Category Archives: Latest News

First time buyer mortgages double in number

Access to mortgages for first-time buyers is getting easier with the number of products available doubling in number in the last three years, according to a study.

Moneysupermarket, an online comparison website, says that since 2012 the number of 95% mortgages has rocketed by nearly 450%.

In addition, first-time buyers are also being tempted by mortgage rates that have dropped by 1% though the website is urging potential homebuyers to be aware of the mortgage’s whole cost.

The study has also found that there are now 2,776 mortgages for first-time buyers, with the total being boosted by the Help to Buy scheme which helps buyers onto the property ladder.

The average rate for a first time buyer mortgage is now 3.26%.

Rates for first time buyer mortgages

The average loan to value needed for a first time buyer mortgage has remained fairly steady at 79% over the past three years.

This means that the average first time buyer in the UK is now having to find a £31,500 deposit on a property valued at £150,000.

Under the Help to Buy scheme, a property of the same value would only need a 5% deposit of £7,500.

Moneysupermarket says that there are now 170 mortgages available for those with a 5% deposit with an average rate of 4.72%.

The website’s head of banking, Kevin Mountford, said: “The growing number of mortgages for first time buyers, and falling interest rates, is good news for those wanting to get onto the property ladder.

“For those who can scrape a 10% or 15% deposit there are more competitive deals available.”

However, he warned that anyone looking to take on a first time buyer mortgage should be aware of the additional fees which may affect the benefit of having a lower mortgage rate.

Small firms say alternative finance demand will rise

Meanwhile, around 60% of the UK’s SME’s say that the demand for alternative finance will grow as banks still have tight lending criteria in place.

The study from Amicus Finance says there’s been a drop in the level of traditional business finance from mainstream lenders and alternative finance, such as bridging loans, will increase by 26% over the next two years.

Last year, the firm says that alternative lending amounted to £1.74 billion, which is double the amount loaned in 2013.

Of the alternative finance options for business, 24% said they had looked at crowd sourcing finance, which also includes peer-to-peer lending, while 18% considered invoice/cashflow finance.

Businesses looking to bridging loans for their finance needs

When it came to commercial mortgages and bridging loans, 8% of businesses said they had considered this option while 6% had looked at asset finance.

The chief executive of Amicus, John Jenkins, said: “The finance landscape for business has changed for good and alternative finance demand is going from strength-to-strength.

“Small businesses are turning to specialist lenders because they have the skills to appreciate their specific needs.”

Bridging loan lender reports 200% boost

Leading bridging loan lender Mint Bridging has announced its loan book has soared in value over the past year by more than 200%.

The firm has also announced a slew of new financial products and plans to open a London office.

Andrew Lazare, managing director of Mint, said: “We are working with some great clients and brokers and achieving our growth plans. We have had a fantastic response to our recently launched products.”

He added that the firm is committed to offering a transparent, honest and flexible service to its clients and brokers and a lot of their business is repeat borrowing.

Mint says it is positive about its prospects for the coming year and for the bridging loan industry.

Aldermore set to lend £1.4bn in 2015

The good news was echoed by Aldermore, a specialist lender, which has revealed it is on track for achieving its target of new lending worth £1.4 billion by the year-end.

The firm now has lending worth more than £5 billion with £2.4 billion to SMEs and £2.7 billion to property owners.

If the firm hits its yearly target, then its growth rate will be around 30%.

The chief executive of Aldermore, Phillip Monks, said: “Our achievements have given us confidence to look forward to the rest of the year and beyond.”

The firm also reports that SMEs’ deposits are showing a big surge in growth, up 10% to £1.1 billion.

All this is likely to be good news to the firm’s shareholders since Aldermore gained admittance to the London Stock Exchange in March after pushing back its plans for October debut and raised £75 million equity in the process.

Number of five year mortgage deals in the UK rocket

Meanwhile, mortgage industry experts are predicting a leap in the number of home loans being made available with the lowest rates ever offered in the UK.

In addition, competition in the mortgage sector will increase now that the general election outcome has been resolved, say experts.

This has been underlined by the website Moneyfacts who say that people looking for a five-year fixed-rate mortgage can do so more cheaply than with the rates currently being offered on a two-year deal.

Borrowers can expect a rate of 3.45% on the five-year deal while the rate fixed for two years is costing, currently, 3.73%, on average.

Just 12 months ago, the fixed-rate on a five-year deal was 4.09% on average.

A spokeswoman for the site said explained that longer term fixed rate deals are providing mortgage borrowers with extra security.

