SmartSearch comments on former FBI official charged for sanction evasion

Following the news US prosecutors have charged a former top FBI official for allegedly trying to help a Russian oligarch get off a US sanctions list, Martin Cheek, managing director of SmartSearch: “If the allegations are true, this shocking case serves as a reminder to all regulated firms to remain vigilant in the ongoing fight against sanction evasion and money laundering. No matter a person’s position, profile or responsibilities, regulated firms must remember their legal duties and ensure each client follows the same robust compliance process. Otherwise, firms could be seen as enablers and face fines, investigations and even criminal prosecution.

“While Mr McGonigal entered a not guilty plea, US prosecutors allege the former FBI official, and an ex-Russian diplomat violated sanctions by agreeing to provide services to a Russian billionaire. They are reported to have used shell companies to send and receive payments from the billionaire. It’s a stark warning to those regulated firms who do not carry out vital UBO (Ultimate Beneficial Owner) checks as part of their due diligence. Without this, firms could easily get caught up in any criminal activity.

“Tools such as robust sanction screening, high risk country reporting and electronic verification (EV) must also remain essential parts of every firm’s compliance procedure. These powerful tools are only accessible as part of a wider digital compliance solution, providing firms with the visibility required in such a dynamic and changeable environment.”

Property sales start to freeze up in December

Property sales (non-seasonally adjusted) were down 1% during 2022, and down 3% between November and December, to 108,960. Sales have been steady, and remain above pre-pandemic levels (December was still 6.5% higher than December 2019), but December saw a fall.

HMRC published monthly property sales for December: Monthly property transactions completed in the UK with value of £40,000 or above – GOV.UK (www.gov.uk)

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown said: “Property sales started to freeze up in December, and we can expect a permafrost to descend for the rest of the winter. December is usually pretty deadly when it comes to sales, because it’s such a miserable time to move, but this December’s drop in sales is likely to herald the start of something more significant.

“Sales had been steady for a few months, and they remain above the level immediately before the pandemic. However, the drop we saw in December will not be the last. The RICS Residential Market Survey has charted six months of falling sales – since June – and has noted that ever since the autumn, the descent has picked up the pace.

“We know sales being agreed in the months following the mini-budget in late September were likely to be far lower, given the chaos it unleashed in the mortgage market and the enormous damage it did to buyer confidence. However, with the average sale taking around three and a half months to complete at the moment, we can expect this to start manifesting in January’s figures.

“From then onwards, we can expect a deep chill to settle into the market. The Building Societies’ Association saw confidence in buying a property hit an all-time low in September, and by December it had barely started to recover. Only 14% of people felt that it was a good time to buy, so we can expect buyers to sit on their hands, and transactions to ice over.”

Novatus Advisory bolsters leadership team with appointment of two senior hires

Novatus Advisory (Novatus), the risk, regulation and ESG consultancy and technology solution provider, today announced the appointment of two strategic senior hires, bolstering its leadership team to accelerate growth and maintain its existing practice of delivering excellent service. The hires bring a combined 45 years’ experience from across the financial services sector to the newly created roles and allow the firm to enter into the next phase of its business.

Will Basnett joins as Head of Advisory and will lead the consultancy practice. He has over 15 years of experience delivering transformational change for clients across the Financial Services industry and has led several of the highest profile programmes across the Asset & Wealth Management domain. Will has spent his career building high performing consulting teams, most recently at Alpha Financial Markets Consulting and previously Elixirr, IBM and KPMG. Will’s focus is to build out the existing advisory practice, scaling the service offering in line with industry change and client demand.

Richard Street joins as Chief Revenue Officer for Novatus Advisory’s RegTech division. With over 30 years of experience in financial services at Citi and RBC Investor & Treasury Service, he brings significant experience of setting strategy, delivering business growth and leading Client Sales teams. He has been at the forefront of technological advancement throughout his career, identifying and delivering technology solutions across the sector. Richard is tasked with growing Novatus Advisory’s RegTech business, driving the Transaction Reporting Analysis (“TRA”) Tool – the only platform to facilitate complete regulatory compliance for Transaction Reporting – into the industry.

