Brexit uncertainty is to blame for falling mortgage numbers

John Phillips, group operations director at Just Mortgages and Spicerhaart, says the latest UK Finance figures show that Brexit uncertainty continues hit consumer confidence, and that is having a significant impact on the housing market and it will probably not start to recover until summer 2019: “Brexit, Brexit, Brexit. Whether it is Brexit itself, or, more likely, the uncertainty it brings, one thing is for sure – it is impacting the mortgage market.

“We have seen purchasing take a real hit over the past few months, and this is mirrored by UK Finances’ lending figures today, which show first-time buyer mortgages are down 4.5% on last year and home mover mortgages are down 8.4%.

“In our business, remortgage is by far the strongest area of the business and is actually rising. The UK Finance figures show a drop, but it is a very small one 0.6%, which suggests remortgage is the strongest area of lending across the market. Buy to let has seen the biggest hit – an 18.8% drop, and while market uncertainty is sure to have affected this area too, it has probably been hit harder due to all the recent changes in the BTL market over the past 18 months.

“I think that basically we will see this slow down continue, especially in the purchase market, until we have some sort of stability back. The Prime Minister said today that they are in the ‘final stages’ of negotiations, but still, no deal has been reached, and there is a real possibility of a no deal Brexit. Whatever happens, I think it will continue to affect the market until at least March. Then we will have a period of ‘wait and see’ when people start to get their heads around what, if any, impact the final deal has. So in all likelihood, it will probably be summer next year before we see the market start to recover.”

StepChange research shows 4 out of 5 people feel better just three months after advice

To celebrate Talk Money Week (12-18 November), StepChange Debt Charity can reveal new evidence from clients about how taking debt advice is helping them feel better, sleep better, and feel more confident about making ends meet.

The charity has introduced a major new rolling client tracking survey to capture information about what kind of differences people report after they have taken debt advice. This will help the charity to monitor and improve its own services, and it also provides powerful evidence of the difference that good advice can make.

While there are no quick and easy fixes to serious debt problems, for many people taking the first step is the hardest. The thought of picking up the phone, or beginning the online debt advice process, can be daunting. Yet just three months later, four fifths (79%) of StepChange clients report an upturn in their wellbeing on at least one measure.

On individual measures, three months after debt advice:

Two thirds (67%) of clients said they were confident of making ends meet every or most months over the next 6 months.
Two thirds (67%) of clients said they worried less about their debts than they did before they received advice from the charity.
56% said they felt able to deal with day to day life better than before advice.
51% said they were sleeping better than they did before contacting the charity.
As the National Audit Office recently highlighted, the costs of problem debt to the wider economy are huge. It makes sense to try to ensure that people get help before their debt problems cause further knock-on impacts on their health, housing and wellbeing. So the main message to people worrying about debt is to take the first step – the evidence suggests that they will feel better for it.

Peter Tutton, head of policy at StepChange Debt Charity, says:

“We already know the huge sense of relief that people feel when they successfully become free of problem debt, often after years of hard slog to achieve that result. But what is exciting to find is that, for four out of five people, worthwhile benefits are felt just three months after taking debt advice.

“This Talk Money Week, we would urge anyone suffering in silence over their debt to take the first step and seek free debt advice from one of the reputable charities who can help them.”

Many people taking part in the survey who took the opportunity to give additional comments provided powerful feedback on how free debt advice helps, saying things like:

“Rescued me from a prison cell of debt and worry.”

“I found it very reassuring after my discussing my situation. Staff were efficient and spoke in a calming and professional manner. I felt as if a huge weight has been lifted off my shoulders and not like I can’t cope anymore.”

“So understanding, friendly, you don’t feel alone with your debt problems and you are listened to and spoken to like a human being.”

“I did write a letter to say how helpful it had been, especially to have been given typed breakdowns of outgoings etc, as preparing such things can feel like an immense burden when one is worn down by debt.”

“My situation has improved, I feel secure and in more control of my debts.”

