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.”

TransUnion Announces Agreement to Sell Noddle Business to Credit Karma

TransUnion, the global risk and information solutions provider, has announced today an agreement to sell its Noddle business, the UK-based free-for-life credit reporting and monitoring service, to Credit Karma. TransUnion acquired Noddle earlier this year as part of its acquisition of Callcredit, the second largest credit reference agency in the UK.

“TransUnion is excited to bring these companies together,” said John Danaher, TransUnion’s president of consumer interactive. “Noddle and Credit Karma are well-matched, both embracing a ‘consumer-first’ approach to offering free information monitoring and financial health solutions. We are confident the business will continue to thrive under its new ownership and that this divestiture is a positive move for all parties, including UK consumers.”

Credit Karma is a personal finance technology company with more than 85 million members in North America, including almost half of all millennials. The company offers a range of personal information monitoring, as well as financial health improvement products that are free for members. Credit Karma’s tremendous growth in the US and Canada has been largely through offering award-winning user experience and free access to actionable tools that help their members make the most of their money.

“Our mission is to help people make financial progress, and that extends beyond North America,” said Kenneth Lin, CEO and founder of Credit Karma. “For over a decade, we’ve enabled our members in the US and Canada to take control of their finances by giving them free access to their financial information. We’re confident the acquisition of Noddle will help us deliver on our mission in the UK and welcome the opportunity to expand our partnership with TransUnion globally.”

Once the acquisition is complete, TransUnion will continue to supply Credit Karma’s members with complete access to all of their credit reports and scores. TransUnion and Credit Karma are already partners in the US and Canada, with a relationship that spans more than a decade.

Advisers urged to help landlords with potential fallout HMO licensing changes

Advisers have been urged to help those landlords who may be receiving letters from lenders about their mortgages, following the recent changes to the HMO licensing requirements which are thought to mean a further 177,000 properties now require a HMO license.

Speaking at today’s FSE Midlands, the premier exhibition for the financial services industry which is taking place today at the Ricoh Arena in Coventry, both David Whittaker (Keystone Property Finance) and Adrian Moloney (OneSavings Bank) highlighted how some landlords were already receiving letters from their buy-to-let lenders regarding properties which may now require a license.

They outlined that the original mortgage would not have been granted on a HMO property and landlords in such a position have received letters which tell them to revert the property back to a single let or pay back the loan.

One FSE Midlands broker delegate said a number of her clients had received letters from “one of the two big ‘mainstream’ buy-to-let lenders” even though they had made no changes to the property and it has been a Government decision to change the licensing requirements.

Both Whittaker and Moloney suggested this was increasingly happening and that advisers would potentially need to find new mortgages for their landlord borrowers in such a position.

Whittaker bemoaned those lenders who were sending such letters, saying: “Landlords are punch-drunk from the regulatory changes of the last few years. This is the law of unintended consequences in full effect and you would expect some common sense from lenders. Lenders should say that, as long as there are no changes to the property or that the landlord doesn’t want a further advance, that they can keep the loan.”

Advisers were also warned that the recent changes meant that buy-to-let was no longer a transactional undertaking. “Advisers have to move to a new place with buy-to-let from transactional to advisory,” said Whittaker. “Next year on the 23rd January 2019 when landlords file their tax returns, it will be the first year of a four-year wake-up call. This is when they will need you; you have to help your landlords to the other side.”

Both Moloney and Whittaker were not surprised by this week’s Budget which did not introduce any landlord-supporting measures, such as rolling back extra stamp duty charges or a u-turn on the cuts to mortgage interest tax relief.

“Hammond is not called ‘Spreadsheet Phil’ for nothing,” said Whittaker. “He was never going to take them away. The best was that he would damn well leave it alone. Let’s be honest, he didn’t have much room to do anything in our world.”

Prior to the Budget there was a suggestion that landlords might be able to get CGT relief if they sold their properties to long-standing tenants. Both Whittaker and Moloney were not surprised that this didn’t make the Budget. “It was never going to fly,” said Whittaker. “Anything that would line the pockets of landlords is not going to happen. HMRC and the Chancellor see the landlord community as a group that traditionally hasn’t paid its wedge. Landlords do not draw any empathy in the corridors of Whitehall.”

