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Nationwide enhances lending options for first-time buyers

Nationwide Building Society has increased the lending limit for first-time buyers following the government’s temporary changes to stamp duty regulations, to provide further support to them and the housing market.

The lender will offer 90% loan-to-value (LTV) mortgages for first-time buyers from Monday 20 July, with no set limit on the number of home loans available.

These will be available direct from Nationwide or via a broker; enhanced criteria will apply.

Existing mortgage members moving home will be able to continue borrowing up to 95% LTV, while for further advances, the maximum has increased to 90% LTV.

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Henry Jordan, director of mortgages at Nationwide Building Society, said: “First-time buyers are vital to breathing life into the housing market and economy.

“We understand one of the biggest barriers to homeownership is raising a deposit.

“As a building society, owned by our members, we are extremely well placed to look at ways of helping people into a home of their own.

“While we will continue to monitor the market carefully, we feel it is the right time to enhance our lending, initially to those looking for their first home.

“We welcome the government’s announcement on stamp duty and hope our combined changes create a positive impact on a market that, despite being in relatively good health, is still recovering.”

Miles Shipside, commercial director and housing market analyst at Rightmove, added: “The ability for lenders to offer lower deposit mortgages to first-time buyers is critical to helping the market recover more quickly.

“The stamp duty holiday is of limited benefit to those first-time buyers who are already exempt from it in many parts of the country, and so Nationwide’s return to 90% loan-to-value is likely to help significantly more for those trying to get their first step on the ladder.

“There’s been record demand for property on Rightmove since the market reopened which has been boosted even further by the stamp duty announcement, all of which should help activity levels over the coming months.”

By Jessica Bird

Source: Mortgage Introducer

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Borrowing is on the way to returning to healthy levels

Despite Bank of England figures that showed mortgage approvals hit a record low of 9,300 in May, there are signs that borrowing is returning to normal levels, according to Hometrack.

The Bank of England’s Money and Credit Report showed that households repaid more loans than they took out in May, but that there was still a small increase in mortgage borrowing.

On net, households borrowed an additional £1.2bn secured on their homes, higher than £0.0bn in April, but weak compared to an average of £4.1bn in the six months to February 2020.

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David Ross, managing director of Hometrack, said: “The data released by the Bank of England is encouraging and shows that borrowing, while not at pre-COVID levels, is certainly returning.

“On a more positive note our data for June shows continued growth and is up on the same period in 2019.”

For the market to return to normal, Ross added, providers must continue to innovate and focus on the customer.

He said: “Continued stimulus is key to maintaining this growth.

“We urge mortgage providers to focus on delivering the very best customer experience, removing complexity through digitisation and ensuring fewer barriers to borrowing.

“This in turn will help grow new lending, helping the economy get back on its feet after the shock of COVID.”

By Jessica Bird

Source: Mortgage Introducer

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Scottish Building Society scraps deposits for first-time buyers

Scottish Building Society are helping first-time buyers by scrapping deposits on new-build mortgages.

Under the Scottish government’s First Home Fund, prospective homeowners trying to get on the property ladder need to find a minimum of 5%.

However, the society has agreed to accept the 5% from house builders, removing the need for buyers to find the cash for a deposit.

Paul Denton, CEO at the Scottish Building Society, said: “As we seek to rebuild the economy post-COVID-19, it is important that as many people as possible have access to affordable housing.

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“We were proud to be one of the first lenders to take applications for the Scottish government’s First Home Fund. Getting a deposit together is the main barrier for customers trying to get on the property ladder; in some cases, one that has been exacerbated by the impact of lockdown on personal finances.

“Removing the requirement for buyers to find that 5% is good news for buyers and good news for a housing industry that is vital for Scotland’s future economic prosperity.

“This is a small but life-changing step and we would welcome further Government initiatives, such as a freeze in land tax, to accelerate the recovery.”

