Weekly Round-up, 30th January 2015
According to the Halifax Housing Market Confidence Tracker the drop in inflation (CPI) to 0.5% in December 2014 has corresponded with a steep drop in the proportion of consumers viewing interest rates as one of the main barriers to people being able to buy a property.
Over the last 12 months, the Tracker has shown the proportion of consumers citing concern about rises in interest rates as a barrier (to buying property) rise steadily from 14% in Q4 2013 to 19% in Q3 2014 – the highest since the Tracker began at 22%. However, this fell back to 13% in Q4 – the lowest level in over a year – at the same time as inflation began to fall sharply in the last few months of the year.
It is not only interest rates that consumers perceive as being a barrier to buying a property. The largest single barrier is perceived to be the ability to raise a deposit (61% of Britons said this in Q4 2014). However, in the last few years there have been a number of schemes launched specifically aimed at supporting borrowers with smaller deposits such as the Help to Buy scheme, which has loaned buyers deposits and guaranteed loans.
Martin Ellis, housing economist at Halifax, said: “Mortgage affordability has improved significantly in recent years with record low mortgage rates a major contributor behind this improvement. Figures from the 2014 Halifax First-Time Buyer annual review show that the number of first-time buyers is at its highest level since 2007 and last year the number of first-time buyers increased by 22%. This was the third successive annual increase with a 50% rise in the past two years.”
The fourth quarter of 2014 witnessed a cooling in the housing market with subdued activity among homebuyers and sellers alike, a report from Connells has shown. The decline was in part seasonal and yet also represented a continued hangover from the boom at the start of the year, where many purchases were pushed through prior to legislative reform. The next quarter should see a marked pick-up in activity again as a combination of seasonal factors and, on the whole, favourable adjustments to Stamp Duty legislation take effect. In addition, recent economic data has calmed market fears of a potentially harmful rise in interest rates in the near future.
David Livesey, Chief Executive if the Group, highlighted that the reform to Stamp Duty in December provided a much needed boost by removing the distortions caused by the previous “slab structure”. The new graduated system is expected to balance out some of the artificial differences in property values and create a smoother distribution of prices. It is hoped that this will encourage buyers currently squeezed by growing house prices, particularly first-time buyers, to get on the property ladder.
Property is cool
In contrast to the trends seen in the beginning of 2014 with demand robust across all sectors of the property market, the housing market somewhat cooled towards the end of the year leading to fears that the growth witnessed earlier in the year may be stalling. The number of sales agreed in Q4 dropped by a substantial 21% compared to the third quarter and were 10% lower year-on-year. Despite the fall in sales, house prices continued to rise with average prices 10% higher in Q4 compared to the same period in 2013. The drop in purchase numbers is matched by a corresponding increase in lettings. This sector of the market has witnessed hefty increases in the number of new instructions (up 23% annually) and new applicants (up 37%) as more people wait longer to achieve home ownership.
According to the Group, current house sale levels are trading at the mid-point between 2013 and 2014 figures, which is consistent with the forecast that the start of this year would never be as strong as the beginning of the frothy start to 2014.
This report supports the latest figures from two industry surveys which track the house price inflation across the country. The Land Registry said prices in England and Wales in the year to December rose 7%, down from 7.2% in November and the fourth month in a row that the annual rate has fallen.
The Nationwide building society’s latest survey shows a similar picture. Although it found UK house prices rose by 0.3% in January, the annual rate of growth slowed to 6.8%. The Nationwide said the average UK house price was £188,446 in January, while the Land Registry found the average house price in England and Wales to be £177,766 in December. Both sets of figures show that average house prices have been at a plateau since last summer.
The cost of home insurance has fallen over the last year according to the ABI’s latest Average Quarterly Household Premium Tracker published this week. Based on information from Association of British Insurers (ABI) members who cover 90% of the home insurance market it tracks the price paid for household buildings, contents and combined insurance.
