This week’s news has highlighted the decline in the number of first-time buyers (FTBs) and their preference for fixed rates when they do take out a mortgage.
In MI, Duncan Berry of GE Money Home Lending, mentions the introduction of Nationwide’s 25-year fixed rate and quotes the Council of Mortgage Lenders (CML) saying that in January, 85 per cent of FTBs choose a fixed rate – the highest figure on record. Berry points out that lenders who have previously launched 25-year or similar terms have been forced to withdraw such products due to lack of customer demand.
Griffiths says: “We had two rate increases by early January, with unanimous predictions that more were on the way in 2007. Another quarter per cent rise duly happened in early February, so it is perhaps not surprising that the most vulnerable category of home buyers have sought the comfort of a fixed rate.
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In MS, Mark Harris of Savills Private Finance, mentions the launch of Alliance & Leicester’s 125 per cent mortgage and suggests that, for some FTBs, such high-LTV mortgages may be their only option.
FA reports that the Bank of England says the number of home owners borrowing against their property is rising; estimating mortgage equity withdrawals to be £14.6 billion in the final quarter of 2006 – an increase of £2.4 billion over Q3.
The Halifax reports that houses prices are still rising, although the rate of growth is lower than 2006, while the Royal Institution of Chartered Surveyors reports that new buyer enquiries fell in February and newly-agreed sales dropped for the first time since June 2005.
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Griffiths says: “The writing is on the wall. All we need now is another rate rise increase and we could see the property and mortgage markets weaken significantly.
Finally in FA, the Professional Mortgage Packagers Alliance announced that it will be developing a web-based sourcing system for non-conforming mortgages, with intended roll-out before the end of the year. It has compiled a shortlist of suppliers of software components.
ME investigates why some networks are offering brokers financial incentives to join them.
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Cynics believe the real reason some networks are offering financial incentives is because they are desperate to push up their appointed representative numbers. Mortgage Next Network and Prestbury were two firms mentioned in the article.
MSL has a feature on Tony Machin, group managing director of Freedom Finance, who is quoted as saying “At Mortgage Next, quality is key. A lot of people count numbers. But the main thing is quality.”
Publications mentioned
Mortgage Introducer MI 07 Apr
Mortgage Strategy MS 9 Apr
Mortgage Solutions MSL 09 Apr
Financial Adviser FA 12 Apr
Mortgage Edge ME April
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