Mortgage Market Newsletter Spring 2021

MORTGAGE MARKET NEWSLETTER 4 MORTGAGE MARKET NEWSLETTER 5 those clients caught in a rush to meet the former deadline. For some commentators on this subject, it has just postponed the inevitable ‘cliff edge’. Overall, I am positive about the decision, and of course we have to remember there is a much bigger picture that Sunak is looking at other than just our market. My mood is further bolstered by the Chancellor’s announcement around the Government-backed Mortgage Indemnity Scheme. I have been reading some very negative comments on this scheme, and how the 2013 scheme (which is a mirror image of this one) failed. I take a different view and although the scheme does not address the overarching affordability problem, it will help lenders to increase their appetite for higher loan to value products. According to the HM Treasury report, from October 2013 to June 2017 the number of products at 95% increased from 43 to 261. There is also a lot of innovation going on to try and help address affordability with players like Proportunity and Moovable, to name a few. More positive news comes from Homes for England who have pledged £7.39bn to registered partners in April 2021 to help deliver 130,000 homes by 2026 outside of London. They are also keen to work with more partners than just the major developers. They are looking at more MMC (Modern Methods of Construction), green and environmentally friendly builds and encouraging uptake of their new National Design Guide which is part of the Government collection of planning practice guidance with national planning policy framework. In Virgin Money’s article you can read more on the New Build schemes. Talking of green and environmental issues, according to Carbon Brief, domestic homes account for around 15% of the UK’s greenhouse gas emissions through their use of oil and gas for heating and hot water, and this desperately needs reducing. We believe we will start to see some more innovation from lenders in this space. The Ecology Building Society has been banging the drum for these types of projects for as long as I can remember, but mainstream lenders are starting to get the message too. NatWest Intermediary Solutions have launched a green mortgage and Kensington Mortgages have their eKo Cashback mortgage which pays £1,000 to clients who increase their Standard Assessment Procedure (SAP) rating by 10 points; this means moving up the EPC scale. BM Solutions and other buy-to-let lenders are reminding landlords that their properties need to have an EPC rating of Level E and above. F and G ratings on properties are now illegal to rent out, but simple adjustments can bring these buildings back into scope. Some may also benefit from an exemption, but advisers should seek clarification on when these can apply. Key Partnership’s article on the Driver for Equity Release gifting, highlights that the Bank of Mum and Dad or Grandparents is still very much alive and a strong contender for consideration on gifting an early inheritance. Other lenders are also considering how they can support families with affordability and borrowing such as the Family Assist products and the use of ‘Joint Borrower, Sole Proprietor’. The latter is now offered by several Lenders on our panel including Barclays, Skipton, Principality, Metro Bank and Newcastle R eading through all the articles in this newsletter makes me feel very upbeat about the years to come in the mortgage industry. There has been a lot of doom and gloom for some time, so it is great to see green shoots coming, and not just because it is springtime. Rishi Sunak’s second budget speech certainly had a lot of mortgage industry personnel singing his praises, and why not? It was certainly a good outcome for firms operating in the housing market. As we move forward through the COVID tunnel, we are starting to see the light, and policies being introduced now will stand us in good stead for the future. The Government can see that the housing market is very much at the heart of the economic recovery. Our industry, having made it through the varying degrees of lockdown, has fared very well compared to some others and the Government knows that tax receipts coming from the spin-offs of the housing market will go some way to paying back the billions being borrowed to ease recovery. Sunak’s announcement of the stamp duty holiday extension to the end of June, and then a further tapering to the end of September with the nil rate band at £250,000, gives breathing space for Mortgage Market Update An optimistic perspective Christine Newell Mortgages Technical Director Paradigm Mortgage Services to name a few. As always, if you are struggling to place a case, please call our Mortgage Helpdesk on 03300 536061 . I would like to finish off the positive message by just mentioning the upcoming opportunities to contact your clients about their product renewals. April and June see some decent spikes of products maturing, with £30m in both months up for negotiation and in October, this rises to £45m. This offers advisers lots of opportunities to engage with clients and consider a potential re-mortgage to a better product – a point which is hammered home by Coventry for intermediaries in their article. A final piece of positive news: at Paradigm, we are beginning to discuss when we might be able to be back on the road again and return to running face to face events. We hope to be able to set some dates and times for a return to a somewhat more normal day soon and will keep you updated. Obviously, caution needs to be applied here but we are hopeful that towards the latter part of the year, you might again see me getting excited about regulation and waving my arms around like a lunatic at the front of the room in a hotel near you – fingers crossed! Kind regards, Christine Newell T: 07824 708 956 E: [email protected]