Last Thursday, Clydesdale launched a new product. Clydesdale will not call the plan a mates mortgage but this is certainly what the media is calling it, as noted in the FT Adviser.

This new product is aimed at the professional first time buyer and at new build properties in particular. The professional FTB product allows a higher loan value than the new build option. Loans of up to 90 percent are free of any further mortgage security costs.

With a two year fixed deal at 5.49 percent that later reverts to the Standard Variable Rate or a two year fixed 4.49 per cent deal reverting to an offset variable interest rate, the product allows up to a £500,000 loan value and both deals come with a £999 fee.

To qualify for the professional FTL option, a range of occupations are included, such as barrister, pilot, doctor, solicitor, vet, pharmacist and chartered surveyor.

Clydesdale representative, John Tooth, reportedly said the product launch was down to a requirement for higher LTV products for specific sectors and commented:

“With these new products, we are taking a first step to help meet that need.”

The mortgage plan aimed specifically at new build properties has been launched together with house building Persimmon, Taylor Wimpey and Barratt. The products are only available through selected mortgage broker panel members.

In their sixth year now, the awards celebrate industry excellence through the efforts and achievements of individuals.

Chris Shaw, Countrywide’s Chief Surveyor took the Best Surveyor award, having helped the firm grow from around 70 surveyors to over 350. Shaw commented:

“Whilst clearly delighted and flattered that my individual contribution found favour with the judging panel, this was very much an award for the whole team at Countywide Surveying Services.

“Up and down the country, both at individual surveyor level, regional offices and central customer services departments, we strive to consistently provide an excellent service and professional advice of the highest quality to our clients and I am proud that this service has been recognised.”

The Young Achiever Broker of the Year award went to a mortgage consultant from the Basildon branch of Bairstow Eves, Carrie Cotter. With no financial experience, Carrie took her CeMAP training and, with her CeMAP qualification, excelled enough to win top Mortgage Consultant. Carrie commented:

“I am absolutely delighted to win this award. Overall, my aim is to provide the very best advice and service to my clients.

“The training I have received at Countrywide and the support and guidance of my peers have put me in good stead to do this and progress in my career at Countrywide. This award is the icing on the cake on what has been an excellent three years for me.”

CeMAP

The Company

Points you should check about the company offering the course include things like how long they will allow you to do the course. If the firm doesn’t restrict the timescale, then this is great but the syllabus is updated twice a year – so will they update your materials for you if you wish?

Is there any support if you get stuck? Being home study, some firms offer none at all but the best will offer limited telephone or email support should you need it.

Yourself

The success rate of CeMAP distance learning courses – or any home study course – depends largely upon the individual.

Are you self-disciplined enough to make sure you study the materials even when life isn’t going so well? It becomes very difficult to maintain momentum if you have to keep taking week long breaks between study times.

Do you have a place at home or elsewhere where you can study in peace? If you’ll be studying at home, make sure you have the support of your family – especially if you have children; they need to understand that you need to study, even if it’s just for short periods at a time.

According to a survey conducted by The Mortgage Alliance, over 75% of intermediaries believe that rising inflation and an increase in the base interest rate will mean many homeowners rush to remortgage.

88% of the intermediaries believe the Bank of England (BOE) will increase its base rate in 2011. Looking at remortgage business, 44% of the brokers said the market had remained the same for the last six months and 41% thought it had grown.

64% of those who look after remortgages said they found fixed rate mortgage deals were more popular and gave better value for money for their clients.

Head of The Mortgage Alliance, Phil Whitehouse, commented:

“Directly authorised intermediaries feel the remortgage market has shown signs of life in recent months and will continue to grow, thanks to a number of market influences.

“It has been predicted that interest rates could rise as soon as May and, if this is the case, it will have a big effect on the remortgage market and the levels of remortgage business being written by intermediaries.”

There are of course some who disagree and feel the base rate will not increase significantly due to the continuing fragile economy. Whilst the base rate remains at record lows of 0.5%, many homeowners are taking full advantage and overpaying whilst they can. Of course, from here the only way is up and at some point it will start to move. It is down to the homeowners’ individual circumstances whether or not they are willing or able to take the risk of increases.

Chancellor of the Exchequer George Osborne started by saying a new shared equity scheme worth £250 million is to be set up. Named First Buy, the scheme will allow first time buyers purchasing a new build property to have an interest free loan. Osborne estimates this will help around 10,000 first time buyers onto the housing market.

Commenting on the First Buy scheme, Peter Williams the executive director of the IMLA (Intermediary Mortgage Lenders Association) stated the scheme should be:

“one of a number of mechanisms to help the mortgage and housing market”

The level of stamp duty exemption for the first time buyer stays at £250,000 for the time being – the Building Societies Association (BSA) had previously called for this to be made permanent but this has not come to fruition as yet.

The CML (Council of Mortgage Lenders) did welcome the news, although it added that more should still be done to help the first time buyer.

First time buyers will probably also benefit from the announced rise in the personal tax allowance.

With so many factors to take into consideration when looking at their first mortgage, any first time buyer would benefit greatly from the services of a mortgage advisor who can help them find the best mortgage deal for their circumstances.

The Barclays study, which surveyed 1000 borrowers, shows that approximately 85 percent of borrowers could shorten the length of their mortgage term if they paid just a little more than the minimum required of them.

A high number of borrowers currently on a tracker mortgage deal are enjoying lower mortgage repayments as the Bank of England’s Monetary Policy Committee continue to hold the interest base rate at its historic low of 0.5 percent.

