Mark's Mortgage Blog

For non-married couples, it’s vital to make a Will to ensure that those they wish to inherit their Estate actually do so.

2014-10-01T04:52:00.001-07:00

In the first change of its kind since 1926, new Intestacy rules come into effect from today that will change the way in which relatives inherit assets from someone who has died without a Will.

In short, particularly for non-married couples, it’s vital to make a Will to ensure that those they wish to inherit their Estate actually do so.

Please find below a summary of the changes:

Unmarried couples

· No change - Despite pressure to allow people who
have lived together for a number of years to inherit some part of their
partner's Estate, the new intestacy laws still make no provision for ‘common
law’ partners – even those who have children with the deceased. The only way
non married partners can inherit each other’s Estate is to make a Will.

Married couples/civil partners with NO children

· Old Law – Only the first £450,000 plus half of the remainder would go to the surviving partner. The other half would be split between the deceased’s blood relatives.

· New Law - Married spouses are now entitled to the whole Estate if their husband/wife dies without a Will and they have no children.

Married Couples and civil partners WITH children

· Old Law – Surviving spouse would receive; the first £250,000 of the Estate, all the deceased’s belongings and life interest in half of the remainder of the Estate. The deceased’s children would receive the other half.

· New Law – Surviving spouse receives the first £250,000 of the Estate and any personal belongings. Instead of receiving life interest in 50% of the remaining balance, they now receive it as an outright payment. The remaining 50% goes to the deceased’s children.

Adopted Children

· Old Law – Risk that adopted children would lose their inheritance if they were adopted.

· New Law – A child of the deceased will inherit even if they are subsequently adopted.

Redefinition of ‘chattels’

The legal definition for chattels has now changed to include anything that is not; monetary, business assets or held as an investment.

If a person has no surviving children or direct descendants (great grandchildren etc)

The Estate will be inherited in this order:

• Your parents

• Whole blood brothers and sisters, or their children if your siblings have not survived you.

• Half blood brothers and sisters, or their children if there is no surviving parent.

• Your grandparents.

• Your whole blood uncles and aunts, or their children.

• Half-blood uncles and aunts or their children.

• The Crown.

Who is going to pay your bills if you lose your income ?

2014-05-30T08:24:00.001-07:00

With millions behind on their household bills, UK bill payers need to consider how they would cope if they were to lose their income due to illness or injury.

Research released this month by price comparison site, uSwitch, found that 4 million households in the UK are in debt to their energy supplier, while a further 2.6 million are struggling to pay monthly bills.

We're hearing more and more about how people are living beyond their means, and spending more than they have each month - but what if you didn't even have your current income?

For many people in the UK, their monthly salary is already not enough to cover the amount that they need to pay out each month.

But not even careful financial planning cannot take into account unexpected income loss from having to take long-term sick leave.

No one likes to think about having an accident, but these latest statistics should be a stark warning to everyone who has bills to pay and debt repayments to make each month to think about protecting their income.

After all, if you're already stretching what you have to the limit each month, how are you going to meet your financial obligations if what you have coming in is severely reduced?

Income protection is a simple solution – and one that is like having your sick pay last the length of your mortgage instead of its current limited time.

If this was something that was of interest feel free to get in touch (mark@themortgagemonkey.co.uk)

FCA hits out at lenders' inflexibility towards existing customers

2014-05-22T03:06:00.001-07:00

The FCA has hit out at lenders failing to use the transitional arrangements it introduced under the Mortgage Market Review to waive affordability checks for existing borrowers and instead keeping them on more expensive SVRs.

Speaking recently, FCA mortgage and mutuals sector manager Lynda Blackwell said that transitional provisions had been put in place under the MMR that did not require lenders to undertake an affordability assessment on product switches where no additional money is being borrowed.

The transitional arrangements apply when borrowers do not increase the mortgage amount and have a good payment history.

The original intention of the transitional arrangements was to help existing borrowers who had become unfairly trapped with their lender due to the fact that the MMR rules introduced after they had committed to a mortgage.

Without the transitional arrangements many existing borrowers would potentially have been prevented from moving or transferring to a better deal.

But Blackwell says the FCA has heard of cases where borrowers are being refused the option of moving to a fixed rate on affordability grounds and then having to remain on the lender’s more expensive SVR.

She says: ”That is not what the MMR says. It is disappointing to see this happening because lenders have wanted flexibility with the transitional arrangements. In the future it would be really good to see lenders approaching this in the spirit intended and using the transitional provisions to help out those borrowers who need to move home, who want a better rate, but who find themselves trapped because of tighter criteria and stricter affordability checks.”

A quarter of Critical illness claims are made before age 40

2014-04-24T02:58:00.001-07:00

People must consider taking out cover earlier in life as around one in four claims for critical illness (CI) occurs before the age of 40, research has found.

