Paradigm add Masthaven Bank to lender panel

Paradigm Mortgage Services, the mortgage services proposition, has today (26th July 2018) added Masthaven Bank to its lender panel.

From today, Paradigm member firms will be able to access Masthaven’s range of first and second-charge mortgage products with an array of unique criteria for both mainstream and specialist borrowers.

Masthaven’s first-charge mortgage products are offered up to 80% LTV with rates from 2.94% on a repayment basis, with both interest-only and part and part mortgages available up to 60% LTV.

The second-charge range is available up to 75% LTV with rates from 3.84%; Masthaven’s second-charge buy-to-let products are available up to 75% LTV.

The lender is particularly active in the specialist market offering loans to both the self-employed – for those who have 18 months’ trading although it will consider projections if the individual is nine months into their current trading period and have two years’ finalised – and contractors who have three months in a role.

It also lends to those with some adverse credit allowing CCJs and defaults under £300 or over 36 months, while recent CCJs/defaults and missed mortgage payments may also be considered.

Masthaven prides itself on its credit flexibility and does not credit score providing advisers with an avenue to explore for all those borrowers who may not fit the mainstream criteria.

John Coffield, Head of Paradigm Mortgage Services, commented: “The number of quality challenger banks and mortgage lenders operating in the marketplace has grown significantly in recent years and the latest UK Finance lending figures shows the strides that many are making. Masthaven Bank is certainly one of those institutions and its commitment to all parts of the mortgage market, not just the mainstream, is evident in its product range and criteria. We feel certain that many Paradigm firms will have clients who will benefit from the lack of credit scoring and the significant flexibility that it offers. We look forward to working with the Masthaven team and introducing them and their range to our members.”

Matt Andrews, Managing Director of Mortgages, Masthaven, said: “Masthaven is working with Paradigm and its mortgage intermediaries as part of our mission to make the specialist market more accessible for brokers and customers alike. Distribution partnerships such as this one are vital to this effort. Masthaven products are designed for customers that don’t fit the traditional high-street ‘cookie cutter’ approach. Paradigm is a leading mortgage distributor with strong expertise in the specialist market, and we’re confident that Paradigm’s DA firms will be able to find the answers to their customer needs.”

Treasury Select Committee report places household finances higher on the agenda

The Treasury Select Committee has today published the report of its inquiry into household finances.

Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline, commented: “The Treasury Select Committee has done a good job of putting the issue of household finances high on the agenda in Westminster, where it belongs.

“This report contains welcome calls to action across a range of really important issues affecting households in financial difficulty – including the need to increase the supply of free debt advice, improve debt collection practices across the public sector and expand access to affordable credit.

“The Committee is right to highlight the worrying gap between supply and demand for free debt advice – and with demand only set to rise, we are pleased to see a strong recommendation for the government and Single Financial Guidance Body to consider how this challenge can be met.

“The report’s recommendations on improving public sector debt collection practices, making the forthcoming Breathing Space scheme more effective and supporting the credit union sector are particularly welcome. Taken together with the FCA’s work on consumer credit, these actions would make a significant contribution to the fight against problem debt in the UK.”

Households need to prepare now for the ‘new normal’ of higher interest rates

The Bank of England Monetary Policy Committee has today voted to increase interest rates to 0.75 percent, its highest level since 2009.

Jane Tully, director of external affairs at the Money Advice Trust, the charity that runs National Debtline, said: “Households need to prepare now for what could be the ‘new normal’ of higher interest rates in the coming years.

“Today’s small rate rise will not on its own cause problems for the majority of people, and with most mortgages on fixed rates the full impact on household finances will not be felt immediately. However, we know that even a small increase in costs can be all it takes to push some households with already stretched budgets in to difficulty.

“For the first time in nearly 30 years, UK households are now spending more than they have coming in. Combined with slow wage growth and increasing living costs, interest rate rises like today’s will add to the challenges facing the many people already struggling.

“With advice agencies continuing to experience high levels of demand for their services, it is crucial that lenders, government and the advice sector work together to make sure people affected receive the support they need.”

Interest rate rise to adds nearly £400 a year to mortgage bills

Homeowners could see their mortgage bills rise by around £400 a year following the Bank of England’s decision to raise interest rates, new analysis from Experian reveals.

The BoE’s Monetary Committee announced today it was hiking Base Rate to 0.75%, the first rise since last November.

The 0.25% rise will see those on Standard Variable Rate (SVR) and tracker mortgages pay around £400 a year extra.