The research showed that by making an overpayment of an additional £50 per month, over a 25 year average mortgage value of £150k would decrease the mortgage term by 28 months – more than two years.

Stretching this overpayment to £300 per month would save 9 years 7 months on a mortgage term (based on the same average £150k mortgage with a base rate + 2.49% interest rate).

Six percent of the survey respondents claimed they expected to begin overpaying later this year. 24 percent said they aimed to repay their mortgage earlier than the planned term and 56 percent expected to reduce their mortgage term to 15 years or even less.

Andy Gray is the Head of Mortgages at Barclays. He commented:

“Even with the reality that interest rates will start to rise at some point, many borrowers are likely to be able to afford a little more than they think.

“I’d urge all homeowners to review their current mortgage arrangements.”

However, it has been stressed that the C&G brand will stay open to customers applying directly.

The announcement, delivered today, will not affect the C&G savings business or any of its branches however, Lloyds has confirmed that around 570 positions will be made redundant group-wide due to a number of job-cutting measures being made on a wider scale.

The notice posted to intermediaries stated:

“There will be no impact on your clients’ existing mortgages or on any applications already submitted. Customers can continue to manage their accounts through our branch network and by telephone.”

Those who are just starting or in the process of taking out a C&G mortgage produce will receive a letter from the bank.

Any intermediaries will need to get their mortgage applications into C&G, in full, before the end of 31^st March for them to process the application.

From the 1^st April, the C&G intermediary website will still be open, complete with contact details and any key forms, but the application caseflow system will be closed from midnight on the 31^st March.

Mike Jones, sales director, mortgages, says: “This decision allows us to remove overlap and thereby focus our broker activity via the Halifax Intermediary business.

“This approach ensures that across Halifax, BM Solutions and Scottish Widows bank, the group can continue to offer a focused and all encompassing proposition to brokers and their clients.”

Stonehaven is one lender that withdrew from equity release just twelve months ago in the first quarter of 2010 when its own funding dried up. Stonehaven has not commented on the size or source of its new line of funding.

The lender was not the only one to withdraw from the equity release sector last year, including names such as Prudential, Northern Rock, Retirement Plus and Coventry Building Society.

In an article on the Mortgage Strategy website, Lifetime Living representative Simon Chalk is in talks with at least three other lenders who are also set to re-enter the equity release sector.

The Chief Executive Officer for Retirement Plus, Duncan Young, also expects that this increase in supply will further cause demand to rise and so he is hoping more lenders will re-enter the market. He added that Retirement Plus is moving towards re-entering, although they are not quite there at the moment.

As supply and demand increase, no doubt more and more mortgage advisors will look to offer equity release advice too. Mortgage advisors must have taken their CeRER training to offer advice in this specialist area, which they can do at any time following their CeMAP training.

The new range from Stonehaven includes an option called Interest Select, allowing borrowers to repay part of the interest each month.

The report from Aviva revealed approximately 21 percent of those aged over-55 still have to make monthly mortgage repayments.
Those over the age of 75 have an average equity in their property of £246,190, but currently only 4 percent of those over 55 are planning to use equity release.

Of those classed as ‘pre-retirees’ (aged 55 – 64), a third are still paying off their debt (20 percent) and have an average mortgage of £64,504. This compares to 14 percent of the ‘retiring’ age group (65 – 74) who owe an average of £61,979 and 9 percent of those over 75, where the average debt actually rises to £78,125.

Although only 9 percent of the over-75s continue to make mortgage payments, the higher mortgage figure shows they will probably find it difficult to pay this off from an income that is often fixed.

However, the average property value owned by the group aged over 55 is £235,590 with the average equity figure revealed to be £218,469 (or £246,190 in the over-75s group).

The report showed that 4 percent already intend to use an equity release product to pay off their mortgage and 6 percent plan on selling their home and down-sizing.

Clive Bolton, the ‘at retirement’ director for Aviva, said: “Even though people are likely to have to work for longer, for many over-55s the likelihood is that they will spend much longer in retirement than any previous generation. For those carrying mortgage debt into their retirement, the issue of how to repay the loan will inevitably come to the forefront when they finally do stop working. As such it is interesting to see just how much equity the over-55s have in their homes.”

After almost two years of historically low interest rates, the only way for interest rates to go is up, so is it time to opt out of the emotional rollercoaster of interest rates and choose a 10 year fixed rate mortgage deal?  They might have disappeared since the days of before the credit crisis, but a recent article in the Daily Mail asked this very question and pointed out two main issues that may suggest the long term fixed rate deal may be about to see a huge revival.

The first is the rising costs of remortgages. Where application fees were once as little as £299, nowadays the typical arrangement fee varies from £999 to £1499 or even as much as 3% of the mortgage balance for the best rates with valuation and legal fees on top. With rates this high perhaps it does make sense to fix for a longer period.

The other major factor is the historically low interest rates. There is only one way to go now and with rising inflation, the gradual phase-out of the bailing out programme for banks, the oil crisis and many more economic factors that indicate the next few years are going to be tough ones. With this in mind, the hassle and stress of remortgaging now may seem nothing when we look at doing the same in a few more years.

Of course, such a long term fixed deal does not come without its disadvantages. Although most mortgages are portable so you can still move home, it would cost dearly to opt out of the fixed rate before its term ends or want to pay off more than 10% of the balance.
Interest rates are changing rapidly but currently are little more than a five year fixed deal so if it’s a route you are considering going down, then it could be time to switch.