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Mortgage market review March 2017

Mortgage market update for March 2017

Macro news and drivers

Lenders under fire for cancelling mortgage offers at eleventh hour
High street lenders have come under fire for cancelling mortgage offers based on their own mistakes, costing borrowers money. The Association of Mortgage Intermediaries says the errors often take the form of lenders recording wrong client information, or valuers making mistakes. But it is understood the regulator will not act until more cases occur.      

London house price inflation hits four-year low
House price inflation in London has fallen to its lowest level for four years and could continue to slow during 2017. The January Hometrack UK Cities House Price Index reveals price growth in London has dropped to 6.4 per cent - the lowest level since June 2013.     

City home affordability at worst level since 2008
Home affordability in cities is at its worst level since 2008, with average city house prices nearly seven times the average salary. According to the latest Lloyds Bank's Affordable Cities Review, city property prices are now at their highest ever levels, with the average home costing £224,926, up 32 per cent from £169,966 in 2012.      

Minister reaffirms commitment to 1m homes by 2020
The government remains committed to its target of building one million new homes over the course of the current parliament - despite a shortfall of 190,000 in 2015-16.      

Regulation and legislation

Bank of England relaxes regulations for challenger banks
The Bank of England has pledged to change the capital rules for challenger banks so that they can offer a more competitive mortgage service. PRA supervisors will now take a more flexible approach to these capital requirements.      

Rising base rate put thousands at risk of bankruptcy
A base rate increase of 1 per cent could result in 18,100 new insolvencies by 2020, new data has shown. According to the latest forecast figures from the government's Insolvency Service, even a modest increase of 0.5 per cent in the Bank of England's base rate would lead to an extra 9,700 bankruptcies over the next three years.      

Product developments and innovation

Coventry for intermediaries unveils variable rate range
Coventry for Intermediaries has unveiled a range of variable rate residential mortgages for borrowers with a 35 per cent deposit while discounting existing products. The new product under the Flexx for Term banner is priced at 1.35 per cent to 65 per cent loan to value with no early repayment charges and a £999 product fee.       

Newcastle intermediaries courts FTBS with H2B loans
Newcastle Intermediaries has added a duo of new All in One products to its refreshed suite of loans for the help-to-buy market. The two loans include all standard legal costs, including Land Registry fees, a Land Registry priority search, bankruptcy searches, property searches (such as local authority, water and drainage fees) and VAT.      

Aldermore launches 0.3% proc fee for product transfers
Aldermore is launching a new retention fee of 0.3 per cent for product transfers in a bid to put brokers "at the heart of its proposition".      

Barclays launches mortgage for self-employed
Barclays Wealth & Investments has launched a mortgage designed for UK entrepreneurs and self-employed founders of high-growth businesses.      

Leeds introduces retention proc fee
Leeds Building Society will introduce retention procuration fees this year. It will pay 20bps to intermediaries for product transfers, as well as paying a full proc fee to those helping existing borrowers to port their mortgages.      

Leeds targets high LTV borrowers
Leeds Building Society has added two new deals to its buy-to-let mortgage range in a bid to boost choice for high loan-to-value (LTV) borrowers. The new five-year fixed rate mortgages for re-mortgage only offer rates of 2.75 per cent with a £1,999 fee and 2.90 per cent with a £999 fee.      

Nationwide to pay proc fees for retention business
Nationwide Building Society plans to pay mortgage brokers a procuration fee for retention business. It is expected that the fees will be introduced by the summer and will be launched simultaneously to all intermediaries, with no phased roll-out.        

Consumer trends

Three-quarters of first-time buyers pay stamp duty
Three-quarters of first-time buyers now pay stamp duty compared to just over half 10 years ago. The proportion of first-time buyers able to find a home under the stamp duty threshold has almost halved in just a decade, as first-time buyers increasingly struggle to find properties under £125,000.   

Home ownership falls to 30-year record low
Home ownership in England has fallen to its lowest level since 1985 despite a raft of initiatives designed to boost the number of people who own their home. The Financial Times reports figures from the annual English housing survey show around 63 per cent of households owned their homes in 2015/16.   

Prospective homeowners held back by poor credit scores
New research from specialist credit card provider Vanquis revealed one in four people aged 24 to 35 have been declined credit while more than half (53 per cent) of this group have never checked their credit score.         

Experts corner

Are lenders doing enough to help older borrowers?
Moves to increase upper age limits by lenders have been welcomed by the market. Experts say larger lenders do need to do more, particularly around interest-only lending, criteria changes and affordability pressures for pensioners, and also need to move away from treating upper age limit tweaks as a cure-all.

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