The appointments follow investment from Maven Capital, announced in July 2022, to accelerate the already rapid growth of the firm and its RegTech platforms. In the past twelve months Novatus has doubled its headcount and plans to repeat this in the next year as it adds delivery capacity and expertise to the team.

Andrew Hedley, Partner and co-founder of Novatus says: “We are thrilled to add Will and Richard to the team. Both bring unique strengths and wealth of experience to the business to support our expanding team, and allow Novatus to continue delivering the best results for our clients. It is incredibly exciting to see the trajectory for Novatus, across both the advisory and RegTech divisions of our business.”

Matthew Ranson, Partner and co-founder of Novatus comments: “The past year has seen Novatus go from strength to strength, and I am delighted to see our business evolve. Our partnership with Maven and influx of skills to the team will enable the continued growth and evolution of the company. Our ambition is to be the market leading advisory and RegTech firm.”

Comment on HMRC monthly property transactions

Following this morning’s release of the HMRC monthly property transactions, Simon Webb, managing director of capital markets and finance at LiveMore, said: “Housing transactions dipped in December from the previous month but 2022 saw a relatively strong housing market with an estimated 1,258,090 homes being bought.

“The December housing transactions will be completions from buyers putting offers in at least three months ago, in most cases, before the mini-Budget last September caused some panic in the housing and mortgage markets.

“But transactions are now starting to slow and I expect for the early months of 2023 numbers will be lower as people were putting buying and selling plans on hold in the last quarter of 2022. A combination of potential recession, high inflation and cost of living plus higher mortgage rates, although they have been coming down, brings uncertainty into people’s minds.”

Link to HMRC data https://www.gov.uk/government/statistics/monthly-property-transactions-completed-in-the-uk-with-value-40000-or-above/uk-monthly-property-transactions-commentary

Comment: HMRC property transactions

Following this morning’s property transactions announcement from HMRC, Karl Wilkinson, CEO at Access Financial Services said: “This morning’s housing transactions figures suggest that Q4 2022 was more robust than the doomsayers predicted. Despite rising mortgage rates, and energy cost concerns, consumers were still ready to borrow.

“The cost-of-living crisis will certainly play its part in where we go from here. Advisers must focus on providing knowledge and support to those looking to move or remortgage, including the reported 1.5million people due to come off fixed-term mortgages this year. We are not out of the woods, advisers must be ready to respond to demand and provide much needed professional support and advice.”

Might we see a traditional post-Christmas pick up? – Comment on the HMRC property transactions for December

Following the latest property transaction figures from HMRC, Adam Oldfield, chief revenue officer at Phoebus Software, says “Although no-one will be surprised by the dip in residential transactions in December, that dip is really quite small and the current number is still above pre-pandemic levels.  This is an encouraging sign that, despite the knock in confidence in September, the housing market continues to move along.  Although at a slower pace.

“As predictions abound for 2023, and with conflicting reports regarding the number of buyers registering interest this month, it is perhaps inevitable that some of those predictions err on the negative side.  Nonetheless, there are signs that confidence is returning and, while fuel prices continue to fall and inflation steadies, might we see a traditional post-Christmas pick up in transactions in the first quarter?”

FICO UK Credit Card Market Report: November 2022

FICO’s latest report of UK card trends — for November 2022 — suggests that consumers managed their credit card debt to keep lines of credit open for the festive season as spend increased month on month. However, a continuing trend in those missing two or three payments will be a concern for lenders.