During Q4, 2014, the Tracker showed that the average annual premium paid for building insurance was £230 or £4.43 a week. This was down 4% on the previous quarter and a fall of 6% over the year since quarter 4, 2013. For contents insurance, the average annual premium paid was £124, or £2.38 a week. This was 4% less than the previous quarter and down 5% over the same quarter a year ago.
The average annual premium paid for a combined buildings and contents policy was £291, or £5.60 a week. This was down 1% on the previous quarter and fell by 3% over the year.
Free for the family
Aviva is now offering £15,000 of free life cover for parents through all channels, including advisers. The cover is available for parents who register before the child’s fourth birthday. Cover has been extended so £15,000 of cover is now available for both parents for each child. This could mean cover worth £30,000 for each eligible child if both parents apply.
Parents applying must not already have had Aviva’s free parent life cover or have previously held cover from Aviva for the same child.
The cover is available to all UK parents including biological, adoptive and same sex couples. The cover can be taken out via financial advisers and Aviva does not charge for the service. Free cover was first introduced by Aviva back in 2009, the current changes are an increase to their free new parent life cover. The policy formerly offered £10,000 of life cover to parents up to their child’s first birthday.
They may have bought Canary Wharf for £2.6bn this week, but the Qatari Royal Family’s property purchases has finally run into a dead end thanks to a town hall bureaucrat.
In a rare act of resistance a planning officer at Westminster city council, Matthew Rees, has said the family’s plans to create a British palace worth an estimated £200m will be refused.
The Qatari royals had hoped to knock together two Grade I-listed mansions in Regent’s Park to create a lavish palace with 17 bedrooms, 14 lounges, four dining rooms, a swimming pool, a cigar lounge, a cinema and a juice bar. But the council officer said no, citing that the development would lead to the loss of a housing unit which would not meet S14 of Westminster’s City Plan: Strategic Policies adopted November 2013 and that negotiation could not overcome the reasons for refusal.
The Qataris’ agents had tried to head off the problem by offering the council £850,000 in cash towards its affordable housing fund. The council’s head of affordable housing had said the money could be put to good use in contributing to the construction or purchase of new affordable homes. But Rees said this was not permitted, and the decision stood.
What’s in a name?
A man who wants to call himself Superhero has been thwarted by naming authorities in Denmark.
Benjamin Preisler Herbst owns a toy shop in Copenhagen and says his life revolves around the comic book characters. He wants to add the term to the start of his existing name, but officials are having none of it. “The word superhero is a term for a fictional/non-existent figure,” reads a rejection letter from the naming authorities, according to the Jyllands-Posten website. “We don’t believe that Superhero lives up to the criteria for being approved as a boy’s name.”
A recent French court decision stopped parents from naming their child Nutella on the grounds it would make her a target of mockery. But Mr Herbst is 26 years old, and says adults should be free to make their own decisions. “I fully understand that people under 18 should be protected from being named silly names by their parents,” he tells the BBC. “But I think it should be up to adults to change their own name to whatever they want.”
Danish authorities have approved unusual names in the past, including Balcony for a girl, Gin – which is considered unisex – and Gandalf. Mr Herbst says Superhero is no sillier. “We only have one marvellous life, so why should the authorities be in charge of what we want to be known as?” For now his battle continues, with plans to appeal the decision and an online petition to gather support. In the meantime, Mr Herbst has some other names to choose, as he’ll soon be a father to twins – apparently Batman and Robin are not on the list.
Europe on the horizon.
As the election results in Greece sent a ripple through the European Union, it didn’t stop the EU Mortgage Directive hitting the news in the UK with the Treasury finally deciding on a definition for an accidential landlord. Why’s this important? Well it is all about protecting the consumer. If it’s accidental then it’s advice under Mortgage Conduct of Business rules and therefore regulated. If it’s regulated then the new landlord has all the protection given under the mortgage market review in terms of recommendation and redress.