“It saved my life.”

Over time, StepChange will be measuring outcomes for clients at three months, nine months and fifteen months after taking advice, and will publish a full report of the first findings early next year.

As Talk Money Week continues, StepChange will be putting out more information via social media and blogs to help promote the themes of the week, promoted by the Money Advice Service, which include getting more people to access free debt advice, get more people to save regularly, more young people receiving a meaningful financial education, and fewer people using credit for everyday spending. Keep up to date on Twitter at @StepChange and @MoneyAware and with the hashtag #talkmoney.

Consumer car finance market falls by 7% in September

New figures released today by the Finance & Leasing Association (FLA) show that new business volumes in the point of sale (POS) consumer new car finance market fell by 16% in September, compared with the same month in 2017, and the value of new business was 14% lower over the same period. In Q3 2018 overall, new business fell 4% by value and 6% by volume.

The percentage of private new car sales financed by FLA members through the POS was 90.9% in the twelve months to September 2018.

The POS consumer used car finance market reported new business in September up 9% by value and 3% by volume, compared with the same month in 2017.

Commenting on the figures, Geraldine Kilkelly, Head of Research and Chief Economist at the FLA, said: “Recent trends in the POS consumer new car finance market have reflected those for private new car sales which have been affected by changes to emission standards introduced in September.

“The POS consumer car finance market overall reported new business volumes up by 3% in the first nine months of 2018, in line with expectations of single-digit growth for the year as a whole.”

Consumer finance new business falls by 1% in September

New figures released today by the Finance & Leasing Association (FLA) show consumer finance new business fell by 1% in September, compared with the same month last year. In Q3 2018, new business grew by 5% compared with the same quarter in 2017.

In September, credit card and personal loan new business together grew by 4% compared with the same month in 2017, while retail store and online credit new business increased by 8%. The value and volume of second charge mortgage new business both grew by 11% in September.

Commenting on the figures, Geraldine Kilkelly, Head of Research and Chief Economist at the FLA, said: “The fall in consumer finance new business in September was the first since April 2017, and in part reflects the impact of recent changes to emission standards for new cars on the POS consumer new car finance market.

“In the first nine months of 2018, consumer finance new business grew by 8% compared with the same period in 2017, in line with expectations of single-digit growth in the year overall.”

Asset finance market reports new business stable in September

New figures released today by the Finance & Leasing Association (FLA) show that asset finance new business (primarily leasing and hire purchase) in September was at a similar level to the same month in 2017. In Q3 2018, new business grew by 6% compared with the same quarter in the previous year.

New finance for IT equipment and plant and machinery grew in September by 60% and 3% respectively, compared with the same month in 2017. Over the same period, the business car finance sector reported a fall in new business of 20%1.

Commenting on the figures, Geraldine Kilkelly, Head of Research and Chief Economist at the FLA, said: “Asset finance new business continued to grow in the third quarter despite continuing uncertainty about the outcome of the Brexit negotiations. The market is on track to report new business growth of around 5% in 2018 as a whole, reaching a record annual total of £33 billion.”

Borrowers being let down because the mortgage industry is “not fit for purpose”

The mortgage industry is failing to keep up with modern borrowers’ needs, it has been claimed, after a new survey revealed more than half were rejected for lifestyle choices including being self-employed or buying a converted home.

A study of the market commissioned by lender Together found a huge percentage of mortgage applicants – 54 % who’d fallen out of the application process – had been denied a home loan for reasons that could be considered ‘normal’ by most people.

These included factors once believed to be ‘non-standard’ such as their employment type; they could be self-employed, a contract worker or take a dividend, or the type of property they were looking to buy, including conversions or high-rise flats.

Pete Ball, personal finance CEO at Together, said many mainstream lenders needed to keep pace with the demands of these types of borrowers. Some banks and building societies remained reliant on a computer-automated approach, and outdated and rigid criteria – when deciding mortgage applications, he said.