According to recent data, which looked at the percentage of life and critical illness claims
in the UK by age group –

8% of people aged 25-40 had a life insurance claim.

24% of people aged 25-40 had a critical insurance claim.

Other findings showed –

61% of people aged 40 to 60 had a life insurance claim.

70% of people aged 40 to 60 had a critical insurance claim.

Finally –

33% of people aged 60 plus had a life insurance claim.

5% of people aged 60 plus had a critical insurance claim.

So what does this mean ?

Based on this new data around one in every 12 claims for life cover in the UK occurs before the age of 40, which is probably higher than most people would expect.

For critical illness the number rises to 1 in 4 which shows that putting off buying cover
until we are older can be counterproductive.

This data shows the importance of putting cover in place as early in life as possible.
Policies such as Serious Illness Cover pay out on diagnosis of even early stage
cancers or less severe heart attacks.

Conditions such as these can sadly affect people of any age and cover is usually cheaper for younger people, so it makes sense to look at protecting yourself at the
earliest opportunity.

If this is something that you would want to look into further , please feel free to get in touch.

Thanks as always for your attention.

Borrowers may have to wait weeks for branch adviser meetings due to new FCA rules from 26th April

2014-04-02T04:11:00.001-07:00

Borrowers could be forced to wait weeks for an appointment with lenders’ mortgage advisers after the Mortgage Market Review as firms race to get qualified staff in place.

Last week, a Nationwide business development manager warned that customers could expect waiting times of up to a month to see one of their mortgage advisers.

He also said that face-to-face meetings could take between three and three-and-a-half hours from 26 April,when the rules come into place.

Nationwide has tried to play down the concerns, saying: “Over the last year, Nationwide has increased the number of mortgage consultants available in branch. Availability of mortgage
appointments is in line with demand and the society expects no material change
to this post-MMR.”

But experts believe all lenders will struggle with the new non-advised sales ban, where all sales must be advised where there is any form of “interactive dialogue” with a customer.

Moreover, the new rules require lenders to capture more detail from the borrower to ensure they can afford their loan.

As a result it may well be that some clients feel they are more suited to going to a mortgage intermediary (broker) if they feel they want to move forward a lot quicker than a direct lender can
offer them.

Association of Mortgage Intermediaries chief executive Robert Sinclair says: “I don’t anticipate any issues in the intermediary world in that we have already been taking in the kind of detail required under the MMR for some time. The big change is in the direct world, because of the requirement to take more detail than they have in the past. There will be delays – that may be in getting an appointment or how long those appointments take.”

Let your home look after you

2014-02-25T03:21:00.001-08:00

Many people in the UK who are approaching, or are already in retirement, have an insufficient pension pot to fund the lifestyle they want in retirement .

This can be down to needing to draw on savings historically, or perhaps lower than expected
investment return.

And yet those same people who may think there isn’t a solution actually already have one that
they don’t know about - because it is a more common phenomenon that those same people
have significant equity tied up in their properties that can be made available to
help in exactly this way through equity release.

The lowdown

Equity release is a way to unlock cash that is tied up in your home as equity,without needing to move, and it is available to over 55s.

You can either take a cash lump sum or an income, or you agree a maximum available pot that you can withdraw money from as and when you need it.

There are two main types of equity release scheme:

· A lender will give you what's called a lifetime mortgage, where the interest is paid during
or after the property is sold.

· A home reversion scheme is where the equity release provider will either buy all (or a
portion) of your home for a cash sum and you can live there rent-free for as
long as you choose.

What can you use the money for?

When you release equity you are free to spend the money on pretty much whatever
you like – be it perhaps to clear an existing mortgage, create a lump sum to generate income, a gift to a family member to perhaps help with a property purchase, or to buy that Harley you’ve always wanted !

Pros and cons

Any plan taken out will have an impact on the inheritance you leave to your loved ones, so that’s why it is important to take the right advice so as fully understand the implications of any scheme you sign up to.

The benefits of releasing equity though are significant -

Access cash that was previously tied up in your home
You don't have to move area or downsize to access this money
You get to stay in your home for as long as you want
Option to pay nothing until after your death (or if you move into long-term care
and the property is sold)
Use the money to fund your retirement, to gift to your family or for any other
purpose.

When you take advice , the types of areas that will be discussed will be -

With a home reversion plan the provider will own a portion of your home, and will
receive that portion of the proceeds when the property is sold
With a lifetime mortgage, the proceeds of the sale of your home will need to
cover the mortgage owing ( although providers protect the estate with a 'no-negative-equity-guarantee'.
It will reduce the amount left to your family or others when you die.
Funds released can affect any means tested state benefits that are received.

