Blog Archives

Mortgage lending points to market recovery, say property finance specialists

19.09.2013

The latest data from the Council of Mortgage Lenders shows that gross mortgage lending was steady in August at an estimated £16.6bn – almost identical to July’s gross lending of £16.7bn and 28 per cent higher than August last year.

This consistency from month to month is perhaps surprising given all the talk of an overheating housing market. However, it is extremely encouraging, suggesting a sustained and considered improvement in the housing market, which is more likely to lead to a measured recovery, rather than a house-price bubble.

Five-year fixed-rate mortgages

Swap rates have fallen again in the past week so while a few lenders have raised or simply withdrawn their longer-term fixed rates, borrowers shouldn’t panic about a sudden surge in pricing on fixes. If you see a rate you like, go for it but don’t fret too much if you plan to buy or remortgage in a few months’ time. Most lenders will let you reserve rates for up to six months so borrowers can do this if they still have concerns.

Getting a large loan

A couple of high-street lenders are piloting large loan products, increasing the options available to those looking for a large mortgage. However, the private banks still remain a good option for those looking for a large mortgage as they tend to be more flexible on terms, usually offer interest only and will also consider older borrowers.

The economy is turning a corner but let’s not get too carried away: there is still a long way to go. The danger of over-reaction to a house-price bubble is that any confidence in the market is extinguished just as it is establishing itself. Lending volumes and house prices are still well below pre-crisis levels.

For more Mortgage Best Buys

For more large mortgages or private bank mortgages

 

Adrian Anderson
Posted by
Adrian Anderson

Older borrowers seek mortgage help from property finance specialists

13.09.2013

Anderson Harris are seeing a significant rise in the number of silver borrowers or older borrowers coming to them for property funding. These mature borrowers tend to be mainly in their late sixties or seventies and considered too old by the vast majority of banks. They also don’t have the income requirements needed to qualify for funding, yet they often have a substantial asset i.e. their home, including other investments, such as a significant property portfolio or maybe an art collection, but can’t get a mortgage from their own bank.

There has been plenty written about these mature borrowers downsizing and freeing up cash to buy a smaller property – some are doing this, but many older borrowers are looking to stay where they are and raise money that will give them an income, or time to sell up and downsize (for one client this meant extricating a property held in a trust, before it could be sold).

So the main older borrower options are equity release (expensive and tends to upset the relatives) or a private bank facility. The latter tends to work out more cost-effective, providing a five-year facility in which borrowers can wind down a trust in order to sell a property, or secure a smaller property to move to and give them time to sell without rushing things.

Getting a Private Bank Mortgage – Case Study

A retired client living in a substantial property in Knightsbridge, which is valued at £10m, with no mortgage, but has substantial other assets. This older borrower wished to downsize to a smaller property but needs time (3- 4 years) to make the transition and manage his tax position.  Suddenly he finds the ideal property (£2m purchase price) to retire to but needs to buy immediately as there is fierce competition. This older borrower needs to  borrow £2m quickly, without liquidating any of his existing investments (not tax efficient). His incumbent bank of 45 years will not assist due to age.

Anderson Harris arranges a private bank mortgage within 2 weeks at 2.25 per cent over LIBOR.  Bank takes custody of his pension fund to satisfy their AUM requirement but the client retains the exact same investment structure and manager. The fees for custodianship of the pension fund are the same as his existing administrator.

Mortgages for older borrowers – Best Buys – two-year fixes –correct at 11.9.13

1.89% with £1,499 fee. Up to 60% LTV [maximum age at end of term: 75]

1.94% with £1,845 fee plus £130 processing fee. Up to 65% LTV [all loans must be repaid by age 75 of oldest applicant]

2.14% with £995 fee. Up to 60% LTV [won’t lend beyond retirement age. Maximum age 75]

2.19% with £1,499 fee. Up to 60% LTV [Maximum age at end of mortgage term 75]

2.39% with £199 fee. Up to 65% LTV [for borrowers up to 75]

4.49% with £199 fee. Up to 70% LTV [for borrowers aged 75 to 80]

Source: Anderson Harris (www.andersonharris.co.uk)

For more Mortgage Best Buys

For more Silver Borrower, or Older Borrower Services

Jonathan Harris
Posted by
Jonathan Harris

Lending boost as FLS provides more mortgage options at cheaper rates

03.09.2013

The Funding for Lending scheme (FLS) is resulting in cheaper mortgage rates, according to the Bank of England, which is expected to boost the amount of lending done throughout the rest of the year.

Mortgage rates have fallen between 0.5 and one percentage points in the past year since the scheme was introduced. Subsequently, borrowers are enjoying some of the cheapest mortgage rates ever seen, with pricing falling across the loan-to-value curve. This means that even those with more modest deposits, particularly first-time buyers, are also benefiting from cheaper mortgage rates. Indeed, the Council of Mortgage Lenders reported last week that the number of first-time buyers is at its highest level since 2005 as they return to the market in their droves.

Fears of a house-price bubble show no signs of abating as increased confidence in the economy and rising employment contribute to a steady ascent in property values. So far, this is not deterring buyers as low mortgage rates mean affordability is not yet an issue. However, if prices continue to rise this situation could change.

Government schemes such as FLS and Help to Buy will continue to support the growing availability of cheaper mortgage rates in coming months. While interest rates are expected to stay at 0.5 per cent at least until late 2016, following the forward guidance issued by Bank of England Governor Mark Carney, it is important that borrowers take nothing for granted and don’t overstretch themselves. Rates will rise at some point so it’s important to bear this in mind; Anderson Harris can advise as to the best course of action for clients faced with an increasing array of funding choices.

The private banks continue to remain extremely competitive for borrowers requiring large loans, with low rates and flexible conditions often better than those found on the high street. Our excellent contacts with the private banks mean we can also place more complex cases for wealthier borrowers.

For funding solutions for you or your clients, please get in touch.

Adrian Anderson
Posted by
Adrian Anderson