LendInvest set to expand into buy to let sector

With an ambition to double its £290m lending book this year, LendInvest says it has an appetite to expand into the buy to let market (BTL) market with bridging loans.

This would, the firm says, be a sensible way to boost growth.

LendInvest’s Christian Faes, founder of the property financing firm, said they remained committed to property lending but was looking at entering the buy to let bridging loans market next year.

He explained: “There’s a big demand for it and it’s what we know best.”

LendInvest says it is committed to offering bridging loans but fears how large a market share they can take before compromising on the level of risk on the deals they take on board.

The firm also believes that the bridging market will help give them an edge when they enter the BTL sector.

To help the firm’s planned growth they have just hired Microsoft’s former director of marketing strategy, Bart Boezeman.

He takes up the role of chief marketing officer.

Mr Faes said: “Bart brings a wealth of expertise which will contribute to our brand development.”

Mr Boezeman said: “The LendInvest vision is an exciting one and the mortgage industry is ready for something new.”

Just Cashflow announces FundingKnight tie-up

As LendInvest announces its expansion plans, business loans provider Just Cashflow has announced its partnership with crowd lending platform FundingKnight.

They are now aiming to raise £4 million from retail investors to expand their business operations.

The money will allow FundingKnight to provide growing companies in the UK with finance facilities.

The chief executive of FundingKnight, Graeme Marshall, said: “This complimentary investment opportunity for alternative finance will enable more businesses to benefit.”

Homeowners looking to fix long-term rates

Meanwhile, the Council of Mortgage Lenders (CML) has published figures that show that remortgaging in the UK has increased by 15% month-on-month as homeowners respond to recent rate cuts.

This means that some are now fixing their mortgages on a five-year fixed rate of less than 2%.

Apparently, from the CML survey, 75% of people thinking of remortgaging are looking at fixed rate deals.

Of the remainder, 7% are looking at a tracker rates, 4% for discount deals and 7% would opt for a standard variable rate.

A spokesman for Nottingham Mortgages Services said: “For the best remortgaging deal it’s important to look at more than the base rate and search the whole market and be aware of any product fees that can be charged.”

Bridging loans running at £50m a week

The UK’s bridging loans industry is going from strength to strength with nearly £50 million worth of short-term finance being approved every week, according to one index.

The West One Bridging Index makes clear that the bridging loans sector could be worth around £2.5 billion gross this year.

West One Loans has also announced it loaned £50 million in the first four months of 2015 – its loan book is now worth £200 million.

A director of the firm, Stephen Wasserman, said: “The market is thriving and looking healthy.

“Borrowers and brokers are alert to the possibilities the bridging loans industry has to offer them and our stock continues to rise.”

Bridging loans for property refurbishment

Another survey revealed this week that the most popular use for bridging loans is for property refurbishment.

The survey from MTF has analysed broker sentiment and 57% of respondents said refurbishment was the most popular use for such loans.

The survey also revealed that 39% of brokers say solicitors are the main cause for delays in bridging loan applications and 18% say that a bridging loan application, on average, takes nearly two weeks to complete.

A director of MTF, Tomer Aboody, said: “Rising property prices are pushing down rent returns so property investors are seeking out assets which need work so they buy them at a low price, carry out renovations and rent or sell them on for a decent profit.”

He said that mainstream lenders are still imposing tough lending restrictions which makes it hard for property investors to access funding.

Second charge lending hits five-year high

Meanwhile, the Enterprise Finance secured loan index has revealed that second charge lending grew by 13.7% in the year to March to reach a five-year high.

The index reveals that £75.5 million was loaned in March, up from £66.4 million in the same month last year and February 2015.

A director of Enterprise Finance, Harry Landy, said: “The market is moving up a gear after a solid start and demand for consumer credit remains keen.”

He added that the growth of 40% in lending shows that as the economy recovers, people are looking to borrow money once again.

The average value for a second charge loan is just over £61,300, according to Enterprise Finance, which is a year-on-year increase of 3%.

High Street banks say mortgage approvals are growing

With a slow start to the year for mortgage approvals, the number now being approved is ‘trending upwards’, says the UK’s High Street banks.

According to the British Bankers’ Association (BBA), banks offered 38,751 mortgages for house purchases in March – up from the February figure of 37,453.

The new monthly approvals figure is the highest it has been for six months but it’s still 14% lower than it was 12 months ago.

One reason for the spike in approvals is the growing number of low mortgage rates now being offered.

With the prospect of the Bank of England instigating a rise in interest rates receding, more lenders have continued to reduce their mortgage rates.

Indeed, there are now five year fixed rates available for less than 2% year.