A typical standard variable rate deal with a rate of 3.99%, sees borrowers repay £1,513.63 each month, based on a 20-year mortgage worth £250,000.

But a rate rise of 0.25% to 4.24% would push those payments up to £1,546.64, an increase of £33.01 a month or £396.12 a year.

A tracker mortgage 2% above Base Rate, rising to 2.75%, would see monthly payments rise from £1,324.76 to £1,355.30. That’s a monthly rise of £30.54 a month – or £366.48 a year.

Analysis of the latest data from Experian’s mortgage comparison service shows a jump in consumers shopping for fixed-term deals.

A third (33%) of searches carried out in July were for fixed-term deals, up from 27% in June and 24% in May.

The trend suggests that potential homeowners have been looking to tie themselves in to a fixed deal to protect themselves from an increase in interest rates and mortgage payments.

Amir Goshtai, Managing Director, Experian Marketplace & Affinity, said: “The rise in consumers looking at fixed-term mortgages indicates people have been reacting to the speculation of a potential rate rise.

“If and when there are further rises is yet to be seen, but in the meantime a priority for homeowners should be to take some simple steps to minimise the future impact on them.

“Getting on top of their financial position, doing some detailed budgeting and understanding their credit score will help them prepare for further rate changes.”

Tips to remain in control of an interest rate hike as a homeowner:

Use a mortgage calculator to see how a rate rise will impact your finances, before you decide what action to take

Compare mortgage products to find the best deal for you and speak to a mortgage broker for more info

Check your credit score before you apply for a new mortgage and allow plenty of time to manage and improve it. This could save you money and improve your chances of getting the best deals you’re more eligible for.

Review your spending and make sure you’re planning ahead for both immediate and future interest rises

Beverley acts to boost returns to savers

Beverley Building Society is today announcing a 0.25% increase across all of its personal savings accounts to help boost savings returns across the region and beyond.

The new rates will come into effect from 28 August.

Following hot on the heels of a rise for business savers in July, it means that all of the Beverley’s savers will receive a timely boost to their returns.

Chief Executive Karl Elliott said: “Helping our members build better futures is why we exist and so we are delighted to be able to announce some positive news for our loyal savers, who are the bedrock of our Society.

“We always seek to offer long term value to our savers and ensure that the interest rates we pay represent a consistently fair return.

These changes are a timely boost for our savings members across East Yorkshire and beyond and we hope that they may also give people an added incentive to think more about saving for the future.”

Interest rate rise heaps further pressure on those living in debt

Following the Bank of England’s decision to raise interest rates, Richard Haymes, Head of Financial Difficulties at TDX Group, an Equifax company, explains what it means for people living in financial difficulty: “While an interest rate rise is positive news for people living on their savings income, or holding pensions and investments, it may prove to be the tipping point for those in financial difficulty or struggling with debt.

“Individual Voluntary Arrangements (IVAs) have reached record levels and we expect the rate of monthly IVAs and Trust Deeds to grow by around 17% this year. A rise in interest rates will make it much harder for people in these arrangements, and there’s a risk they’ll default on their strict requirements.

“A large portion of people who are in personal insolvency hold a mortgage (over a fifth according to personal insolvency practice Creditfix), and a rate rise will obviously increase their mortgage repayments. Due to these people’s unfavourable credit circumstances, it’s likely that majority of mortgage holders in insolvency are tied to variable mortgage products, leaving them particularly vulnerable to a higher interest environment.

“Holders of a £250,000 mortgage will have to absorb a monthly repayment increase of £31* as a result of this 0.25% hike. Modest as it may appear to many, for people in structured debt management plans or IVAs this could have a very significant impact, even resulting in their debt solution becoming defunct or in need of renegotiation.”

StepChange Debt Charity comment on Bank of England interest rate rise

StepChange Debt Charity urges policymakers to keep a close eye on the impact of higher rates on debt servicing costs, as even small changes can tip financially precarious households into difficulty.

Latest data from the Financial Conduct Authority (FCA) shows that 34% of total outstanding mortgage debt (by value) is held on variable rates – with the proportion of mortgage borrowers who have variable rate mortgages likely to be even higher than this. The FCA data shows that the average rate currently being paid by a variable rate mortgage holder is 2.9%. If this rose by a quarter of a percentage point to 3.15%, a mortgage holder with a £150,000 repayment mortgage would pay around £20 a month more.

