from Ireland. If they did rely on Irish funding they must be stuffed as someone paying offf what had
    been a £100000 150000 Euro mortgage would now only be paying back 100000 Euros

    :- Duncan

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