Council of Mortgage Lenders also announce mortgage rise

The figures from the Association have been backed up by the Council of Mortgage Lenders (CML) which has also recently reported a growth in lending.

In addition, the BBA says more people are using overdrafts and loans from their bank – borrowing rose by £400 million in March over the month previously.

However, in another report, the cost of 10 year mortgages have begun to rise with lenders increasingly withdrawing their low rates for this term.

Lenders are slowly increasing the rates for 10 year loans from 2.89% to 3.09%.

Market analysts are now contemplating whether this is a wider trend of increasing the rates for fixed-rate deals from lenders which are now beginning to creep up from their all-time lows.

David Hollingworth, a broker at London and Country, said some lenders are still trying to compete over a 10 year term.

He added: “We have seen some 10 year mortgage rates moving up and it’s only a matter of time before other lenders follow suit.”

Bridging loan firm Amicus enjoys ‘outstanding’ quarter

Meanwhile, the UK’s bridging loan industry continues to go from strength to strength with London-based fund, Amicus, announcing it had completed deals worth £67 million in the first quarter.

The firm points out that it did more than £30 million of business in March.

Amicus’ managing director, Keith Aldridge, said: “We’ve been planning for growth over the last 12 months and are delighted that our first quarter has reinforced that confidence.

“We should see a 10% share in 2015 of what is a growing market.”

UK’s bridging loans reaches £80.5m

A new regular report on the UK’s bridging loans industry, called Bridging Trends, will highlight the latest data from the industry.

In their first report it has been revealed that in the first quarter of 2015, the amount of gross bridging lending reached £80.5m with the average term for a loan being 11 months.

The average LTV is 50% and the average interest for a bridging loan is 0.95%.

The most popular use of bridging loans is for property refurbishment and 69% of these loans were unregulated.

The data has been compiled by a clutch of bridging loan firms including lender MTF and a variety of bridging loan packages.

Data for the UK’s bridging industry

This combination of data is the first time that a regular measurement of the country’s bridging loan industry has been recorded.

Those behind the report says it will be updated and published on a quarterly basis and will measure key indicators including the average monthly interest rate, average completion time as well as the typical bridging loan purpose.

A spokesman for MTF said the purpose of the report is to address a lack of transparency for the UK’s bridging finance sector.

He added: “We are bringing together a number of the industry’s largest packagers to collect data and present objective information as a sector benchmark.”

Those behind the bridging trends data report believe it will become a useful tool for players in the financial market and helped to deliver a realistic representation on the current state of the UK’s specialist lending.

Unregulated bridging loans for commercial use

The MTF spokesman added: “The data has already brought to light interesting factors including the significant percentage of unregulated bridging loans which suggests they are being used largely in a commercial context.”

The report says that LTV levels remain sensible despite a number of newer entrants to the market offering higher LTV loans to clients.

However, the duration of a bridging loan suggest that it is now no longer being seen as a short term financial fix but a longer-term facility.

This means that a growing number of clients see bridging loans as providing breathing space because borrowers are struggling to find mainstream funding.

Indeed, this trend is now so pronounced the report begs the question whether the financial sector is now becoming a ‘new breed of specialist lending’ for borrowers in the UK.

Mortgage market for March goes flat

The looming General Election is thought to be behind the flatlining of house buyer enquiries and sales in March, according to the residential market survey produced by RICS.

However, 21% of surveyors are reporting house price increases in March and 15% of them say they will grow further in the next three months.

In London, this drop in house buying activity is the 11th month in a row that agreed sales have fallen and nearly one in four surveyors say there’s been a drop in the number of new properties being put on the market.

 

1 in 4 mortgage brokers affected by rule change

A survey has revealed that around a quarter of the UK’s mortgage brokers say they have seen a drop in volumes since new mortgage rules were brought in a year ago.

The research has been undertaken by Paragon Mortgages which had the intention of establishing what the impact of the mortgage market review (MMR) was for the first three months of 2015.

Around 200 mortgage intermediaries replied and 43% said they had not seen a change in their business volumes as a result of MMR.

However, 24% said that their business had increased while 25% said their business had decreased as a result.

When questioned further, most intermediaries who said they had seen a fall in business said volumes had dropped by up to 30% – while 40% said their decrease had been higher.

Long term effect of MMR on mortgage market

The survey also reveals that when asked to predict the future, 15% of those intermediaries questioned admitted that they do not know what the long-term effect of the new regulations would be on the mortgage market.

When asked which of their customers are now finding it more difficult to find a mortgage, the self-employed topped the list with 75% of responses while retired customers are also struggling, say 52% of intermediaries.