Get the right advice

It is essential therefore that you think carefully about an equity release scheme by taking expert independent financial advice.

In addition you should take separate independent legal advice.

Talk to your family

And while it isn't compulsory, it is recommended that you speak to your children or the other beneficiaries of your will to inform them of your decision and the impact it will have on them in the future.

What protection do I have?

The majority of providers now adhere to the highest standards through their membership of the trade body, SHIP.

Safe Home Income Plans (SHIP) ensures its members' products have a number of customer safeguards built into their plans. These include a guarantee that you can live in your home for as long as you choose, that you can move home if your circumstances change, a 'no negative equity' guarantee and, importantly, that you're entitled to independent legal advice.

There is no doubt that more of us will turn to equity release as a means of funding our retirement in the years to come – the mammoth pensions gap makes this inevitable, but with the right advice, it isn’t something that should be feared.

For many years you have looked after your home - perhaps it is now time for your home to look after you.

If you did want to find out more about this, please feel free to get in touch with me at -

mark@themortgagemonkey.co.uk

Thanks for your attention

Base Rate to rise in Spring of 2015

2014-02-20T08:36:00.001-08:00

Base rate is likely to rise next spring, Monetary Policy Committee member
Martin Weale said today.

Speaking to Sky News Weale said once base rate rises, further increases
will be gradual.

He says: “I think it is very helpful that we try and explain the most
likely path for interest rates that the first rise will come perhaps in the
spring of next year, and then the path is likely to be relatively gradual.”

In the latest MPC’s minutes, published earlier this week the committee said
base rate is likely to be “materially” below the 5 per cent average set by the
Bank of England prior to the crisis in the coming years – even when the economy recovers.

Since August, the Bank of England has sought to give consumers an
indication of when base rate is going to rise through a policy of forward
guidance.

It stated that base rate would not increase until unemployment dipped below
7 per cent or there was an unexpected spike in inflation.

However, earlier this month, Carney changed how the bank uses forward
guidance just six months after first
introducing the policy to the UK. Although he maintains the policy has worked
so far.

The overhaul of forward guidance sees the direct link with employment
dropped so the BoE can focus on a much wider range of indicators focusing on
absorbing all of the spare capacity in the economy. This will see the Bank
publish forecasts of 18 more economic indicators for the first time.

As well as unemployment, the MPC will monitor factors such as participation
in the labour market, average hours worked and the extent of involuntary
part-time working, surveys of spare capacity in companies, labour productivity
and wages.

Lenders urged to accept child support as income

2013-12-11T02:50:00.001-08:00

People who are divorced, or those whose relationship has broken down, are being penalised because many mortgage lenders don’t accept child support as income, meaning that they could be forced to keep their ex’s name on the mortgage, or be denied a mortgage altogether.

Two lenders, don’t accept child support payments as part of a borrower’s income at all.

Two others don’t generally accept child support as income, but say they will look at applications on a case-by-case basis.

A further two lenders, only accept a percentage of child support income - in one case only 50 per cent.

Six lenders insist on a court order or Child Support Agency (CSA)/Child Maintenance Service (CMS) payment order or similar.

Only five lenders accept child support as income without a court order or official CSA/CMS payment plan in place.

Mortgage lenders that ignore child support or restrict how much is taken into account may say it’s because these payments aren’t guaranteed and they need to check the support is due to be paid for several years, but few jobs come with a guarantee these days.

Mortgage lenders must make sure mortgages are affordable, which is right, but should also understand that the income of divorced women , and men – may include child support.

The family law organisation Resolution agrees and spokesman Nigel Shepherd said: “Privately agreed child support payments should be accepted as relevant income.”

It is sensible for a lender to require to see the private agreement between the parties setting out the terms of the maintenance payments, plus a track record of regular payments, which can be proved by the applicant providing bank statements for, say, six months, to satisfy themselves the arrangement are robust although maintenance payments are only likely to be reduced or temporarily cease if the payer loses their job, i.e. exactly the same risk of any mortgages generally, which are based on earned income.

Rather than restricting acceptance of maintenance payments to only 50 per cent or 60 per cent, as some lenders do when calculating affordability, once the principle is established there is a strong argument for not only accepting 100 per cent, but going further and grossing up the payments in view of the fact that maintenance payments are tax free.

As government policy is to encourage the parties to come to a private arrangement for maintenance payments, a policy being reinforced by the CMS under plans to impose charges on both parties when its services are used, it is seemingly illogical for lenders to discriminate against applicants who are able to agree terms for maintenance without involving the court or the CMS.

The interest only time bomb

2013-11-25T02:17:00.001-08:00

The interest-only mortgage timebomb is ticking loudly and will only get louder according to statistics revealed in the Financial Conduct Authority’s (FCA) thematic review into interest-only mortgages, which was published earlier this year.

