Lenders loosen criteria to hit targets By Sarah Davidson


Loan to values have loosened and criteria has relaxed in the past month as lenders vie to hit their annual targets. In the residential market Accord Mortgages launched a new range of hybrid tracker- to-fix deals up to 85% LTV while Northern rock lifted its maximum LTV restriction for borrowers taking out a sec- ond mortgage. In the past purchase cus-


tomers with another mort- gage could borrow up to 85%. Now the maximum LTV is 90%.


Barclays has also raised


LTVs from 85% to 90% with a range of fee-free deals. Alan Cleary, managing di-


rector of Precise Mortgages, said the moves were likely to


In the bleak mid-winter


by


Robert Sinclair director AMI


As the leaves turn to brown and the nights draw in, the world looks a bleaker place. Our world leaders continue to look frozen like rabbits in headlights, mesmerised by the scale and complexity of the financial problems fac- ing them. To many the UK mortgage market is insignif- icant in comparison to the implications of sovereign debt default. In real terms, greece is well past debt


reflect the charge to hit year end lending targets. He said: “There’s only so


much low LTV business out there and the big banks are competing very aggressively to get it so the natural thing to do is to move up the LTV curve and down on criteria.” Meanwhile Nationwide


changed its policy for new- build valuations and lend- ing allowing a new-build premium to be included in valuations of new property. Previously the lender valued properties of this kind on their resale value which tends to be lower. The announcement came


as it capped its maximum LTV for new-build houses at 85% across all channels, dragging it down from 90%


management and deep into its own IVA. Ireland went there some time ago, with Portugal.


In domestic terms, whilst it is feeling painful, it may not be as bad as many are painting it. Having been pessimistic for the last 4 years, whilst not quite ready to party, I am heartened by how well the UK is responding to the chal- lenges. Workforce flexibility, job creation levels, fiscal tightening are all delivering positives. Whilst unemploy- ment is awful for individu- als, the total numbers are still within the target levels set by the government and economic analysts. Inflation continues to rumble on but the Bank of England rightly is more worried about economic


LTV direct. Its maximum LTV for new-build flats remains unchanged at 75% LTV.


Buy-to-let In the buy-to-let market there was mixed news as The Busi- ness Mortgage Company claimed financial turmoil in the eurozone pushed up buy- to-let rates in Q3 2011. Fixed rates increased by an


average of 0.21% during Q3 and the average tracker rate increased by 0.08%. Andy Young, chief execu-


tive at TBMC, said: “The ob- served rate increase is likely to be a result of continuing problems in the eurozone including the huge financial bailout to greece. This in turn has affected the money


growth than reining quickly back towards the 2% target. The additional quantitative easing will help and shows the determination to pre- vent recessionary winds. The permafrost of regula- tion however will soon creep closer to us as the Financial Services Authority is scheduled to deliver up its next stage of the Mort- gage Market review. This combined with the new European Directive on residential lending will add burdens and new disclosure documents that will do little to aid consumers in comparison to what we have today.


The levels of lending


now seen at around £12bn per month appear sustain- able for the visible future, therefore plans for 2012


markets and increased the price of funding. “It is probable that product


rates would have risen further had there not been increased competition amongst lenders in the buy-to-let mortgage market.” On a more positive note


Kent reliance launched an 85% LTV buy-to-let product via selected intermediaries and available to limited com- panies. Barclays also relaxed cri-


teria on its buy-to-let range raising its maximum LTV from 60% to 75%. The 75% LTV range includes a 2-year fixed rate at 4.39% and a life- time tracker at base + 3.49%, as well as a 5-year fix at 4.99%. Both deals come with a £1,999 application fee.


need to be based on the market we see today. With little prospect of base rate rises in the near future the purchase market is likely to remain key, unless more lenders choose to play with their standard variable rates. I fear however that much more movement there will lead to political and regulatory scrutiny. Lender margins appear to be one of the sunnier parts of the industry.


The need for borrowers to look at the whole of the market and to take advice has never been greater, given the developments on higher loan to value products with still stringent affordability and credit scoring criteria. good bro- kers should now be really busy.


MOrTgAgE INTrODUCEr NOVEMBER 2011 5


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