Another 51% said those clients with ‘complex incomes’ were also struggling to find a mortgage.

A director of Paragon Mortgages, John Heron, said: “Our research shows there is some uncertainty in the market over the long-term impact of MMR changes on business volumes. This is not unexpected and with any significant change in regulation will come a period of adjustment and the industry should monitor this carefully.”

He added: “We also need to recognise there’s no such thing as an average mortgage customer any more since people have a greater variety of circumstances so we need to be innovative to meet the increasingly varied demand from customers.”

UK bridging loan industry is worth ‘£4bn’

Meanwhile, one finance chief has claimed that the UK’s bridging market is worth a huge £4 billion.

The claim comes from Marc Goldberg who heads-up Lancashire Mortgage Corporation who asked a specialist company to put a value on the bridging loan market.

Mr Goldberg says the bridging loan sector is growing rapidly because it regularly trumps the abilities of High Street lenders to meet client needs.

He said that the speed, flexibility and service of the sector were its strengths and things were going to get better for lenders of bridging loans.

Mr Goldberg said: “We are up 50% on where we were last year and the report we’ve had done says the bridging market is worth £4 billion.

“Every week there’s a new bridging loans lender because, let’s face it, the banks aren’t lending money so the speed of service and flexibility that bridging market lenders have is what clients want.”

He said that the bridging loan sector was offering fantastic opportunities and that it would become much bigger than it currently is.

Demand for high-value mortgages drops

The Bank of England says that demand for high-value mortgages has dropped for the third successive quarter.

The bank’s research has revealed that demand fell sharply for mortgages in the first quarter of 2015 – with demand for high-value properties falling at its fastest rate since the third quarter of 2008.

However, the bank says that mortgage demand is expected to bounce back to normal levels in the second quarter of 2015 to underline the recovery of the property market.

Housing worries affect high value mortgages

Mortgage lenders say the fall in demand is down to a combination of issues including changes to regulatory policy and worries over housing affordability.

Lenders say that some potential homebuyers are also worried about the outlook for the performance of the UK’s housing market this year.

They are concerned too that the predicted recovery may not take place until after May’s General Election.

The Chief Executive of Dragonfly Property Finance, Jonathan Samuels, said the political uncertainty was the cause for the sharp drop in the demand for the mortgage market.

He added: “Many super prime and prime buyers are waiting to see what the next government looks like before committing to a home purchase.”

Mortgage market is ‘cautious’

Mr Samuels pointed out that there’s more caution at the upper end of the mortgage market down to the ‘most uncertain election’ in decades – and will remain until it has taken place.

However, the Bank’s survey also reveals that lenders are also showing an increase willingness to lend to those borrowers who have a deposit of less than 10%.

This means that many first-time buyers are now seeing improved chances of getting a mortgage.

The survey also revealed that there has been no change in the rate of availability of credit for businesses.

Indeed, the bank highlights the issue as being a handbrake on the country’s economic recovery and says weak corporate lending is a problem.

Lenders though anticipate a rise in credit demand from small firms in the second quarter.

Alternative finance sector will contribute to grow

Meanwhile, delegates attending the recent Innovate Finance Global Summit heard how the growth in the UK’s alternative financial industry will continue apace.

GLI Finance’s head of public affairs, Louise Beaumont, said the sector was playing an increasingly important role, especially for small and medium-sized firms in the UK.

She pointed out that the availability of things like bridging loans for small firms still has a low rate of recognition among business owners.

Small firms should use ‘alternative finance’

Ms Beaumont explained: “Out of habit many firms will approach their bank first to discuss their options but many banks are often not suited to serving some businesses.”

Essentially, she explained, the nature of the UK’s economy has changed and banks are still focused on making a secured loan against tangible assets but many new firms have valuable intellectual property which they can utilise instead.

Delegates heard that the industry should do more to promote awareness of the variety of business finance options available including equity and invoice financing, bonds and donations as well as bridging loans.

Bridging loans sector goes from strength-to-strength

The strength of the bridging loans industry in the UK has been underlined with news that West One Loans has written more than £80 million of new business in the first quarter of 2015.

The firm says that it completed £30 million of completions in February alone.
The value of these loans has underpinned the firm’s position as the UK’s biggest privately funded short-term secured lender.

This news follows publication of the firm’s Bridging Index recently which revealed that the bridging loans industry is now providing nearly £50 million worth of short-term finance on a weekly basis.

This means that the annual gross bridging lending figure will be around £2.5 billion.