The review revealed there are now 2.6m interest-only mortgages due for repayment by 2041.

Worryingly, as many as 48% of those face a shortfall at repayment day, with an average figure of around £71,000.

Even more worryingly, the review found that 260,000 (10%) borrowers have no repayment plan of any kind.

Many of these borrowers believe they only have very limited options. Either they can hope that their mortgage provider does not notice that their mortgage term has ended and continue paying interest as they have always done, or they can sell their home.

By downsizing to a smaller property they could afford to pay off the original mortgage. The first option, for obvious reasons, is unlikely and just not sustainable in the long term, while the selling up option is undesirable for many.

At the same time, recent figures have revealed that the UK’s over sixties are sitting on properties with a total value of £1.28 trillion - a massive figure, illustrating the potential of utilizing property effectively to support the income of older homeowners and help those struggling for viable options when dealing with their interest-only mortgages.

A growing amount of customers are older homeowners with interest-only mortgages who are faced with the problem of their own personal mortgage ‘timebomb’ and losing their homes if they do not have sufficient funds at the end of the mortgage term to pay off the remaining debt.

An equity release lifetime mortgage can offer a solution to this, as it allows homeowners to unlock capital from their home whilst retaining ownership of their own home, negating the need to downsize.

If you are sitting on a valuable asset why not use it to your advantage?

A lifetime mortgage also means very little change from the customer’s current mortgage situation, as they can continue to make monthly interest payments as they have always done.

However the key benefit is that the customer no longer has to worry that their mortgage provider will come knocking on their door asking for the remaining debt.

After all, they have probably spent much of their life looking after their home – isn’t it time perhaps that their home looks after them?

If you know someone who potentially may be facing this problem, I would be more than happy to talk to them about it, and go through the options available to make sure that their roof stays exactly where it should be – over their head.

As always , thanks for your attention.

Mark (mark@themortgagemonkey.co.uk)

Interest rates could start to rise in 2014

2013-11-13T09:48:00.001-08:00

The quarterly inflation report out today suggested the Bank of England could raise rates as early as the end of 2014 if unemployment continues to tumble and the economy improve.

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Governor of the Bank of England Mark Carney commented Bank statisticians forsee a 40% chance unemployment will reach the 7% threshold by the end of next year. He added there is a 60% chance it will happen by the end of 2015.

Under the terms of Carney's Forward Guidance, the MPC will not consider raising rates until unemployment hits the 7% trigger.

He said: "Through that guidance we are giving businesses and households the confidence that interest rates won't go up until jobs, incomes and spending are recovering at a sustainable pace.

"In line with the unexpected strength of demand, the unemployment rate has fallen a little more rapidly than expected in August. That is to be welcomed: 100,000 more people are in work as a result."

Carney said the unemployment threshold is a staging post for assessing policy, not a trigger for an automatic increase in Bank Rate.

"When the threshold is reached, the MPC will set policy to balance the outlook for inflation against the need to provide continued support to the recovery in output and employment," he added.

With the recovery taking hold, our task now is to secure it, he said.

But he added that the bank will remain vigilant to risk to stability from the housing sector, in terms of price rises or household leverage.

In a fix? Now's your chance

2013-08-15T02:44:00.001-07:00

A sharp spike in swap rates has prompted a warning that fixed rate pricing has bottomed out and borrowers could miss out if they wait to secure a mortgage.

Between 12 and 14 August, two-year swap rates have jumped 7 basis points to 0.84 per cent, while five and 10-year swaps have rocketed by 17 and 15 basis points to 1.75 per cent and 2.76 per cent, respectively.

Perhaps surprisingly, swap rates remained fairly static in the days after new Bank of England governor Mark Carney last week announced his decision to introduce “forward guidance” on the potential movement of base rate.

He announced the BoE would not increase base rate from a record-low 0.5 per cent until the UK’s unemployment rate fell below 7 per cent, or if inflation spikes.

This all reinforces that fixed rates are on the floor and for most people there is little or nothing to be gained by waiting for lower rates.

For those looking to remortgage, increasing property prices, a trend likely to continue for at least two years, will enable some homeowners to benefit from the cheaper rates available at lower Loan to Value %, especially if they are on a repayment mortgage and/or overpaying.

Depending on the rate they are currently paying, borrowers in this situation may benefit from waiting a short while to enable them to take advantage of the better rates available at lower Loan to Value %.

However, this strategy runs the risk that rates will rise before the lower level is achieved.

If you would like to see what you can achieve currently , feel free to get in touch.

As always , thanks for your attention.

Mark

Three point nine million

2013-02-28T05:28:00.001-08:00

Three point nine million.

