Well, it’s May and before we know it, the first half of the year will be over.
It’s times like these – usually late at night, like at the time of writing – that we tend to take stock and review where we are in this amazing industry.
There really hasn’t been a clear year since the 2016 Brexit vote was just a normal, cold year. Brexit spawned the pandemic and the pandemic spawned a cost of living crisis, which spawned the tragic events in Ukraine which, sadly, seem far from over unless a wrench falls on your head of Putin to make sense of it.
Bojo released the latest housing-related idea
Next year, maybe, we’ll avoid feast and famine and have some semblance of “normality” — though, to be honest, I’ve forgotten what that looks like.
As always, however, we’re an incredibly resilient group, which shows that a little determination and a determination to look after our customers can get us through just about anything.
These days, to get an idea of any potential problems, it’s worth watching some of the smaller, specialist lenders that rely on the securitization market, and Molo Finance was the one that suffered this time.
Due to rising inflation and rising interest rates hitting financing costs, she suddenly stopped all lending. It is a rare event. It has canceled all applications if borrowers don’t have an offer, postponed completion dates, and is trying to change all terms from those already on offer if they still want to go ahead!
It’s not just property values and interest rates that have gone up, but also rental prices.
My thoughts are of course with the good people out there who had no control over this, but for those in control this is no way to do business, especially when we find out in the press. There should be a way to honor what was agreed upon, at the very least.
Right to buy – again
Meanwhile, pretender Prime Minister Bojo has released the latest housing-related idea that he thinks will get him lots of votes, borrowing from Thatcher’s spirit with a new right to buy revolution.
This time it is aimed at all those who rent through housing associations, around 2.5 million households, who could benefit from a discount of up to 70%, even if the figures are not confirmed.
While this may help some borrowers, there are serious questions about whether even a steep discount would be enough for many to take advantage. And, perhaps more importantly, what happens to the product?
They must be reinvested directly in housing, otherwise there will be an even greater shortage of social housing, where there is already only skin and bones.
We haven’t been able to get rates back to “normal levels” since 2008. Maybe without the pandemic we would have been at 2.5% now
This appears to be another short-sighted policy that is designed more to grab headlines than to tackle deep-rooted problems in the housing market.
I repeat, ad nauseam: the housing market has been on the long road to ruin for decades, and this is a call for a long-term housing czar leading a cross-party committee developing a strategy to long term, and is not changed by successive governments or by the whim of the last housing minister 15 minutes into the job by accident trying to slide up the greasy pole.
On a positive note, the Building Safety Bill is progressing through the legislative process. According to a government spokesperson, this means: “Tenants will for the first time be legally protected from the cost of repairing historic security flaws, as building owners will not be able to pass on these bills to them.”
Many more clarifications are needed and builders need to comply with them, but it seems like a step in the right direction.
In money markets, the three-month Sonia is still floating in the dawn, up 0.18% to 1.23%, and swap rates continue to learn to fly, with the famous “inverted yield curve ” always present.
From the previous column:
2-year silver is up 0.11% to 2.20%
3-year silver is up 0.09% to 2.19%
5-year silver is up 0.08% to 2.07%
10-year silver is up 0.13% to 1.90%
As for mortgage rates, the cost of fixed rates has continued to rise over the past few weeks, with Moneyfacts reporting that average prices have risen across all fixes and loan-to-value ranges, with some lenders raising rates up to to 0.5% in one shot.
We don’t know where the current rate hike environment will end, although even the Chancellor has hinted that seeing the Bank’s base rate at 2.5% over the next 12 months is a reasonable expectation.
Seems like a big leap but, due to all the problems we’ve had over the years – as discussed in the introduction – we haven’t been able to get rates back to “normal levels” since 2008. Maybe without the pandemic we would have been at 2.5% now.
This is a call for a long-term housing czar who leads a cross-party committee that develops a long-term strategy
There are, of course, many institutions and savers who want and respond better to higher rates, and rates should not remain artificially low forever. But, again, something could stand in the way of that: a war in Europe and a cost of living crisis. If that starts to slow things down, competition among lenders will become more intense again and rate hikes may have to slow.
According to the latest Goodlord Rental Index, it’s not just property values and interest rates that have gone up, but also rental prices. All regions saw growth in April, but interestingly, research found there was also a corresponding increase in tenant wages.
concrete and gold
There has been a handful of concrete and gold among lender changes, with Santander changing its buy-to-let (BTL) and residential affordability rates to reflect base rate changes. NatWest has increased its refund to first-time buyers from £750 to £1,000 on certain rates, and Accord has reduced BTL interest coverage calculations for owners taking out a similar mortgage.
The Mortgage Works has increased the maximum LTV on new build apartments to 75% LTV, while charming Kent Reliance has a new 90% LTV product for the right applicant with no maximum loan amount.
Following the green agenda, it was good to see Tandem Bank launch a second mortgage feature which will offer a ‘green discount’ on new second mortgage loans, operated under its Oplo brand. This offers a tariff reduction of up to 0.5% for new customers with an energy performance certificate A, B or C.
Seems like another short-sighted policy that’s designed more for the headlines
Finally, it was exciting to hear about the plans for the next Ukraine Aid on June 30, featuring many big bands and talents from the industry, kudos to Kevin Duffy for putting it all together.
As some of you know, music is my thing. So to celebrate this and pay homage to the late and great Taylor Hawkins, there are 20 Foo Fighter song titles on these pages. The first to send me an e-mail with each of them will receive a gift of a certain description.
Until next time, I remain your servant and your greatest support, forever.
My hero to zero
the best of you – working so hard for your clients in difficult conditions
FCA reports that lowest level of H2 complaints against FS companies since 2016 – hopefully they will continue to decline
the new right to buy regime – I’m not sure this is what the housing market needs
the final FCA fee consultation that increases unfounded charges on mortgage companies
Realtors who still insist buyers cannot secure a property with them unless they use their own brokers
What really makes me cringe?
Conversations with many brokerage firms and real estate agents today have shown that everyone faces a particular problem: completions seem to take longer. Some people’s “Pipeline Turn” has become more elongated, which is hard to get used to.
While this is partly due to more mortgages being done earlier or new builds taking longer to physically complete, it seems that part of the problem lies with the whole transfer process. property. We’ve been talking about it for years, with the technology being very slow to arrive and really make a difference.
Another problem is that lenders are continually lowering the cost in a bucket store “service”, so they can label the concept “legal free”. I wonder if lenders should bring them a razor and replace them with a nicer cashback.
The lender and broker are tarnished with poor service at this point in the process, and the wait times to get any type of update, or even just to be hung up on, are ridiculous. It seems like folly to expect something out of nothing.
Elsewhere, there are still too many couriers who write letters in pen and ink, then send them tied to Percy the Pigeon’s foot while they close for lunch and a little nap. In both cases, the notion of customer service escapes them.
Fortunately, there are excellent brokers out there who care about their clients and are happy to respond to brokers.
Meanwhile, technology is starting to make a difference, with some groups doing a great job fixing this part of the journey. I don’t want to wait my whole life for this to be fixed.