So let to buy and how to take advantage of inherited property will be regulated advice, and with this we will probably see the return of regulated buy to let – you now have a big enough market to justify the system development costs and risk profiling. But this position does depend on a certain level of trust, a potential landlord being open and honest about how the property has been acquired and their intentions.
But where it’s a first time landlord who is purchasing their first property for business purposes, then the current non-regulated regime carries on even though they may need the guidance and support of a regulated advice process. It does beg the question: what’s the difference between a first time landlord buying for business purposes and a let to buy scenario – surely both are customers looking for advice?
Ultimately it is up to the Adviser working in the buy to let market to determine how much advice is necessary for first time landlords in a business purchase whilst working to MCOB on accidental landlords. The question is how to monitor the process, especially when affordability is tight. Customer understanding of the costs involved in buy to let will play an even more important role going forward so the due diligence on the consumer will be essential, irrespective of compliance regime.
Neil Hoare, Commercial Director
The seven two score line changed to nine nil in January as the 2 dissenting voices on the Bank of England’s Monetary Policy Unit changed their vote from “up by twenty five” to “no change”. Martin Weale and Ian McCafferty had been calling for a change in the base rate since August when unemployment had carried on falling below the first forward guidance announcement by Mark Carney, the Governor of the UK’s Central Bank.
In April we will see the sixth anniversary of the current historic interest rate with the return of a nine nil score being a significant shift in sentiment. Many lenders were getting ready to price in a base rate rise in their products in the first quarter of 2015, from the latest set of minutes from the MPC, it looks like the pricing teams may have got the year wrong.
So it’s no longer about capacity in the UK workforce and wage growth, lower fuel prices both at the pump and in the home plus a supermarket price war has driven the focus on inflation or deflation depending on whether you are a glass half full or half empty person. When the letters to the Chancellor explaining the numbers stop getting written by the Governor, we might finally be in a market where rate rises are on the cards. But until that happens the Lender rate war will continue with a vengeance.
Neil Hoare, Commercial Director
HLP adds TFC Homeloans to panel.
All HLP brokers will now be able to access TFC Homeloans extensive panel of lenders its whole of market ‘Smart Source portal’ will help HLP brokers to determine the best type of loan for their client.
The comparison tool is particularly useful as it allows brokers to compare a re-mortgage and second charge loan side by side, based on the total cost over the term.
Andrew Brown, director of TFC Homeloans, said: “This new partnership is a significant one for our business which is currently growing from strength to strength.
“We are really pleased to offer our services to HLP and are looking forward to working closely with them.
“We endeavour to provide a solution for every single case and are sure HLP Brokers will find that both our specialist product teams and Smart Source portal have the answer to even the most complicated of cases.”
Christopher Tanner, Chief Executive Officer of HLP, added: “We are pleased to welcome TFC Homeloans back to our panel of providers.
“HLP have a longstanding relationship with TFC Homeloans and we are certain that their wealth of knowledge in the mortgage market will be of immense benefit to our brokers.”
Mortgage sourcing to be integrated into new HLP CRM system.
Twenty7Tec, the leading provider of online sourcing systems, today announces that MortgageSource, the company’s revolutionary mortgage sourcing system has been selected by national mortgage network HomeLoan Partnership (HLP). MortgageSource will be integrated with HLP’s new CRM system, and provided to over 250 Authorised Representative Firms of the Network effective from Q1 2015.
HomeLoan Partnership recently selected 360 Dotnet as the provider of their new CRM solution, and MortgageSource has been fully integrated into the 360 Lifecycle system. HLP members will now be able to record client fact find details, source mortgages and protection, produce suitability letters and KFI’s from within one system from any web enabled device at any time of time of the day.
MortgageSource, is a cloud based mortgage sourcing system that utilises an in depth analysis of product criteria to drive more accurate sourcing results. The system considers criteria such as acceptable client income streams, specific credit history events, property construction and location variants, as well as offering a significant range of filters, including Help to Buy schemes, Shared Equity and New Build. Furthermore, product criteria and rates can be updated in real time by the Twenty7Tec product team, helping to ensure that sourcing is always performed across the very latest product data.