Is it the miles a London tube train runs before serious refurbishment?

Or the golden parachute a chief executive of a bank when shareholders have had enough after a few years of highly paid incompetence?

All reasonable guesses, although it's none of the above.

Instead, it's a recent count of pet insurance plans in the UK.

Nearly four million households spend a typical £250 a year on covering their animals against a number of perils, the most important being the cost of a serious visit to the vet.

Now compare that with people protection. Starting from a higher base, it's obvious human cover could not grow even five-fold over the same period.

I recently read that “only 56% of owners take out pet insurance”. I love that “only”.

If “only” 56% of people took out some sort of personal cover to look after themselves as well as they look after their pets ( the wellbeing of whom in fact is ultimately down to the health of the premium payer.)

Remember that 3.9 million? It's roughly 10 times the number of people who have taken the step to protect their income with what is known as Income Protection.

Assuming the self-employed are the natural income protection consumers as their ‘health is their wealth’ so to speak, that means just one in 10 are covered. In fact anyone who is self employed could need short term cash help for injuries preventing their work.

Ah, but I can hear you saying – too expensive.

Well there is another way of looking at premiums – they are cheaper than a payday loan or a visit to a pawnshop. These have mushroomed, taking up empty retail space far faster than even bookmakers, pound stores, chicken shacks and charity shops – as well as dominating a fair slice of online space.

Income protection at around £20 a month is a far sight cheaper route to £1,500 a month than borrowing at thousands of percent a year as well as being better for all concerned than selling or pawning the wedding ring.

And in case you are wondering whether I practice what I preach (?) – yes , I have had my income protected since I took out my first mortgage in 2002.

Want to find out a bit more? Feel free to get in touch.

Bank of Ireland

2013-02-28T05:05:00.001-08:00

Bank of Ireland is writing to 13,500 of its buy-to-let and residential customers on tracker mortgages to warn them of plans to more than double the base rate differential it charges them.

Around 7 per cent of Bank of Ireland UK mortgage customers will be affected by the changes to the interest rate differential, over 50 per cent of which are buy-to-let holders.

For buy-to-let borrowers, the rate will jump from Bank of England base rate plus 1.75 per cent to rate plus 4.49 per cent from 1 May.

For residential borrowers, the increase will be applied to in two separate stages. From 1 May, it will rise from base plus 1.75 per cent to base plus 2.49 per cent. From 1 October, it will then be subject to yet another increase, taking it to base plus 3.99 per cent.

A statement from the bank argues the increases reflect higher funding costs.

It says: “This change reflects the significant increase in the cost of funding these mortgages since 2008 and the need for banks to maintain greater levels of capital.”

One industry commentator remarked “This is a shocking move by Bank of Ireland. It shows a blatant disregard for the fortunes of its customers. It is all very well offering to waive redemption penalties for those who can move but, for those who cannot, it creates unnecessary issues and will surely breach boundaries of the FSA’s Treating Customers Fairly initiative.”

If you are concerned about this , please feel free to get in touch.

As always , thanks for your attention.

What's 1% between friends ?

2012-10-02T01:57:00.001-07:00

Figures from housing charity Shelter have found that 56% of borrowers would struggle to keep up with their mortgage payments if interest rates rose by 1%.

More worryingly, 11% said they would be unable to pay monthly payments altogether.

Campbell Robb, Shelter's chief executive, said: “These shocking findings show that over half of mortgage holders are living on a knife edge and could be tipped into a spiral of debt if their mortgage payments went up. "

Despite the Bank of England interest rate remaining low, current pressures on banks mean that mortgage rates are rising it is a concern that many people won't have plans in place to manage increased costs.

Meanwhile, Santander will lift its standard variable rate from 4.24% to 4.74% tomorrow. The move, which the bank blames on a range of factors including higher wholesale costs, will add £26 a month to the average cost of a £100,000 mortgage.

It is no surprise therefore , that despite the Base Rate remaining currently static, the popularity of fixed rates has been steadily climbing in recent months as mortgage holders endeavour to secure their position financially whilst rates are low.

If you are concerned about maintaining your mortgage in the event of a rate change and would like to consider alternatives, please feel free to get in touch.

Mortgage lender fees rocket 70%

2012-09-06T05:55:00.003-07:00

Mortgage lender set up fees have soared 70.3% in the last four years, according to recent research.

The average fee a lender charges for a mortgage was £899 in March 2009 when base rate fell to 0.5% but is now £1,514.

The average fee for a two-year fixed mortgage is now £1,595 and the average fee for a five-year fix is £1,014.

The highest fee is an eye-watering £3,990 charged for a five-year fixed rate product.

There can be no logical reason why fees should have increased so much. In the space of just August and September alone, they have increased by an average of £42.