Highlights

  • Average total sales in November reversed the downward trend seen over the previous few months, to be 1.9 percent higher than October 2022 at £755
  • The percentage of payments to balance dropped by 2.8 percent in November, suggesting continued pressure on disposable income
  • Accounts missing one payment dropped by 4.2 percent
  • Year-on-year there were 14.8 percent more accounts with two missed payments and 10.3 percent more accounts with three missed payments
  • The reliance on credit cards for cash withdrawals dropped, month-on-month, by 10.4 percent

FICO comment

Analysis of the largest consortium of UK cards data shows that November was a mixed story when it came to credit card spend and debt management. On one hand, typical festive spending was evident; but there were also signs that those already struggling to manage financial commitments were further stressed.

The percentage of cardholders missing one payment decreased for the second month in a row, although it is 9 percent higher than 2021. But there has also been an increasing trend since May 2022 for customers missing two payments and since June 2022 for those missing three payments.

Year on year the trend will also be a concern to lenders, with a 14.8 percent increase for those missing two payments since November 2021. This is likely to be driven by a combination of the exhaustion of savings built up during the pandemic, increasing interest rates and continued high levels of inflation. Going back to November 2019 — pre-pandemic — the percentage of customers missing one, two and three payments was higher than it is now. However, it is important to note that the average balance of two and three missed payments was lower three years ago.

Another sign of financial pressure is the percentage of payments to balance. This dropped again in November by 2.8 percent to 39.3 percent, and is down 1.5 percent year on year. This measure is expected to keep dropping as consumers’ savings reduce and cost-of-living pressures are expected to continue well into 2023.

The Data Charts

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Lenders can use segmentation analysis on their portfolios to ensure that their web and mobile applications encourage consumers in distress to make contact at the first indications of difficulty, and to consider establishing special payment plans for those struggling to stay on top.

Rental yields up in majority of regions, reveals Fleet Mortgages’ Q4 2022 Rental Barometer

Fleet Mortgages, the buy-to-let specialist lender, has today (23rd January 2023) released the latest iteration of its Buy-to-Let Rental Barometer covering Q4 2022 rental yields across England and Wales.

The regional snapshot covers all areas of England and Wales in which Fleet lends and highlights the rental yield changes that have occurred in each of those regions. In this iteration, the yearly comparison is between Q4 2022 and Q4 2021.

Average Rental Yields y/y change
Region 2021 Q4 2022 Q4
North East 8.2% 8.0% -0.2%
North West 7.2% 7.2% 0%
Yorkshire and Humberside 6.9% 7.1% 0.2%
East Midlands 6.3% 6.7% 0.4%
South West 5.8% 6.4% 0.6%
Wales 6.2% 6.3% 0.1%
West Midlands 6.7% 5.5% -1.2%
South East 5.2% 5.5% 0.3%
East Anglia 5.3% 5.3% 0%
Greater London 4.5% 5.2% 0.7%
England & Wales (Total) 5.9% 6.2% 0.3%

Across England & Wales the Barometer shows both an annual and quarterly increase in rental yields, up from 5.9%% a year ago, and 5.4% in Q3 2022 to 6.2%.

Fleet said this reflected increased rental yields in six out of 10 regions, with two others maintaining their yields of a year ago, and eight of 10 regions showing a quarterly increase. Only Wales and the West Midlands had not improved on their yields of Q3 last year.

The North East of England retains its top regional rental yield figure for the tenth consecutive quarter, showing only a slight 0.2% drop compared to a year ago, while the North West and Yorkshire and Humberside move back into the top three. Apart from the North East, the only other region to post a drop in annual yields was in the West Midlands.

Fleet said a continued shortage of private rental sector (PRS) supply, set against the backdrop of significant tenant demand, was driving rents higher, with landlords having to factor in higher mortgage costs.

The lender said while buy-to-let mortgage rates had continued to track lower in recent weeks, remortgaging landlords were likely to be paying more for their finance and this was likely to translate into the need for higher rents in order to cover these increases.

Fleet said yields could therefore fall back slightly but would remain strong because of the supply-demand imbalance in the PRS which was unlikely to be resolved in the short- or medium-term.