Moloney expressed scepticism that any such policy would work in the first place. “If your investment is good why would you get rid of it?” he asked. “Sales of property investments have not been really picked up in the main by first-time buyers anyway, they’ve been picked up by other landlords.”

Looking ahead to 2019, Moloney was positive about the opportunities for advisers in the buy-to-let space. “Remortgage has been the mainstay of the market for some time and has definitely benefited this year from a roll-off in two-year money,” he said.” Next year is a great year of opportunity because it will begin to bite people in the pocket.”

Whittaker agreed but warned advisers to be aware that an increase in five-year remortgage deals could impact on business levels. “Those who would normally be on two-year deals may now be on five years,” he said. “And so you won’t be having that remortgage conversation for another 36 months, so it’s important that you should look at your business modelling because of this.”

FCA’s mortgage market study final report due Spring 2019

The industry should not expect the FCA’s Mortgages Market Study Final Report and recommendations until Spring 2019 at the earliest.

That was the view of a panel of mortgage experts who were taking part in ‘The Big Mortgage Panel’ debate which took place at today’s FSE Midlands event, the premier exhibition for the financial services industry, which is taking place at the Ricoh Arena in Coventry.

Robert Sinclair of the Association of Mortgage Intermediaries (AMI), who is sitting on two working groups related to the regulator’s Mortgages Market Study Interim Report, said that the Final Report and recommendations were not anticipated to be published until just before the “regulator’s year end”, at the end of March 2019.

Martin Reynolds of Simplybiz said: “I think the regulator is still conferring on all the, shall we say, vociferous responses it received in relation to the Interim Report, so it’s not anticipated until the Spring.”

Sinclair did give some further information however on a potential ‘adviser comparison’ and ‘consumer eligibility’ tool – both of which were measures announced in the Interim Report.

“It is a little perverse that the FCA wants to build a new tool for the regulation of firms, and then a form of register to put advisers on,” he said. “Which they’ve paid £200k to someone not to do it themselves and they’re also looking to build a separate mortgage adviser tool.”

He added: “The good news for advisers is that all the trade bodies are in the room when this is being discussed because sometimes when regulators get involved in this type of thing, it can turn out to be a crock of shit. And there is no lack of consensus from your representative bodies on these issues. We are all very aligned on what we’re saying to the regulator on this. ”

Sinclair was however keen to stress that there could be some major benefits for advisers. He said: “There are opportunities with both of these tools, in terms of how advisers engage with lenders, and how consumers find the right advisers with the right skills and the right services.”

Government ‘Breathing Space’ plans – comment

Commenting on the news that the Government has launched a consultation on introducing a “breathing space” for indebted individuals, Stuart Frith, President of insolvency and restructuring trade body R3, says: “R3 welcomed the Government’s plans for a ‘breathing space’ for indebted individuals, during which they will have an opportunity to seek advice about their finances from a qualified and professional source.

“We believe that a properly-implemented breathing space could be an effective method to relieve financial pressure from many indebted individuals across Northern Ireland, England and Wales. R3 is concerned that, at present, those in financial distress do not always opt for the most appropriate solution for their particular needs or indeed take any opportunity to seek proper advice at all. This could be due to poor or incomplete debt advice from an unprofessional source, or because either creditor pressure or an individual’s distress regarding their situation leads them to accept the first option presented, when it may not be the best for their particular circumstances.

“The change in the length of the proposed breathing space – from six weeks to 60 days – is, however, one we view with some concern. There has long been a debate about the most appropriate length of time for the respite period to run, but it is important to keep in mind that a breathing space period is not a debt solution. There are already a number of effective solutions available to an indebted individual; the breathing space is there to give people time to consider their situation and decide on the particular solution which works best for them. In other words it should be a means to an end and the duration of the breathing space should be tailored accordingly.

“Any breathing space needs to strike a balance between providing protection for potentially vulnerable indebted individuals on the one hand, while, on the other, still maintaining the fundamental principle of repaying debts. Finding this balance is vital, as a notably long period free from any creditor action could risk causing lenders to tighten their initial lending criteria, which would restrict access to and increase the cost of credit.