Mortgage administration costs cannot possibly have increased 70%. Dealing with lenders on a daily basis as I do, I can certainly vouch that their service delivery standard hasn’t improved on the back of it – on the contrary in some situations , it has in fact worsened, so why are fees so high?

It is possible that lenders are keen to push fees because they are pure income and they get the money at the start of the mortgage.

But don’t forget, paying a large fee doesn’t necessarily guarantee a better rate – it all comes down to loan size. For example a percentage based fee can work well on the smaller mortgage sums against a set fee structure, but for a larger loan it is the other way round.

If you are unsure, talk to someone like myself who can guide you as what is the best thing to do.

This one goes out to all the ladies..

2012-09-03T12:34:00.000-07:00

Life insurance premiums for women will rise by up to 15% before the end of the year with implementation of the EU Gender Directive due on 21 December 2012.

So if you want to do something about it, the time to do so is rapidly running out.

Although life cover has been traditionally cheaper for women because on average they live longer than men, premium costs are likely to increase as both men and women will soon have to pay the same basic premiums.

To avoid this impending price hike, all new policies must have a start date of no later than 20 December 2012.

And to qualify for gender specific premiums applications must be underwritten and accepted with the premium and any exclusions clearly defined, although the premium doesn’t need to have been paid until 20 December 2012.

However, one word of warning, some insurers may start to change to gender neutral pricing before then

When 20 December 2012 has passed it won’t be possible to secure gender specific premiums in the future as start dates cannot be back dated. So come 21 December, it will be too late.

It is also important not to leave things to the last minute - give the insurance company time to do its work.

Almost all life insurance goes through an underwriting process, for some this is almost instant but for others it can involve getting a standard report from your doctor which can take up to four weeks.

Given that there is likely to be a last minute rush and that there is no flexibility on the cut-off date applying early could be prudent.

Santander to increase its Standard Variable Rate by 0.50%

2012-08-22T09:28:00.001-07:00

Santander UK intends to increase its Standard Variable Rate from 4.24% to 4.74% from 3 October 2012.

There will also be an increase in the lender's SVR cap margin – the maximum amount above the Bank of England base rate that it can charge – from 3.75% to 4.99% from 24 September.

Santander said its competitors increased their SVRs by similar amounts earlier this year, reflecting the same market dynamics. In the past few months Halifax, Co-operative Bank, Bank of Ireland and Yorkshire and Clydesdale Bank have increased their SVRs.

Santander's analysis shows that its SVR mortgage holders will see an average increase of £26 per month for a £100,000 mortgage.

Santander now joins the list of lenders to hike its SVR, despite the fact the Bank of England base rate has remained unchanged since March 2009.

A Santander customer on its SVR rate with a £150,000 25-year repayment mortgage will see their payments increase by £42.54 a month; a significant amount for the many households who will be impacted by this.

Anyone affected by this or who is concerned their mortgage lender may join the SVR-hiking pack should consider remortgaging onto another deal if possible.

Speak to an independent mortgage broker like myself , if you are unsure of the best option as they will explain what is available to you and help to make the best decision for your situation.

As always thanks for your attention.

FSA to instruct banks to charge for current accounts

2012-08-21T04:59:00.001-07:00

The Financial Services Authority (FSA) is to instruct banks to charge for current accounts, according to a report by consumer group Which?.

Research found charges for going overdrawn for two days per month without permission range from £120 to £900 a year, leading to confusion for consumers.

Customers who stay in credit also lose out through punitive charges levelled on withdrawing money abroad.

A senior executive at the FSA told Which? regulatory intervention may be needed to curb the problems arising from supposedly free banking.

Which? chief executive Peter Vicary-Smith said –

“Hidden charges completely shatters the myth that banking is free. The suggestion that banks should increase charges to avoid more scandals defies logic and is a slap in the face for consumers who are being hit hard by one of the worst financial crises in recent times. It's a disgrace that the very people who bailed out the banks are being asked to pay more for the most basic accounts, while the industry continues to be rocked by scandals like PPI mis-selling, LIBOR rate-rigging and IT failures. Banks must be far more transparent about their fees and charges so that people can clearly see what they already pay."

Many European retail banks currently level a monthly charge instead of relying on cross-selling or high hidden charges for income.

Peter McNamara, former head of personal banking at Lloyds, told the Today programme if UK banks wished to operate a similar system they would need to charge between £4 to £5 per month but felt the idea of suddenly enforcing or regulating some charges on accounts is an extraordinarily unattractive one.

John Howard, former chairman of the consumer panel at the FSA, said he was in favour of monthly charges for a number of reasons.