The First Home Fund was launched by First Minister Nicola Sturgeon to make the housing market fairer by providing a total of £150m until March 2021, helping at least 6,000 people buy their first home.

All first-time buyers in Scotland can apply for an interest-free loan of up to £25,000 towards the cost of a home, if at least 25% of the property cost is covered by a mortgage.

By Ryan Fowler

Source: Mortgage Introducer

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Homeowners set to be able to extend mortgage payment holidays

Those struggling to pay their mortgage due to coronavirus are set to be able to extend their payment holidays for three more months, or start making reduced payments, in proposals published today.

On 17 March, banks agreed with the Chancellor that they would offer ‘forbearance’ (tolerance and help) on mortgages, meaning they all should offer those struggling a three-month ‘holiday’, allowing customers a temporary break from having to make mortgage payments during this time.

Over 1.8 million mortgage payment holidays were taken up, and the first of these will be ending in June. But an extension of another three months will now likely be available.

The Financial Conduct Authority’s (FCA’s) new draft guidance also includes an extension of the application period for an initial mortgage holiday until 31 October 2020, so that customers who haven’t had a payment holiday and are experiencing financial difficulty will be able to ask for one.

The current ban on repossessions of homes will be continued until 31 October as well.

Full info on what the FCA expects mortgage lenders to do?

At the moment, these proposals aren’t confirmed. The FCA says it welcomes comments on them until 5pm on Tuesday 26 May, and then expects to confirm them shortly afterwards. Here’s what it’s proposing:

  • If you’ve not had a mortgage payment holiday, you’ll have until 31 October 2020 to apply. Customers who are making repayments now but get into financial difficulty later will be able to request a payment holiday until 31 October.
  • If your payment holiday’s ending, you can ask for another three months if you’re still struggling. Lenders should continue to support customers who have already had a payment holiday where they need further help, unless granting a further mortgage holiday would create its own financial difficulties.
  • Firms are expected to contact customers on mortgage payment holidays and find out what they can repay and, for those who remain in temporary financial difficulty, offer further support. As part of this, firms should consider a further three-month payment holiday.
  • If you can make full or partial payments, you should do so. At the end of a payment holiday, firms should find out if customers can resume payments, or part payments. If so, your lender should contact you to agree a plan on how the missed payments will be repaid, which could include spreading the cost of payments over the remaining mortgage term, or extending the mortgage term.
  • The current ban on repossessions of homes will be continued until 31 October 2020.
  • Payment holidays and partial payment holidays won’t go down as a missed payment on your credit file. However, the FCA says that consumers should remember that credit files aren’t the only source of information that lenders can use to assess how creditworthy someone is.

The FCA adds that these recommendations are minimum standards and that they don’t stop firms from going above and beyond, for example, by offering reduced interest.

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Buy-to-let mortgages aren’t technically covered by today’s announcement as they’re not regulated by the FCA. Yet if a lender is regulated for its residential mortgage business, the FCA says it also looks carefully at how these firms carry out their unregulated buy-to-let business, so it’s hoped that some mortgage lenders will offer the extensions to their landlord customers too.

What impact could a mortgage holiday have on my credit score?

As Martin and the FCA have pointed out, while mortgage payment holidays won’t be marked as missed payments on your credit report, they could still have an impact on your wider creditworthiness, as lenders can find out about them through bank statements or ‘Open Banking’ data, and can factor them in. As Martin says…

‘We wait to see how substantial the impact will be – but those who need a mortgage holiday should still do it’

The FCA has confirmed, sadly, that while credit files shouldn’t be impacted by mortgage or other payment holidays, lenders are still allowed to take them into account when making their acceptance decisions.

It’s impossible to say yet how widespread this will be or how substantial the impact will be – we’ll start to learn that over the next year. Each lender’s assessment process is different; it’s a dark art that’s hidden from the public and never published, so this is likely to be yet another factor applicants will need to navigate.

