This week’s press coverage seems to have taken a very ‘green’ feel, especially the cover of MI. MS and MSL picked up on the government’s plans to make all British homes carbon-neutral in the next decade.
In doing so, two million tonnes of carbon could be saved every year, cutting an average of £160 from domestic energy bills. The Chancellor’s plans were met with some pretty harsh criticism from the opposition, with George Osbourne, the Conservative shadow chancellor, saying: “Gordon Brown’s speech proves that the only thing about him that’s green is the recycling of his policies. He started announcing insulation schemes 12 years ago.”
Following on the carbon-neutral theme, FA reported that 37 per cent of the 200 advisers surveyed by Alliance & Leicester believed that green mortgages will develop following the introduction of Energy Performance Certificates. Green mortgages would involve a reduction in the headline rate for carbon-neutral homes or offer an increase in loan to value to allow eco-friendly upgrades. However, it is believed that presently there is not sufficient demand for products to be launched to the industry.
Rob Griffiths, associate director of AMI, agrees in MI that there doesn’t seem to be the demand at present. However, he also thinks that with the introduction of Home Information Packs (HIPs) on 1st June, a number of lenders will be putting some serious thought into green mortgages, especially if they think there is some serious money to be made.
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On the ‘green’ theme, but not in the positive sense of the word, MSL revealed that the government looks set to target UK’s ‘green belt’ in its quest to meet house building targets. Hertfordshire County Council has estimated that it will need to build 30,000 homes on green belt land in order to meet its housing targets of 100,000 new homes by 2027.
Up until now, building on the green belt was only permitted under ‘very special circumstances’ and has resulted in the Ecology Building Society calling for the government to explore recycling land rather than targeting the green belt. MI also features an article on the supply and demand of the UK housing market, with Hamptons International reporting that there is an average of eight buyers for every seller in the UK.
Exit fee fracas
Moving on, and there’s more on the exit fee front; following the Financial Services Authority’s (FSA) clampdown on exit fees, Moneynet.co.uk has revealed to MS its fears that this could lead to lenders massively hiking their arrangement fees.
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According to Richard Brown, chief executive of Moneynet.co.uk: “As one lucrative revenue stream dries to a trickle, and sizeable sums are handed out in refunds to former customers, we will see an increase in the arrangement fees being charged and more lenders will adopt dual pricing policies.” In MI, Hugh Nichols, partner at Badbury Berkeley Financial, raises a fair point by asking how this is treating customers fairly.
Interest only
As the Council of Mortgage Lenders (CML) reports that the popularity of interest only mortgages has continued to grow; with 27 per cent of interest only borrowers who moved house in January having not specified how they intended to repay the capital of the loan, as detailed in MSL, there continues to be indecision as to whether this is due to the client not being able to afford a repayment option, or as Sue Anderson from the CML states: “It is down to consumer choice, as opposed to borrowers thinking they would not be able to have this much of a loan on a repayment basis.”
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As reported in MM, speaking at the recent FSA Scotland event, Andrew Turrell, mortgage and credit unions manager said: “Many brokers are failing to access affordability for clients, particularly for interest only mortgages and mortgages that extend into retirement.”
Talking point
Fixed rates are somewhat of a talking point in this week’s press, with the CML reporting that a staggering 85 per cent of first-time buyers plumped for fixed rate mortgages in January, which is the highest number to be seen in a single month. It is thought that this is largely due to uncertainty over the next Base Rate rise, but also as fixed rates have been priced more competitively than variable rates.
According to the CML, the average interest rate on fixed products hit 5.27 per cent in January, while variable deals were 5.54 per cent, according to MS. Meanwhile FA reported that the Consumer Credit Counselling service has warned that home owners are set to struggle this year with higher fixed rates and rising interest rates. Since August’s Bank Base Rate Rise, the number of fixed rate mortgages that come with a fee of more than £750 has risen sevenfold.
Finally on buy-to-let, FA, MS and MI picked up on Mortgage Trust’s latest research, revealing that despite reports of falling rental yields, one in four property investors plan to keep their properties for more than 15 years. With 75 per cent of landlords expecting to hold onto their properties for more than four years.
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