“The world has changed,” said Mr Ball. “People’s pay, working patterns and pensions have altered beyond all recognition from 30 or 40 years ago. Even where they live, who they chose to live with, or the type of property they want to buy is vastly different from a generation earlier.

“What was previously thought to be ‘normal’ simply doesn’t exist anymore.”

Together’s wide-ranging study, which was conducted by market researchers YouGov, surveyed about 2,000 people about mortgage applications and the reasons why some of them had fallen out of the mortgage application process.

It builds on earlier research by the Intermediary Mortgage Lenders’ Association (IMLA)* which revealed a significant proportion of the UK population fail to secure a home loan between an initial enquiry and the time they would receive a mortgage offer.

The latest survey discovered that, of those rejected, 12% were denied because of their employment type, while 3% had insufficient employment history. This could be despite potential borrowers being in a good position to repay their mortgages.

One in ten (10%) were denied because the property they wanted to buy was considered ‘non-standard’, which could mean anything from a converted barn to a high-rise apartment.

Self-employed workers are also being “locked out” of the mortgage market by some lenders, Mr Ball said. Labour market data shows the population of people who are working for themselves has soared by a quarter in the past decade to 4.8million**, making them a cornerstone of the UK economy.

Millennials – those aged between 18 and 34 – were worst hit overall – with two thirds (66%) who took part in the survey failing to get on the housing ladder because of the way they live and work nowadays, which may mean they do not meet some mainstream lenders’ criteria

Older people also seem to be missing out, the research suggests. A total of 46% of over 55s were denied home loans, some because they were too near retirement age. This could pose a growing problem in the future, as the age of the UK population rises, said Mr Ball, with the number of people aged 65 and over in England and Wales is projected to increase by 65 per cent to more than 16.4million in 2033.***

Andrew Montlake, of mortgage broker Coreco, said: “Across the country, people are living and working longer and have varying ideas of what their perfect home will be at different stages throughout their lives.

“Unfortunately, much of the mainstream mortgage market has been slow in catering for these potential borrowers, who make up a wide section of society. The market needs to continue to adapt to make sure it remains fit for purpose.”

Additionally, nearly one in five (18%) people who took part in the Together survey were turned down because they had a low credit score or a lack of credit history.

Surprisingly, fewer than one in ten (9%) of those who took part in the market research said they’d been turned down because their deposit was too small and 16% said they were not earning enough to afford repayments on their home loan.

Over a quarter (27%) of rejected applicants who did not obtain a subsequent mortgage were put off ever going through the process again – shelving their dream of owning their own property – rising to 32% for over-55s. One in ten (10%) of those who withdrew a mortgage application/ enquiry the last occasion they were unsuccessful pulled out before receiving an offer as they found the process too complicated, and 7% said there were too many stages.

A disappointing 28% who were originally unsuccessful have not secured a mortgage.

Mr Ball said: “As a lender, we’ve been providing flexible, common sense lending for over 44 years, so we recognise that was once considered unusual or specialist is now becoming more normal, and the mainstream needs to be able to adapt to the changing world.”

Hanley Economic BS launches RIO mortgage range

Hanley Economic Building Society has launched a range of retirement interest-only (RIO) mortgages to support borrowers and intermediaries in their later life lending requirements.

The range is based around two main products. The first being a 3.49% Variable Discount at a maximum LTV of 50% for house purchase and remortgage purposes. The second being a 3.74% Variable Discount with a maximum LTV of 65% for house purchase and remortgage purposes.

The minimum loan size for the range is £10,000, with a maximum loan size of £750,000. There is a minimum age of 55 years with no maximum age and the borrower(s) must be retired. For joint mortgages each borrower will need to afford the mortgage in their own right.

If borrowers have a Lasting Power of Attorney (LPA) in place Hanley Economic Building Society will further discount the headline rate by 0.50%, and it will apply this discount at a later date should borrowers wish to obtain an LPA further down the line.