Certainly many new challenger financial firms talk about their new, more sophisticated customer assessment models, that they believe are better than just relying on credit files. It’s that very fact that sparked me to look at this in the first place. And as they will be able to see that someone has temporarily not paid their mortgage, they can spot payment holidays.

My hope is that as these holidays are specifically for the short-term financial hit of coronavirus – and as the practice is so widespread – it won’t be used by many firms, and where it is it won’t tarnish individuals’ credit reputation for too long. But there’s no real way to know.

Most importantly, I don’t believe this should stop anyone who needs a mortgage holiday from getting one – if it’s crucial for cash flow, just do it. Yet for those on the border, who may find it temporarily useful but can cope without it, add this to the fact that interest racks up during the payment holiday and I’d err on the side of caution.

What does the FCA say?

Christopher Woolard, FCA interim chief executive, said: “Our expectations are clear – anyone who continues to need help should get help from their lender. We expect firms to work with customers on the best options available for them, paying particular attention to the needs of their vulnerable customers, and to provide information on where to access help and advice.

“Where consumers can afford to restart mortgage payments, it is in their best interests to do so. But where they can’t, a range of further support will be available. People who are struggling and have not had a mortgage payment holiday will also continue to be able to apply until 31 October.”

By Callum Mason

Source: Money Saving Expert

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Government to extend mortgage payment holidays

Mortgage payment holidays are likely to be extended past June, according to a report in the Financial Times.

Chancellor Rishi Sunak is said to be in discussions with the banking sector about an extension.

Salman Haqqi, personal finance expert at money.co.uk, said “The government’s initial launch of mortgage holidays brought welcome relief for homeowners who had their income affected by the COVID-19 crisis.

“The scheme, where payment could be deferred with zero negative impact to credit ratings, resulted in up to one in nine homeowners making use of the initiative.

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“Though a formal announcement is yet to be made, many businesses are still closed and the full extent of job losses is still becoming clear, so any extension to the scheme will be welcomed.”

As it stands more than 1.6 million mortgage customers have taken a payment holiday.

The government’s furlough scheme has already been extended until the end of October.

Haqqi added: “Should homeowners wish to look into a payment holiday on their mortgage, it’s important to remember that you will still owe the money and interest will continue to accrue while the deferred payments remain unpaid.

“This means that your monthly payments will likely go up slightly after the payment holiday ends.

“While the option to take a payment holiday on mortgages will have been a lifeline for many, if you are still able to make your payments in full, you should continue to do so.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Barclays extends mortgage offers to six months

Barclays is giving customers up to six-month extensions on mortgage offers as the government has advised home moves should be delayed in the current climate.

Customers who have a mortgage offer and exchanged but not completed can apply for the extension.

However, the lender will need to be told about any change in circumstances, such as being furloughed, which could impact income.

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The lender is arranging extensions directly with customers rather than through brokers.

To qualify the application must be either a residential or buy-to-let purchase, with the current offer expired after 26 March or due to expire in the next 30 days.

It comes after Barclays announced that more than 238,000 mortgage and loan holidays have been approved for customers.

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Last week the bank relaunched 80 per cent loan to value lending after temporarily withdrawing the products in response to the coronavirus outbreak.

All lenders have confirmed they would extend mortgage offers by three months as the virus put the breaks on the housing market.

Based on average bill sizes for a medium energy user on a dual fuel plan paying by monthly direct debit, and averaged across all regions. This information is updated hourly with energy plans which are available to switch to through Uswitch. To appear in this table, plans must be available in at least 7 of the 14 regions.

Written by: Lana Clements

Source: Your Money

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Specialist lender lifts mortgage restrictions

Specialist lender Hodge has lifted restrictions on its mortgages after announcing interim changes to its lending criteria last month.

The lender has resumed accepting applications for new purchases at a maximum of 60 per cent loan to value, and removed its restriction of only accepting like-for-like remortgages.