360 Lifecycle is an award-winning suite of bespoke client and adviser management system tools used by over 3000 financial intermediaries. Designed specifically for the intermediary market the 360 Lifecycle system delivers unparalleled client servicing in the post-RDR world, allowing instant access to client information.
HomeLoan Partnership is an award winning Mortgage Network which has been supporting intermediaries since 2001. Based from its Head Office in Worthing, it has national coverage with member firms based across the country. Its decision to support its member firms with a market leading combination of a client relationship management and the latest in sourcing system technology is a clear indicator of HLP’s strategy of providing high quality solutions to forward thinking Mortgage and Protection firms who in turn, deliver great customer outcomes.
James Tucker, Managing Director of Twenty7Tec, commented “After a thorough analysis of all available options, we are delighted to have been selected by HLP to be the Networks chosen sourcing system provider for the next 3 years. The integration that we and 360 Dotnet have accomplished will drive huge efficiency in process for HLP members, enabling them to better service both their new, and existing clients’.
Chris Tanner, CEO of HomeLoan Partnership, noted “The introduction of the Mortgage Market Review last year has meant that mortgage and protection firms must look to create efficiencies in their business to take advantage of the current need for quality advice for consumers. By selecting Twenty7Tec, we feel we have given our members an accurate mortgage sourcing solution which, in turn, helps manage client expectations and reduce an adviser’s time referring to underwriting guides or on the phone to Lenders. ‘Right first time sourcing’ is not only good for consumers, but for lenders and the adviser themselves.”
Carlos Thibaut, Managing Director of 360Dotnet, noted “This initiative with Twenty7Tec offers members of HLP a truly unique set of tools that can provide significant savings on the cost of running their business, generating invaluable extra hours in the working day, and leaving advisers to focus on their core strength – giving advice.”
HLP CRM system set to transform client mortgage experience.
Yesterday we announced that HLP will soon be launching our revolutionary new Client Relationship Management (HLP CRM) system to a full-house of invited Lenders, Protection and General Insurance providers, and industry press, at an event in London. Powered by Lifetime Group’s 360Dotnet software, we believe the combination of the CRM and new sourcing tools will create a new dimension to our members’ businesses by helping them deliver a more efficient and effective mortgage and protection solution to their clients.
In 2014, we saw our annual mortgage completions increase by over 160%* from 2012 to £1.5bn, compared to market growth estimated to be in the region of 42%**. With lending through the network anticipated to grow again in 2015 to £2bn, the software solution has been specifically developed to support the productivity of HLP members in a mortgage market which has become increasingly focused on the Intermediary. By delivering the flexibility to address the needs of an increasingly digitally engaged consumer base, the HLP CRM system will meet the future requirements of the adviser in a more intuitive way that will enhance the experience for their clients.
Designed to encourage stronger relationships between brokers and their clients, the HLP CRM system offers a state-of-the-art client portal. HLP members’ clients will now have access to their own digital financial control centre with a focus on financial planning and goal setting alongside offering financial advice. It will create new opportunities of engagement through case tracking and Skype integration.
Documents can be uploaded, stored and transmitted securely through the portal which employs security levels equal to those used by online retailers and banking institutions. In addition, documents can be transmitted by the client or broker via the portal which means any additional documentary evidence requests from lenders or insurance providers can be fulfilled without waiting for the post, expensive visits or the risk of an email going astray. Ultimately cases should be progressed more quickly enhancing both the customer experience and the quality of application submitted to the lender. The portal is accessible from any internet enabled device, anywhere around the world.
Commenting on the launch of HLP’s new CRM system, HLP’s Chief Executive Officer, Chris Tanner, said: “As a growing network which anticipates lending to increase by 30% in 2015, we pride ourselves on giving member advisers outstanding technology solutions to improve efficiencies and the overall customer experience. The launch of this bespoke system, developed in collaboration with 360Dotnet, embraces the latest online platforms across multiple devices and empowers our members to truly engage with their clients.”