David Lownds, Head of Marketing & Business Development at Hanley Economic Building Society, commented: “As mutual building society we realise the need to support borrowers throughout their lives. Our retirement interest-only mortgages aim to fit the needs of older borrowers who are looking to remain within their current home but use some of the equity to fulfil a better retirement. For some this will mean carrying out home improvements, for others it will be to help their children or grandchildren to get onto the property ladder.

“We are encouraging borrowers to have a Lasting Power of Attorney (LPA) in place by offering a 0.50% discount off the initial pay rate. An LPA provides peace of mind that the finances of a borrower are managed in the event of any health issues in later years.”

One in five Brits would never inform a partner of their debt situation

Almost one fifth of Brits (19%) would never inform a partner of their debt situation, according to new research by Equifax, the consumer and business insights expert.

The survey, conducted online with Gorkana, found those aged 65 and over (29%) are almost twice as likely as those aged 18-24 and 35-44 (both 12%) not to reveal their debt to their significant other.

Meanwhile, only a third of respondents (32%) would inform a new partner of their debt situation within three months of beginning a new relationship. Of those, men are more forthcoming than women – 37% vs 27% respectively.

Furthermore, over a third (35%) of people who are either married or in a civil partnership do not have a shared bank account, with the proportion rising considerably for people earning less than £20,000 (71%).

The research also revealed more than half of people (51%) have never helped a family member with their debt. Of those who had, they were more than twice as likely to have given them money (35%) rather than advice (14%) to help with their financial difficulties. Respondents aged 65 and over were the least likely to give advice (9%), and also less willing to discuss money issues at the dinner table (45%) compared to 18-24 year olds (59%).

Commenting on the findings, Richard Haymes, Head of Financial Difficulties at TDX Group, an Equifax company, said: “Our research shows that when it comes to talking about debt it remains a taboo subject, even with our friends and family. In an environment where people are borrowing at record levels, it’s concerning that they feel they can’t be open about their situation.

“It’s encouraging to see that younger generations are bucking the trend and are being more transparent about debt and money problems. This age group are faced with factors like rising higher education fees and familiarity with a low-cost credit environment, which could be aiding with normalising the concept of debt.

“People may be reluctant to divulge details of their finances to family and friends, but by carrying the burden of debt problems alone, they risk further escalating their situation. Recognising the signs of financial difficulty, informing creditors at an early stage and availing of resources such as Citizens Advice and StepChange can alleviate the stress of debt and lead to better outcomes for all involved.”

New report to build evidence base for Government’s dormant accounts financial inclusion initiative

The Big Lottery Fund, the UK’s largest community funder, has today published a new report that will help build the evidence base for the Government’s dormant accounts financial inclusion initiative. The report – Understanding the decision making of people who are experiencing financial exclusion – builds upon existing financial exclusion knowledge by sharing the stories of those with real life experience of struggling to access fair, appropriate and affordable financial products and services.

The report identifies some of the key challenges faced by the financially excluded. Contrary to popular perception, it identifies that many of those turning to high cost credit are fully aware of the extortionate rates they will be charged, but feel they have no choice but to go ahead with the provider. This is because they need the money urgently and for a necessity – leaving them feeling backed into a corner and unable to take the time to shop around.

Others are also aware that they are unlikely to be accepted by a cheaper, mainstream lender. This is exacerbated by low awareness of responsible lenders, such as credit unions and Community Development Finance Institutions, coupled with a perception that high cost lenders aggressively target low income areas with their marketing.

The research took place in a series of sessions held earlier this year with 62 people from a variety of backgrounds and situations, including unemployed and underemployed women from minority ethnic groups, young and lone parents, people in work on low incomes, and young men who have left care in the last few years. It focused on three financial products: credit, savings and insurance for people with less than £500 in savings. It shows how those already using high cost credit are caught in a spiral that they struggle to get out of – to break the cycle they need to be able to save money, but the high cost of credit repayments prevents them from being able to set money aside.