It will consider capital raising across the whole of its later life range at up to 60 per cent LTV.

Purchase and remortgage transactions will be based on automated valuations.

Emma Graham, business development director at Hodge, said lifting some of the temporary restrictions across later life products would enable it “to help more customers secure finance at this challenging time.

“Over the coming weeks and months, we will continue to review our position in the market with a view to make additional enhancements to our products and criteria in the near future.”

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Restrictions on physical property valuations and the government’s lockdown have been affecting the industry and a range of lenders have temporarily reduced their maximum LTVs.

Other lenders have also relaunched products that had been withdrawn from the market. Last week Nationwide resumed lending up to 85 per cent to new customers.

Chris Sykes, mortgage consultant at Private Finance, said: “It is really encouraging to see lenders returning to market or lifting restrictions on criteria. Hodge coming back to market with greater flexibility gives older borrowers more opportunities for finance when perhaps they or their families need it most.

“Hodge is not alone in this. We have just seen BM Solutions, a major buy-to-let lender, coming back into the market at 75 per cent LTV (up from 60 per cent) and other lenders like Nationwide and Halifax easing on their LTV restrictions.

“Lenders are adapting to these changing times and perhaps even adapting quicker than we have seen in the past.”

By Chloe Cheung

Source: FT Adviser

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Rise in mortgage products ’cause for optimism’

The number of mortgage products grew by 5.9 per cent in the past week in a sign the market is starting to recuperate, according to technology provider Mortgage Brain.

The number of products available last week stood at 8,044, marking the second consecutive week the number had risen, and up by 488 from the previous week.

The increase was mostly due to the remortgage sector, where product numbers went up by 5.4 per cent, while home mover products increased by 2 per cent, and buy-to-let products fell by 1.9 per cent.

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When compared to pre-pandemic levels, the number of mortgage products is still 6,630 – or 45 per cent – lower than the nine week average to March 16, however.

According to Mortgage Brain the latest increase in numbers reflected lenders returning to the market, increasing their LTVs and relaxing some of their criteria.

Last week Nationwide resumed lending up to 85 per cent to new customers. Specialist lender Hodge followed and lifted restrictions on its mortgages, after announcing interim changes to its lending criteria last month.

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Mark Lofthouse, CEO of Mortgage Brain, said the rise in product numbers in the past two weeks was “cause for cautious optimism”.

Describing the recent figures as “encouraging”, Mr Lofthouse added that “we could be at the end of the dramatic week on week reductions”.

Kevin Dunn, director at Furnley House, added: “Last week we thankfully saw the return to the market of some higher loan to value deals from some of the bigger lenders. Hopefully this will have a ripple effect to give other lenders the confidence to return more products to the market too.

“A higher increase in remortgage products makes sense, as often these are easier to complete without having to have a physical valuation.

“There are definitely some green shoots to suggest the market is slowly coming back.”

By Chloe Cheung

Source: FT Adviser

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Do you need mortgage protection insurance?

Your mortgage is likely to be one of the biggest expenses you need to have every month. Even if you were not able to work because of a disease or redundancy, those repayments still must be made, or you may face the risk of losing your home. You can choose from two primary possibilities to protect yourself: you can turn to general income protection insurance (meaning the payments you would get could be spent on anything) or use protection insurance, designed particularly to cover the mortgage payments. People tend to choose the second option often because it is explicitly designed to solve this problem. MPPI, which stands for mortgage payment protection insurance, makes it possible for you to keep on paying off your mortgage, even if you stopped getting a stable income.

Types of MPPI

There are three main types of mortgage payment protection insurance. The difference between them is the range of situations where you will get financial help:

  • Accident and sickness only,
  • Unemployment only,
  • Accident, illness, and unemployment.