Customers do not know "what the real cost of providing that basic banking service is", he said. "Banks have to be honest with us about what it really costs to provide that bank account. Consumers are immensely angry with the banks about everything that's happened, and the typical reaction is why should we pay banks even more. But there are real concerns that the regulator is trying to address, that free banking is creating distortions in the marketplace.”

The current system may have created the climate that led to the mass mis-selling of payment protection insurance (PPI), because effectively it encouraged banks to cross sell products, and unfortunately we are all too aware of what the by-product of that environment was.

An app or £13k ?

2012-07-17T07:53:00.003-07:00

We have an electronic pass system at our Basingstoke office which means you have to swipe to get into the building beyond reception.If I change suits during the week I might forget to put my pass in the new jacket pocket and so have to ask for a temporary pass.

Of course when I go back to the original suit later on a couple of occasions I have had the pleasure of finding a ten pound note in the pocket, or at least a pile of change.

Even though this money was mine all along it always feel as if I have just 'found' it for the first time. It's like I'm suddenly ten pounds richer.

One of the reasons that many people give for not buying life insurance is that it is too expensive, or that they cannot afford it.

And yet a 30 year old non-smoking lady can get £200,000 of life cover over 25 years for that same £10 a month.

The same ten pounds that you might find crumpled at the bottom of your pocket, could provide a lump sum equal to a small fortune.

How long would it take to build up £200,000 by saving ten pounds a month?

Over 1600 years.

Yet you could pay one premium of £10 into a life insurance policy and it could pay out £200,000 to your family immediately if you died in an accident.

Life insurance is actually amazing value for money and it has never been cheaper.

Look at it another way. Most of us now use smart phones and are used to buying apps. For an average of 69p, apps feel like great value because most of us have 69p fiddling small change in our pockets at the end of most days.

For 69p a month our lady could buy £13,800 worth of life cover.

So , is life cover expensive?

Consumer rage or criteria rage?

2012-05-31T08:58:00.000-07:00

Tighter mortgage criteria has led to an increased number of consumer complaints about mortgage products, according to a report by the Council of Mortgage Lenders (CML).

The trade body, using data from the Financial Ombudsman Service's (FOS) annual review, said that a 'significant proportion' of complaints were caused by providers changing their lending criteria due to difficult market conditions.

FOS reported that 9537 complaints were received about mortgage lenders, up 4% on last year's figures.

There was an increase in complaints from customers who were unhappy with their lender's range of mortgages, with consumers also disappointed with the explanations provided by lenders when applications were turned down.

The FOS received an increased number of complaints about the reduction of upper age limits on some products, with older borrowers also frustrated by an increased requirement to provide details of their income in retirement.

Complaints from buy-to-let investors also grew, with customers unhappy with higher product rates and administrative charges.

The number of issues raised to the ombudsman regarding new loans also increased, with more borrowers complaining about being unable to get a mortgage with the loan-to-value ratio requested.

Elsewhere, complaints received from people trying to switch mortgages between properties fell but the ombudsman highlighted the need for lenders to provide more information to customers having their homes repossessed.

A Jubilee tale

2012-05-29T09:37:00.000-07:00

Buckingham Palace is estimated to be worth £1bn, up 9000% since the Queen took the throne when it was estimated to have been worth £11m.

Were it ever to be sold, that would equate to c.£70m in stamp duty.

Windsor Castle’s estimated value was £2m when the Queen began her reign in 1952 and it is now estimated to be worth 9350% more at £189m – so that would be a mere £13.2m in stamp duty.

Don’t think they would be fans of the ‘mansion tax’ somehow.

Compared to non-royal residences, the average UK house price in 1952 was valued at £1,891 and is now up 8605% to £162,722.

During the Queen’s reign the average UK house price has increased from £1,891 to £162,722.

Bye bye New Buy?

2012-05-10T09:14:00.001-07:00

There is rising concern that the Government’s flagship NewBuy scheme has hit trouble, just two months after its launch.

The scheme, which launched on March 12, allows first-time buyers and home movers to purchase a new-build house worth up to £500,000 with a 95% mortgage, with taxpayers and developers underwriting the loan.

But the scheme has been dogged by controversy, with mortgage lenders offering NewBuy mortgages at high rates that have come under increasing fire from house builders.

The three lenders in the scheme when it launched have all hiked their rates: NatWest, which offered the best initial rates, at 4.29% for a two-year fix and 4.99% for a five-year fix, has hiked them up to a current 4.79% and 5.49% respectively.

Barclays and Woolwich have also raised their initial rates, with the latter now offering a three-year fix at 6.09%. Lloyds Banking Group, which entered the scheme after launch to become the fourth NewBuy lender, offers rates of around 6%.

Mike Farley, chief executive of Persimmon Homes, says the scheme will not work unless the lenders drop their rates. He said: “There’s nothing wrong with the concept, but to make it work we need a lower rate or people will drop out.