“R3 believes that an extension to the breathing space period should be available to particularly vulnerable individuals, if deemed absolutely necessary by the regulated adviser overseeing the breathing space. However, it is important to note that only one breathing space period should be available to an individual within a 12 month period, to ensure the scheme is not abused as a means to avoid paying debt. As well as this, the individual should not currently be part of a formal insolvency procedure, and have not been part of such a procedure in the preceding 12 months.

“The Government has also set out more detail about the possible introduction of a statutory debt repayment plan, under which someone in problem debt would formally agree a repayment plan with their creditors over a certain time period. There is less evidence to support the case for a debt repayment plan than there is for the breathing space, so we would urge caution here.

“We will do our utmost to work with the Government to further the breathing space proposals, and to find a framework which works for all parties involved, ensuring that creditors’ rights are not unfairly impaired while also allowing indebted individuals an opportunity to get the best possible advice and help for their situations.”

TransUnion responds to the Autumn Budget and what it means to lenders

George Robbins, director of financial services at TransUnion (formerly Callcredit) responds to the Autumn Budget: “While the Autumn Budget revealed government borrowing was on a downward trend, which should be commended, the chancellor failed to discuss how years of austerity have seen UK consumer debt on the rise. This year it increased to £200bn, made up of car finance, personal loans and credit cards, and despite recent Bank of England figures showing a slow in consumer borrowing last month – and Philip Hammond’s assurance that the era of austerity is over – the extent of current consumer borrowing means responsible lending must remain firmly in the spotlight.

“To protect consumers, and themselves, all lenders need to ensure they are using robust data to assess a borrower’s affordability and to avoid the dangers that can arise from an increase in consumer debt. Ultimately, lenders need to understand the whole financial picture of their customers, so they can make an accurate risk assessment, and ensure customers aren’t borrowing beyond their means.”

Bankruptcies expected to continue rising

The number of people being declared bankrupt is expected to increase throughout the rest of 2018 in England and Wales, top 20 UK business services firm Wilkins Kennedy has warned.

The latest Insolvency Statistics published for Q3 from July to September 2018 reveal bankruptcies increased by 1.7% this quarter which was a rise of 12% on the same period last year in England and Wales.

Insolvency expert Louise Brittain, Partner and Head of Contentious Insolvency at Wilkins Kennedy – which has 18 offices throughout the South East of England – said: “Usually, people will choose to enter Individual Voluntary Arrangements but the figures show that has been replaced by bankruptcy.

“People are choosing to voluntarily write off their debts to go into bankruptcy or their creditors are making them bankrupt.

“It is interesting that there has been an increase in the rate in personal insolvency from 2016 (18.8%) to 2018 (22.7%) which has been steadily growing over the last two years and I expect this to continue as mortgage rate rises continue to increase and unsecured debt increases.

“The most interesting figure is that individual voluntary arrangements have declined significantly from 17,813 on the same quarter last year to 15,845, this year meaning people are choosing not to propose a long pay back period for their debt, creditors are tightening the requirements of these arrangements and as a result, people are choosing the one-year process of bankruptcy as opposed to the three-to-five year process of an individual voluntary arrangement.

“Debt Relief Orders where debt is underwritten under £20,000 has increased by 11% this quarter so more people with more debt are choosing to go bankrupt rather than going down the route of Individual Voluntary Arrangements.

“There has also been a decrease in company voluntary liquidations of 27% and a big increase of 26% in businesses going into administration because I think business owners are letting their companies be wound up or their business be struck off.”

Louise also criticised the Government for the “draconian measures” introduced in this week’s Budget which favour the HMRC rather than businesses.

She said: “There are a couple of draconian measures that have been brought in to make sure HMRC is treated more preferentially than other creditors in insolvency situations.

“This budget has given the HMRC preferential status again in insolvencies which had been abolished in The Insolvency (Amendment) Rules in 2010 but it has now been brought it back in.

“That means the HMRC is paid first in insolvencies which will have a massive impact because many suppliers will now receive absolutely nothing.

“It is going to make it very, very difficult for small businesses and start-ups to borrow any money that isn’t secured by directors’ personal guarantee particularly where they don’t have tangible assets worth securing.

“The other measure introduced is that HMRC will now make company directors personally liable automatically if they start another business leaving behind an HMRC claim. That is a very concerning situation because the HMRC can now bring claims against directors direct without any involvement of the Courts.”