The cost of mortgage payment protection insurance

The price of MPPI is not always the same – it may differ accordingly to your age and the level of your mortgage repayments. Apart from that, the number of life circumstances that enable you to get financial help also affects the cost. Therefore, accident and sickness-only or unemployment-only policies are less expensive than the variant that covers both of them.

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What is more, your job or the type of employment contract you have can be significant as well. Most insurers classify professions in different risk categories. For instance, it may look like this:

Class 1 – Professionals, administrative staff, managers, secretaries, IT specialists, etc.

Class 2 – Skilled manual workers, shop assistants, florists, etc.

Class 3 – Semi-skilled workers, care workers, teachers, plumbers, etc.

Class 4 – Heavy manual workers, builders, mechanics, etc.

What is more, most insurance companies cater to self-employed people as well. Still, you should always read the small print carefully in order to make sure you are not excluded because of, for instance, being on a fixed-term or casual contract.

Where to get mortgage payment protection insurance

Firstly, you can be provided with MPPI by a mortgage lender, as most of them offer it along with your mortgage application. It is a convenient solution because, in this way, you will cover your premium as an element of your regular mortgage payment. Nonetheless, it is advisable to always shop around for a policy. You need to keep in mind that buying policy via your lender means that you will be under their group policy. For this reason, further switching to your mortgage can be restricted.

The second option is to cooperate with a mortgage broker to arrange the best insurance for you. They are experienced in comparing numerous policies from many different companies to make sure that you will be provided with the best possible option. What is more, before you make your final decision, they will comprehensively explain to you what the differences in each possibility are.

Another solution that you can choose is to use an existing life insurance policy for mortgage protection. It is possible as long as the amount you are insured for is equal or higher than the value of your mortgage. Moreover, it needs to run for the same term. However, you need to remember that it means you are assigning the policy to your lender. As a result, if you die during the term, the life insurance benefits will be given to your lender to pay off the mortgage. If there are any policy benefits left over after that, your dependants will receive them. However, if the whole sum needs to be used to cover the mortgage, your dependants will get no money.

Topping up your mortgage

If it happens that you want to top up your mortgage, you always have to check if your policy is appropriate for its new value. It is possible for you to find a new policy that will cover the whole amount of your mortgage. Apart from that, you can get other insurance that will be associated just with the added amount.

Both of these options should be compared carefully. Sometimes it can be more beneficial to keep your primary mortgage payment protection insurance and then provide yourself with a second one for the top-up value. You should find out what is the cost of resigning from your primary policy and getting a plan for the full value of your new mortgage instead.

When you are getting a new policy, you may be surprised that the premium is higher than the last time you checked. The reason for this is that you are getting older, and age is one of the main factors that affect the premium. But the good news is that if you quit smoking, or if the rates have lowered since the last time you tried to get the cover, it may be possible for you to pay less.

All in all, to make your financial situation better protected, you really should invest in mortgage payment protection insurance. At the same time, it is advisable not to rush in choosing it and familiarise yourself with all the options, or ask a professional broker to help you to make the right decision.

BY JOHN SAUNDERS

Source: London Loves Business

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Coventry launches online form for payment holidays

Coventry Building Society has launched an online form for borrowers affected by the coronavirus.

The building society will grant payment holidays of up to three months for residential and buy-to-let borrowers.

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It stresses that a borrowers’ credit rating will not be affected, but interest will accrue in the holiday period

For residential mortgages, the payment holiday will apply for borrowers who are up to date on their payments, not in arrears, and can confirm they have been financially affected by the pandemic.

Meanwhile, for buy-to-let mortgages, the facility will apply for borrowers who are up to date with their payments, not in arrears and can confirm that their tenants are having difficulty in paying their rent due to coronavirus.

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A spokesperson for Coventry Building Society said:“[We] urge borrowers currently in arrears who are impacted by the coronavirus to call our customer service centre.

“Savings and borrowing members can see the latest updates on the society’s response to the coronavirus situation by visiting our website.”

By Jake Carter

Source: Mortgage Introducer