“The rates are so high, people won’t be able to afford the repayments, and that will put the brakes on.”

Pete Redfern, chief executive of Taylor Wimpey, said it is ‘very difficult’ to know if the scheme will work or not, and he said lenders would have to find the right rates. He said: “Individual lenders are nervous that if their rates are too low, they will take market share and that will distort their mortgage book.

“It is not the end of the story, but it is unfortunate and I hope it doesn’t knock the train off its rails.”

Santander has yet to launch into NewBuy but says it will do so, and smaller lenders may enter the arena, with hopes among developers that more competition will encourage better pricing.

Aldermore, the new bank launched two years ago, says it intends to launch a NewBuy deal but wants to see how the larger lenders are doing first.

Estate agents have been among the most vocal critics of the scheme, pointing out that buyers of new homes pay a high premium, and that while NewBuy is designed to offer some protection to lenders should they need to repossess a property, the indemnity will not stop purchasers falling into negative equity.

History in the making..

2012-05-02T08:32:00.000-07:00

Next week will see history made in the mortgage market.

From next Tuesday the Co-operative Bank and Britannia Building Society will no longer offer mortgages on an interest-only basis.

Customers will now only be able to take out mortgages on a capital and repayment basis.

The lender says it expects the changes being proposed in the Mortgage Market Review will result in all customers who apply for a mortgage being assessed on the basis that they can afford a capital and repayment loan, which is why it has made the decision to only lend to customers on a capital and repayment basis moving forwards.

Existing interest-only mortgage customers are able to switch to any open product for the same amount of borrowing on an interest-only basis when they come to the end of their deal.

In addition they will also be able to take their interest-only mortgage with them should they move home.

The above changes will also apply for mortgages offered through Platform, the dedicated intermediary lender for The Co-operative Bank.

In the case of Platform, the majority of its lending is focused on buy-to-let and volumes of mainstream and almost prime interest-only applications are low. It also believes demand for interest-only loans will continue to fall.

As a result, the lender says the cost of changes that it would want to make in order to comply with future regulations and meet its high standards as a responsible lender cannot be justified. It has therefore also taken the decision to withdraw interest-only lending for new residential lending and additional borrowing on residential interest only loans.

Platform will continue to offer interest-only as a payment option for buy-to-let, as the rent on the property is typically used to make monthly repayments and the value of the property is used as the repayment vehicle for the mortgage.

Well it had to happen eventually – the question is of course , whether others will follow suit this time as well....only time will tell.

As always thanks for your attention.

Mark (mark@themortgagemonkey.co.uk)

Borrowers shouldnt wait before considering a fixed rate option

2012-04-18T06:51:00.000-07:00

Average rates across two- and five-year fixed products have crept up, and borrowers on their lender’s Standard Variable Rate should be wary of future rises and look to fix sooner rather than later.

The warning comes after a number of lenders announced hikes to their SVR (Standard Variable Rate) rates which come into force on May 1.

Analysis has found that the average rate for two-year fixes hit a low last October, falling to 3.82%, but has now risen to 4.15%.

This means a difference of £27.31 per month or £327.72 over the year for repayments based on a £150,000 mortgage.

Similarly, five-year fixed rates hit a low in January this year with an average rate of 4.57% but this has crept up to 4.72%, adding an extra £12.81 per month or £153.72 over the course of a year.

For two-year trackers, the average rate was at its lowest in August 2011 at 3.37% but now stands at 3.63%, hitting consumers with an extra £20.91 per month payment or £250.92 over the year.

The number of SVR rises announced by lenders recently , come into effect in May.

About one million customers will be affected by these increases announced by providers including Halifax, Co-operative Bank, Bank of Ireland and RBS/NatWest.

Overall, the average increase to SVRs is 0.62% which will add an extra £52.58 to a £150,000 mortgage or £630.96 over the year.

Mortgage rates are nudging upwards, there is no doubt about that so anyone looking for a mortgage or whose mortgage deal will end in the next few months should act sooner rather than later to secure one of the current rates in case they rise further.

Any borrowers paying their lender’s SVR should also reassess their mortgage arrangements. One of the consequences of the low base rate has been the fact that SVRs have been similar to the rates on new mortgage deals and in some cases the SVR has been even lower.

Consequently as a result, an increasing number of people have opted to stick with their existing lender and move on to the SVR when their fixed or introductory tracker or discounted period ended, as opposed to remortgaging elsewhere.

However, as around one million borrowers are about to find out, many SVRs can rise even if base rate doesn’t.

Estate agent under fire for 'strong arm' mortgage tactics - Introducer Today

2012-04-16T03:37:00.001-07:00

Estate agent under fire for 'strong arm' mortgage tactics - Introducer Today