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Mortgage market review - October 2016

Mortgage market update for October 2016

Macro news and drivers

Santander warns borrowers on interest-only mortgages after completion - Santander is warning borrowers about the risks of interest-only mortgages after the sale has completed. The lender is carrying out spot checks on its interest-only mortgage customers by calling borrowers at random and testing their understanding of the loan they have just taken out.

Mortgage lending plummets following Brexit vote -According to the latest monthly report from the Council of Mortgage Lenders, home movers and first-time buyers borrowed £10.6 billion July. They took out 58,100 loans, down 14% on June and 13% on the previous year.

Bank of Englad mantains interest rates but hints at November cut - The Bank of England has decided to keep interest rates at 0.25% but suggested rates could fall further in November if inflation rises. All nine members of the Bank's Monetary Policy Committee voted to keep interest rates on hold following last month's cut.

FCA: base rate rise will hit vulnerable mortagors  - The Financial Conduct Authority says most lenders are not able to properly protect financially vulnerable customers if Bank of England base rate rises. The regulator makes the announcement in key findings following its thematic review into financially vulnerable customers.

House price grosth slows to 8.3%, says ONS  - Annual house price growth slowed in July but remained high at 8.3%, new figures show. The data from the Office of National Statistics revealed that annual house price growth fell 1.4% from June's figure of 9.7%.


Regulation and legislation

Lifetime ISA bonus can be used to fund deposits - The government has announced that Lifetime ISA savers will be allowed to put the bonus towards a deposit for their first home when they exchange contracts. The Lifetime ISA is set to be introduced in April next year and will allow anyone younger than 40 to put away up to £4,000 a year until they are 50. For every £4 people save, the government will give them back £1, a bonus of up to £1,000 a year.

Market watch: how will Autum Statement impact houseing? -As more good news emerges and Rics summons a half-smile, will the Autumn Statement make any provision for housing?

FCA proposes standalone equity release qualifications -The FCA is considering a standalone equity release qualification to give more customers access to the product, including through advisers. The suggestion is part of a consultation on exam standards, which closes on 13 December.

FCA sets out how it will investigate mortgage panels -The FCA has set out the scope of its investigation into how mortgage panel arrangements hurt competition and consumer choice. The regulator outlined its plans in May to examine competition in the market, including how consumers assess products, the impact of regulation and commercial relationships across the mortgage market.

Property 118 reveals legal action plans against BOI lawyers and Skipton -Landlord group Property 118 has revealed its plans to take legal action against Bank of Ireland lawyers and that private funders could help claim against Skipton Building Society. In June, Property 118 won a Court of Appeal case against West Bromwich Building Society and said the lender had wrongly raised interest rates on tracker loans without a rise in base rate.


Product developmenst and innovation

Aldermore cuts help to buy rates by more than 1% - Aldermore is reducing rates on its Help to Buy: mortgage guarantee offering. The lender is replacing its existing two-year fixed rate products with a standard, non-tiered offer.

Availability of 5% mortgages drops after EU referendum - According to the latest AmTrust Moneyfacts LTV tracker, the number of available mortgage loans with a 5% deposit dropped from 249 in July to 238 in August.

Yorkshire reduces rates on three and five-year fixes - C Yorkshire Building Society has reduced rates for borrowers looking to secure a longer term deal, with a 0.14% reduction on selected three and five-year fixed rate mortgages. The Society has reduced rates on its range of three and five-year fixes at 65%, 75% and 85% loan-to-value (LTV).

New five year fixed B2L range launched by Paragon Mortgages - Specialist lender Paragon Mortgages has added a new range of five year, fixed rate buy-to-let products to its range. The new mortgages, targeted at individual and limited company landlords, offer interest rates starting at 3.75 per cent and are available at up to 75 per cent LTV.

Coventry Building Society increases B2L maximum age to 85 - If Coventry Building Society is set to increase its maximum age at end of term on buy-to-let lending by ten years, from 75 to 85. The maximum age for applicants will be 75yo.

Santander launches online re-mortgage application -If you have your mortgage with Santander, you can now apply for a re-mortgage online in as little as 30 minutes. The new service provides applicants with an instant decision on their mortgage. Santander says the use of straightforward questions and design makes it easy to apply for a mortgage online.

Accord unveils new 10-year fixed rate mortage - Accord Mortgages has launched a new 10-year fixed rate mortgage, the lowest on the market for borrowers with a 25% deposit. It is available to borrowers with 25% deposit at an interest rate of 2.88%, which can be ported to another property should the borrower wish to move during the fixed rate period.

Habito launches Digital Mortgage Broker - UK tech startup, habito, has launched what it calls "the world's first artificially intelligent Digital Mortgage Adviser (DMA)" allowing consumers to discuss their mortgage needs from any connected device, 24/7, without requiring a human broker.

Chelsea launches online and telephone remortgages - Chelsea Building Society has launched a range of two- and five-year fixed rate loans for remortgage customers. The new range includes short and longer term options across 65, 75, 85 and 90 per cent LTVs, and a choice of fee-free mortgages. The range can be obtained online or via telephone.


Consumer trends

Stamp duty and soaring house prices are puttingt brits off moving - According to, six out of 10 homeowners are putting off a move up the housing ladder to remain in their current property and undertake improvements, indicating a possible slowdown in the housing market.

Online adviser trussle pledges to find best mortgage deal - Digital mortgage brokers are starting to appear so instead of visiting an adviser you can apply for a home loan from your computer. The way it works is that you key in your details for a mortgage or remortgage, and the system works out the best deal for you. You also have the choice of speaking to an adviser on the phone. If you want to proceed, Trussle will send the application to the lender.

One in three houses sales blosked by mortgage problems - More than a third of house sales are falling though because buyers or sellers cannot arrange a mortgage in time, new research has revealed. According the Nottingham Building Society, mortgage issues are the biggest reason for house transactions failing over the past five years, with 34% of people who have tried to buy or sell blaming finance problems for the sale not going through.

A quarter of parents have moved house to be in their desired school catchment area - According to Santander Mortgages, 26% of parents with children of school age have either bought or rented a new property to get their children into their desired school catchment area.


Experts corner

Borrowing into retirement: what are the options? -As lifestyles change an increasing number of people are looking to borrow into retirement. Stephen Little looks at how lenders have reviewed their age limits in response to growing consumer demand.

How far will mortgage robo-advice go? -While brokers who refuse to go digital will be shunned by consumers, the most successful firms will combine technology with the best of their human skills



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