360Dotnet, which is part of the Lifetime Group, leads the design of bespoke and flexible CRM systems. Commenting on the collaboration with HLP, Carlos Thibaut, Managing Director, of Lifetime Group said the group was delighted to be involved with HLP’s plans: “Innovation in the mortgage market is needed so that brokers can navigate the market with confidence and clarity. A powerful CRM system can help achieve this by using technology to add depth and focus to the broker/client relationship and deliver better outcomes and experience for both.”
Click here to watch our trailer video.
*Source: HomeLoan Partnership completion statistics 01.01.2014 – 31.12.2014
**Source: Council of Mortgage Lenders gross completions 18.12.2014 rolling 12 months from Dec 2013 to Nov 2014
Inflation rate proves challenging for the Mortgage Market
On Tuesday, when driving down to HLP’s offices in Worthing, I was listening to the Radio 4 business report. The featured economist was asked for their prediction on inflation and returned with what turned out to be the correct number, for once, which was 0.5%. He commented that in December 2013 we saw utility prices rise sharply and, of course, petrol prices hadn’t fallen by then. Lower inflation is good for the consumer but a challenge for the mortgage industry.
Why a challenge? Well, for the vast majority of employees we now enter the season for wage negotiations and, naturally, employers are going to look towards inflation statistics to guide their remuneration packages. With prices in the high street rising very slowly you can imagine that the starting point for an increase is not going to be a high number.
But that doesn’t stop house prices rising at a significantly higher rate. And with affordability intrinsically linked to income, if the pace of house value inflation outstrips wage growth, it’s going to be even tougher for first, second or even third time buyers to enjoy a change of property. According to the Office for National Statistics, the average house price for first-time buyers rose by 11% in the year to the end of November compared with 9.5% for existing owners. First-time buyers can now expect to pay on average £208,000 for their first home whilst existing owners paid more for their next home, typically £312,000 in November, the ONS said.
The Governor of the Bank of England has commented in a BBC interview that he still expects the base rate to start to rise over the next couple of years despite the low inflation rate. So the question remains, when will he take the step to change the historic rate? At the moment it’s anyone’s guess.
Neil Hoare, Commercial Director
HomeLoan Partnership appoints Neil Hoare to its Senior Management Team.
HomeLoan Partnership is delighted to announce that Neil Hoare is joining its Senior Management Team as Commercial Director.
Hoare joins from previous senior roles at Personal Touch, Select & Protect, Pink Home Loans and Santander and will strengthen the management team with his wide ranging experience in the Mortgage, Protection and General Insurance Industry.
Neil Hoare comments: “I am excited to be joining a Network that has plans for growth both by developing the business of its current membership and recruitment of new firms through its focus on mortgage and protection. One area of real enthusiasm is technology which is increasingly a key driver for the efficient mortgage intermediary looking to meet customer needs. It’s clear HomeLoan Partnership has this at the heart of its strategy and will feature as a key differentiator in 2015.”
Chris Tanner, HomeLoan Partnership CEO, comments: “As a Network looking to build on what has been significant growth in the past 5 years it’s important that we expand the Senior Management Team with people who can really help our members understand the opportunities available to them. Neil Hoare brings with him a wealth of experience in connecting our business partners with advisers and he will be working closely with both to meet the high expectations of customers in a post MMR world.
Tanner continues: “Our ethos has always been to focus on providing solutions for members that continually adapt to the changing face of financial services. For example we are preparing to launch a new Customer Relationship Management solution in the first quarter of 2015 which reacts to the demands of meeting customer needs and have, in the past, launched a Will Writing business for members to offer diversity in income generation. By working closely with our members and attracting new firms we have seen our turnover increase from £1.8m in 2008 to almost £15m for last year. It’s clear from our results that our strategy to deliver both safe year on year profit and a culture that adapts quickly to change has led to a robust and successful Network business model.”