Even where people are not making credit repayments, most say that they find it hard, or impossible, to save regularly. Despite this, many budget carefully and make small, ad hoc savings – usually cash in jars – that they dip into as necessary. While it’s important for them to have easy access to money to help them get by, this means that their savings rarely build up.

When it comes to insurance, there is low awareness of home contents insurance – particularly among younger people – little trust that insurance companies will pay out in the event of a claim and a perception that insurance is expensive and difficult to understand. Although most councils offer their tenants ‘add on’ contents insurance (added to their rent for a low weekly cost) awareness of these schemes is also low.

Overall, feedback from the sessions was that credit needs to be ‘decided quickly, from a trusted source, and ideally flexible’; savings need to be ‘easy to do and not too easy to stop’; and insurance needs to be ‘understandable, appropriate, and from a trusted source’.

The report is to form part of the evidence-base underpinning the Big Lottery Fund’s involvement in a £55 million funding strand intended to focus on tackling financial exclusion. This was announced earlier this year by the Department for Digital, Culture, Media and Sports (DCMS). The funding comes from bank and building society accounts that have not been used for fifteen years and where customers cannot be contacted. These are known as dormant accounts and the £55 million will be awarded to a new dedicated Financial Inclusion organisation, which will operate independently of government.

The research was conducted through telephone interviews and focus groups held across the country between March and June 2018. Participants were asked about their experiences and attitudes towards borrowing money, insurance products, and making savings, and any challenges they’d faced in doing this. Participants were also encouraged to give suggestions for possible solutions they thought would work best for them.

Gemma Bull, Big Lottery Fund Portfolio Development Director, England said: “Those who are living with the daily effects of facing barriers to financial inclusion are best-placed to tell us what solutions would make things better. We hope that the end user perspective reflected in this report will be useful in supporting the work of not only the new Financial Inclusion organisation that is being set up, but also other funders, policy makers and practitioners as we seek to tackle the challenge of improving access to fair and affordable financial products and services for all.”

Steve Cox joins Fleet Mortgages as Distribution Director

Fleet Mortgages, the buy-to-let and specialist lender, has today (5th November 2018) announced that Steve Cox has joined the business as its new Distribution Director.

Steve will be working closely with the management and sales teams at Fleet Mortgages, helping to develop and establish both new and existing relationships, and to ensure the lender’s product proposition works in both its core areas and potential new ones.

Steve was previously Business Development Director at Hodge Lifetime where he had worked since April 2016 and was responsible for lifetime and equity release sales. Prior to this Steve spent eight years as Head of Commercial Development at Sesame Bankhall Group.

Steve brings with him an excellent reputation and a commercial outlook towards business, plus he has established relationships with many of the key networks and mortgage clubs that Fleet already work with.

Fleet Mortgages has also announced that its BDM, Chris Barwick, who previously covered the North East will now be covering the North of England.

Fleet Mortgages is a specialist buy-to-let lender with products distributed via intermediaries only. It is specifically focused on providing mortgages to portfolio and professional landlords.

Bob Young, Chief Executive Officer of Fleet Mortgages, commented: “We are very pleased to announce that Steve Cox has started work at Fleet Mortgages today as our new Distribution Director. We have been very much looking forward to him joining the team here – he brings with him a wealth of experience and is one of those rare individuals within our industry that has worked across both broker and lender roles at a very high level. This type of knowledge and expertise will be a huge boost to Fleet Mortgages and I have no doubt that Steve will hit the ground running and will help develop our offering and proposition in both our established product areas and a number of new ones.”

Steve Cox, Distribution Director at Fleet Mortgages, said: “This role was a very attractive one – too good to turn down – and I’m therefore very pleased to be finally starting at Fleet, where I believe I can offer a great deal of experience and insight, plus the ability to help push this business. Fleet already has a strong reputation for quality and service, and the team that’s been assembled is second to none. I’m excited to be working here and dealing with the large number of distribution partners we currently have. This is an exciting time for the business and there are plenty of opportunities to explore.”