Remortgage Market Expected to Continue Growing

According to the Council of Mortgage Lenders, both residential and buy to let remortgaging is expected to continue to grow in the second half of 2017. Low mortgage rates has continued to encourage borrowers to refinance and move away from their lender’s SVR amongst tough competition between lenders.

But despite the continuing strength of the remortgage sector, homeowners are being warned not to be complacent. For those still considering the options and weighing up the benefits, the time to remortgage could be now.

A surprise result at the Bank of England
Nearly three in five people that remortgaged in May said they believed the average mortgage rate would be unlikely to change over the next 12 months. But June’s vote on interest rates from the Bank of England’s Monetary Policy Committee (MPC), kept rates at 0.25% by only five votes to three.

Despite some signs of a possible economic slowdown, three members of the committee voted for an interest rise amidst rising inflation. It has been a full decade since the Bank of England last raised the base rate and this result has ruffled several feathers in the industry.

A warning of complacency amidst low rates
There are currently millions of people sitting on their lender’s Standard Variable Rate (SVR). In fact according to the BSA, 2.5 million mortgage borrowers have never experienced a base rate rise.

Homeowners are therefore currently being urged to be wary of complacency and to take advantage, especially as lenders compete for new customers, helping drive down the cost of mortgages. Data from the Mortgage Brain shows that the cost of a five-year fixed rate loan at 70% LTV is now only 2.04%. This is a full 2% lower than it was at the start of April 2017.

But many experts are saying that after the MPC’s latest vote and due to rising inflation, we are as close to a rise in base rate as we have ever been in recent years.

If your current deal is reaching its end or you would like to find out whether you could be saving money on your mortgage, contact one of our advisers today to arrange a meeting and discuss your options.

Looking Beyond the Claim Stats

The protection market has fought against the myth that policies are simply too unreliable for some time. The market has worked hard to address this, and once again the latest claim stats released by a number of providers show that they are very much on the customer’s side. But are stats alone enough to break through the protection myth barrier?

Public perception
Figures from the Association of British Insurers (ABI) showed that in 2016 insurers paid out 97.3% of claims. But research from a leading provider revealed that over a quarter of consumers (26%) still believed that insurers did not pay out in the event of a claim at all.

Some experts believe it is about more than just prevailing myths and disproportionate media focus. They suggest that one of the big problems with claim statistics is that it is almost impossible to stand out from the crowd. After all, most providers produce claim statistics that are as strong as each other, which some suggest may create a sense of public apathy.

A new era for protection
Looking beyond statistics, insurers are focusing more on the policyholder, with an emphasis on the support and services that they need. Providers are speeding up the claims process, advancing payments to help with funeral costs, and increasing the care and bereavement support through access to third parties and medical professionals.

Added benefits and rewards are moving policies from the bottom of the desk drawer to the forefront of the policyholder’s mind. In a win-win scenario for both client and provider, some providers now deliver incentives for keeping healthy and reducing the risk of suffering an illness.

The difference is that more people are talking about their policies, which could help develop a culture based on customer experience. Meanwhile, providers are continuing to develop their policies and share case studies and real-life scenarios. This, along with the continuing success rate of claims, will help advisers talk to clients about the importance of protection.

If you would like to find out more about your protection options, contact one of our advisers today to arrange a meeting.

Landlords Prepare for September’s Changes

The buy to let sector has seen a number of changes in recent years. This has been a challenge for landlords, lenders and advisers alike during a period of adaptability, flexibility and resilience.

But with the Prudential Regulation Authority’s (PRA) second phase of new underwriting standards for buy to let lending coming into effect on 30th September, there is further in store for the sector. Some lenders are already making announcements regarding their approach to buy to let portfolio lending, which means landlords need to prepare now.

What exactly is changing?
In line with guidance set out by the PRA, from 30th September 2017 landlords who have four or more mortgaged buy to let rental properties will be considered as portfolio landlords by lenders. The PRA expects all firms that conduct lending to portfolio landlords to use a specialist underwriting process that takes into account complex borrowing scenarios.

This will require the entire portfolio to be underwritten when applying for a new buy to let mortgage, even if the other mortgages are with a different lender. Lenders will also be required to use additional affordability tests on portfolio landlords and will require additional documentation to support applications.

How can landlords get ready?
Specialist lenders, already experienced in using a similar underwriting approach, have been clarifying their stance and assessment criteria. Outside of the specialist lending market, the majority of mainstream buy to let lenders have yet to confirm their plans, aside from The Mortgage Works who will continue to support portfolio buy to let lending going forward.

Industry commentators have raised concerns that the upcoming rule changes and a lack of support from larger buy to let lenders, could ultimately reduce the availability of loans to portfolio landlords and increase the price of lending.

There is likely to be more clarifications in the coming weeks leading up to 30th September and many experts are calling for quick clarification where possible. Landlords will need to keep up to date on lender announcements regarding portfolio lending. Depending on your situation, some of these stances may affect your current or future plans.

If you would like to find out more and get up to date on the upcoming PRA changes, contact an adviser to discuss.