Steve Cox, Chief Commercial Officer at Fleet Mortgages, commented: “For the first time in well over a year we can see the vast majority of regions in England and Wales returning a significant annual and quarterly increase in rental yield levels, set against the backdrop of a PRS which is woefully short of the supply required to meet tenant demand.

“Yields are strong right across the board with those in the North continuing to lead the way, while we have even seen increases in Greater London, which has tended to move in the other direction in the last few years.

“This will be positive news for landlords, and we hope will give renewed confidence to them that – should they be able to make the numbers work – there is a well of tenant demand to be accessed and yields to be achieved.

“However, the supply-demand imbalance in the PRS will have been exacerbated by the fallout from the ‘Mini Budget’, and the higher rates it brought in, although we are pleased to see buy-to-let mortgage rates have been on a downward trend in recent months, and Fleet has been able to cut our pricing in recent weeks.

“The cost of mortgage finance has still increased over the period though, and this may well have resulted in a number of landlords – particularly those with just one or two properties – deciding to sell up.

“It all adds up to a situation where some landlords are being forced to leave, some landlords are contemplating their future against a backdrop of increased costs, some landlords want to buy but supply of homes to purchase is low, and where overall there is clearly not enough properties for the tenant demand that exists and is growing.

“There is good news in the form of a lender community with a strong appetite to lend, however we may well need the Government to look again at its policies which are continuing to impact on landlords and their ability to provide the PRS homes the country so desperately needs.”

High cost of living forces one in six over-50s to cash in on homes

One in six of the UK’s over-50s are so impacted by the cost-of-living crisis they will need to either sell or release equity from their homes to give them more cash to live on.

These findings come from the LiveMore Barometer, a detailed indicator of the financial priorities of the UK’s 50-90+ year-olds.

The survey found that nearly half of them will be impacted “a lot” this year by the financial crisis. Raising more cash to live on by downsizing or releasing equity was the top financial priority for 15 per cent of respondents. But amongst the 80-89 age bracket, this goes up to 27 per cent.

The findings also showed that the majority blame the Government for their predicament, with half of them saying they feel “very negative” about the state of the economy. Almost three quarters said they are not getting enough financial support from Whitehall.

Within the regions, the North East, Northern Ireland and Scotland saw the 50-90 year-olds with the highest levels of dissatisfaction at the Government’s financial help.

LiveMore’s chief executive officer Leon Diamond said: “People aged 50 to 90+ are often portrayed as being financially comfortable but the LiveMore Barometer reveals that the truth is far more complex – not just across the different age ranges but geographically too.

“The reality is that our survey shows because of the cost-of-living crisis, many aged 50-90+ will have to make major financial decisions this year about what is often their greatest financial asset, their homes.

“We are conditioned to avoid debt in older age, a concern which is exacerbated by high street banks making it difficult for older people to borrow.

“It is imperative that those seeking to release or generate extra cash get the right financial advice. There are flexible and affordable lending options for 50-90+ year-olds. For example, LiveMore’s oldest borrower is 92.”

Zephyr Homeloans announces tracker mortgage product range

Zephyr Homeloans, the specialist buy-to-let (BTL) mortgage provider, has announced a range of tracker mortgage products.

The lender said that it is offering: 6.20% (BBR + 2.70%) on a lifetime tracker standard buy-to-let mortgage product at 65% loan to value (LTV) for properties with an A to C-rated energy performance certificate (EPC) and 6.30% (BBR + 2.80%) on properties with an EPC rating of D or E.

Both offers include new builds and standard flats above commercial properties.

Zephyr is also offering 6.40% (BBR + 2.90%) on a lifetime tracker mortgage product at 65% LTV for houses of multiple occupancy and multi-unit freehold properties with an A to C EPC rating and 6.50% (BBR + 3.0%) on properties with an EPC rating of D or E.

Paul Fryers, Managing Director at Zephyr Homeloans said: “By introducing tracker functionality into our mortgage product range we are providing brokers with additional tools to support their BTL landlord customers who want flexible options.”

Zephyr also said that the lifetime tracker does not include early redemption penalties.