News Review
Eurozone jitters are affecting UK mortgages By Sarah Davidson
Jitters over the future of the eurozone shook financial markets in September and in early october. capital economics claimed uK mort- gage lenders had tightened criteria and may increase pricing as a result. the research firm also sug-
gested mortgage credit would be restricted in the coming year, reflecting the market’s concern about uK lenders’ exposure to the escalating sovereign debt crisis in the eurozone. it said the cost to mortgage lenders of raising funds in the wholesale market, measured by combining 3-month Li- Bor with the 5-year credit
Lenders
criticised on criteria despite
95% launches By Sarah Davidson
mortgage lenders have been criticised for failing to offer large value mortgages, mort- gages for the self-employed and high loan to value prod- ucts on new build homes de- spite various lenders launch- ing 95% LtV deals and cutting near prime rates in the past month. in its annual results Barratt
developments said stringent mortgage criteria and failure to lend up to 95% LtV on new-build homes was pre- venting transactions and was a key reason for low housing demand. meanwhile research by
Kensington claimed that 35% of intermediaries believe not
default swap premia of major banks, has spiked upwards by around 200 basis points since June. this has triggered a sharp increase in the cost of insur- ing against default by major uK banks – a cost that lend- ers have to bear when they go to the wholesale market for funding. the latest credit condi-
tions Survey from the Bank of england also showed that the deteriorating economic outlook had already led lend- ers to tighten credit scoring criteria. “the latest rise in financ-
ing costs will do nothing to enhance lenders’ willingness or ability to lend,” said the
enough lenders offer mort- gages for more than £500,000 with 43% complaining lend- ers’ tight credit scoring crite- ria is a major stumbling block when sourcing a mortgage of this size. the next biggest problem identified by nearly two in five brokers was obtaining fi- nance for self-employed cli- ents. in addition 22% of inter- mediaries said having more than one source of income can cause problems for cli- ents wanting a large loan. However, in an attempt to address the lack of lending in the new build sector Skipton teamed up with its estate agency subsidiary connells group last month to offer a 95% LtV mortgage specifi- cally for new-build proper- ties, available through con- nells mortgage consultants and the new Homes group. adrian Scott, connells group mortgage services di-
4 mortgage introducer OCTOBER 2011
Bank. “overall this means that the supply of credit over the next year or so is likely to remain restricted and could potentially become more ex- pensive.” However lenders are still competing aggressively on price with Santander, north- ern rock and Leeds cutting mortgage rates again last month. meanwhile the pace of
growth in the uK financial services sector continued to slow in the three months to September, the latest cen- tre for Business intelligence/ Pricewaterhouse coopers financial services survey showed. in the next three months
firms expect growth will be slower still and for the first time in two years, there will be no improve- ment in profitability. the cBi research also said sentiment had fallen for the first time since march 2009 as firms anticipate more challenging conditions. Last week Standard &
Poor’s affirmed the uK’s top credit rating but warned that the government’s recovery plan is “optimistic”.
scheme is initially being mar- keted via Barratt Homes but will be rolled out to other house builders in due course. Several building societies
also stepped in to offer 90% and 95% LtV deals and im- prove pricing. Saffron cut the rate on its
rector, said: “new-build homes are an essential ingre- dient of a buoyant housing market because they boost the availability of quality housing in general, and for groups such as first-time buy- ers in particular.” aldermore also joined the
ranks of 95% lending on new build launching a mortgage scheme for those with a 5% deposit with Hitachi capital. the deal combines a 2-year fixed rate mortgage at 80% LtV from aldermore with a 15% LtV unsecured loan from Hitachi capital. the
95% LtV first-time buyer mortgage from 6.49% to 5.79% while the Hanley eco- nomic is now offering its 95% LtV mortgage via brokers af- ter launching direct in au- gust.
Bath extended its range of parent-assisted mortgage products with the launch of two new high LtV deals in- cluding a 3-year fix at 4.99% available up to 90% LtV, and a 3-year fix at 5.29% available up to 95% LtV. meanwhile Precise mort-
gages reduced rates across its near-prime deals cutting fixed rates by 0.6% so deals now start from 5.24%.
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