Among those StepChange clients with a mortgage, a £23 a month increase would mean around 1 in 10 could no longer have a balanced budget or a monthly surplus, and would be pushed into a negative budget with more money going out than coming in.

Phil Andrew, Chief Executive at StepChange Debt Charity, says: “Whilst a rise in interest rates might be right for the wider economy, from a consumer debt perspective many households are walking a precarious budget tightrope, as their incomes don’t stretch to cover the basics each month. These are the households that a rate rise will affect most. Policymakers mustn’t lose sight of what a rate rise means for real people on a tight budget. The fact that the wider economy can cope doesn’t always mean individual households can. Government and policymakers need to take parallel steps to ensure support is there for those who are negatively affected, especially if more rate rises are coming.”

FCA, Assessing Credit Worthiness in Consumer Credit policy statement – Financial Technology firm, Certua responds

Following the release of the FCA, Assessing Credit Worthiness in Consumer Credit policy statement, Tom Williams, CEO of technology firm Certua, responds to the FCA Assessing Credit Worthiness in Consumer Credit: “With open banking, the availability of data and the developments in AI, the tide is turning – putting the power back in the hands of the consumer to decide how they want to consume financial products. The release of this paper further compounds the need for companies to utilise technology to augment the services they provide, allowing them to focus on their customers’ needs from a holistic point of view.

“The motivation of Financial Services should be focused on the benefit to the customer. With the technology now available companies have the tools to understand to a much higher degree the potential implications of how any product will affect an individual, not just from an immediate impact but from a long term point of view. As an industry we should be providing products that are personalised, dynamic and flex in line with customer need – never compromising an individual’s financial situation, from a point of much greater understanding of individual circumstances.

“We have been innovating with forward-thinking companies in the lending space, using our solutions to help provide increasingly personalised services and as an industry there has been a lot of appetite. Firms want to be able to provide the best services to their customers and we look forward to utilising our platform to continue to be instrumental in powering this change”

National Credit Regulator issues a public warning against fake loan scams

[JOHANNEBURG] The National Credit Regulator (NCR) has warned consumers to be wary of fake credit providers who attempt to entrap consumers in loan scams.

These scams typically target those who are in distressed financial circumstances and looking for a loan, using slogans such as “blacklisted” or “debt review clients welcome”, says Jacqueline Peters, Manager: Investigations and Enforcement at the NCR.

The increase in these types of scams comes at a time when credit approvals have decreased and consumers are finding themselves to be financially stretched. This is the time to be more vigilant as it is in the vulnerable times that we should make wise decisions. The National Credit Act prohibits all advertisements for credit from utilising these prohibited terms and consumers should avoid engaging with any credit provider who advertises in this manner, she added.

Below is general advise for consumers to avoid scams:

· Treat all unexpected calls, emails and sms messages with caution. Don’t assume they’re genuine, even if the person seems to know some basic information about you, such as your name;
· Look out for the name on all e-mails, in case it is a ‘clone company’ pretending to be a real credit provider.

· Do not pay any upfront fees to release your loans. The National Credit Act does not allow credit providers to request upfront payments for the release of a loan. If the credit provider makes this request, do not engage further, report to the relevant authorities such as the NCR or the SAPS;

· Be aware of platforms and hidden fees included for sourcing a loan;

· Don’t be pressured into acting quickly. A genuine credit provider won’t mind waiting if you want time to think and compare the costs of credit by using a quotation;

· Do not engage with credit providers who do not conduct affordability assessments. Furthermore, never give false or incorrect information on a credit application about your financial affairs. Always disclose your financial obligations and living expenses fully.

· Never borrow from an unregistered credit provider.

“If a proposal is too good to be true, it usually is”.

FLA comment on FCA’s final rules and guidance on assessing creditworthiness in consumer credit

Commenting on the publication of the Financial Conduct Authority’s (FCA) final rules and guidance on assessing creditworthiness in consumer credit, Fiona Hoyle, Head of Consumer and Mortgage Finance at the FLA, said: “Today’s policy statement will require careful reading but, at first glance, we are pleased that the FCA has listened to industry feedback on household income, and agrees that allowing only an individual’s income to be taken into account in lending decisions would have had an adverse impact on financial inclusion. We also welcome the FCA’s recognition that different approaches to affordability assessments are appropriate in different markets.”

“Responding to industry concerns, the FCA has also agreed to a longer implementation period for the new rules, which will give firms more time to make the necessary system changes.”