West One has a strong start to 2015

A director of West One, Stephen Wasserman, said: “This is a big start to the year and reflects our success and also that of the industry’s continued growth.

“The bridging loans market is now three times bigger than it was in March 2011 when we launched our Bridging Index.”

He said the upsurge in the popularity of bridging loans was down to the improved reputation of introducers and borrowers who are increasingly aware of financing options that are available.

In addition, High Street banks still have tight lending criteria whereas bridging loan companies are keen to make short-term loans.

Mr Wasserman added: “The economic picture is favourable and borrowers are confident in the case outlook. It’s these factors that have combined to create an environment to do business.”

UK’s bridging loan market is growing quickly

Pointing to his own company’s strong start to the year, he said that January and March were ‘good months’ on that February was ‘exceptional’.

He said that West One had a flexible approach to lending and added: “We have written a wide range of loans since January from multi-million pound deals to a couple of £30,000 deals.”

Brokers are ‘dissatisfied’ with client’s solicitors

Meanwhile, the annual broker survey from Amicus – which was formerly known as Capital Bridging Finance – has revealed that most brokers are dissatisfied with the responses from their client’s solicitors.

The firm found that 73% of brokers were critical with the service their client’s solicitors provided and that there was still ‘much to be done’.

Now Amicus says it and other ASTL members need to work hard to improve the education for many solicitors who are ignorant of the demanding timelines which ensure that a bridging loan application is completed successfully.

In addition, the survey also reveals that bridging loans of longer than six months are now the industry norm and loans for a year are the most popular. The second most popular option is for a nine-month short-term loan.

Brokers say that only 1% of applicants are seeking a bridging loan of 18 months or more.

The managing director of Amicus, Keith Aldridge, said: “Our survey shows that stakeholders need to satisfy each other’s priorities.”

Mr Aldridge added that 80% of brokers believe that the bridging loan sector is on the up and that his firm is looking to achieve a 10% market share of it.

Bridging loans in the UK are growing in popularity

The number of people seeking bridging loans in the UK is growing at such a rate that nearly £50 million worth of such lending is granted every week, according to a report.

The figures come from the Bridging Index which is published by West One Loan and underline the strong start to 2015 for the bridging loans market.

The index revealed that nearly £2.5 billion worth of bridging loans have been completed over the past 12 months to benefit people looking for short-term funding.

According to the index, there has been a 24% jump in the number of bridging loan deals completed from 2013 as the UK’s market rapidly grows.

Demand for bridging loans rocket

The performance last year follows another strong market performance in 2013 and which, say industry leaders, is proof that the public has a growing trust in bridging lending.

A director of West One Loan, Duncan Kreeger, said: “The annual gross bridging lending of £2.5bn is a headline that preoccupies us all. When it is broken down by the daily lending figure it gives a sense of how useful bridging loans are on a daily basis.”

He added that nearly £50 million week is helping developers, individuals as well as business owners to complete projects that would fail without having short-term funding in place.

The index shows that the daily lending figure was around £3.2 million in 2011 which means that the bridging market has grown by three times as more business lenders and brokers handle more work.

Borrowers have confidence in bridging loans

One of the reasons the bridging loans market is growing so quickly is that the profile of the sector has been promoted effectively to potential borrowers.

The stakeholders within the industry are highlighting the usefulness of a bridging loan for short-term funding which is a message that is the increasingly picked up by borrowers.

Another reason is that mainstream lenders are still reluctant to offer short funding for unusual cases, but bridging loan firms are often more enthusiastic for these financial needs.

There’s no doubt that the bridging industry will continue its boom over the coming year as more firms and clients enjoy the benefits of short-term funding for their specific needs.

Financial brokers reject ‘complicated applications’

Meanwhile, a survey of financial brokers has revealed that one in 10 of them would turn down a mortgage application that did not meet the current strict high-street lending criteria.

The figures come from Kensington, a specialist mortgage lender, who say that brokers are likely to pass on an application if they think it is too complicated.

Kensington’s head of sales, Steve Griffiths, said: “Brokers are focusing on building a business but there are alternatives to rejecting cases look too complicated.”

He said he was surprised by the survey results and believed the problem is in the more complex lending applications.

Specialist mortgage lending campaign launched

The mortgage lender is now putting together a campaign to help brokers identify these specialist cases and where they should be placed.

Mr Griffiths added: “Kensington has 20 years of experience and can offer solutions for complex cases.”

The survey also found that 37% of financial brokers would go to a specialist lender directly, while 17% of those questioned said they would refer a complicated applicant to a packager.

However, 36% of the brokers said they would use their own sourcing system to find an alternative lender.