Monthly Archives: July 2015

HomeLoan Partnership appoints the West Brom to its panel

HomeLoan Partnership appoints the West Brom to its panel

HomeLoan Partnership (HLP) is delighted to announce that it has appointed the West Brom to its panel of lenders.

The building society has a long heritage of supporting mortgage intermediaries and has been busy developing its systems and processes over the past few years which allows it to balance an ability to have competitive products but not at the expense of poor service.

Christopher Tanner, CEO of HomeLoan Partnership comments “We are always looking to enhance our proposition with lenders which we feel can add value and choice to our members. The West Brom is a welcome return to our panel and we look forward to working closely with them in the future. Their range of products hasve always been competitively priced and offers our members further choice in meeting customer needs.”

Richard Scott, the West Brom for Intermediaries’ National Account Manager, said: “We are delighted to be part of HomeLoan Partnership’s panel and look forward to working in close partnership with them and their advisers to develop our relationship.

“We are offering HLP access to a competitive range of residential mortgage products. This is backed up by a full online DIP, application, document upload and case tracking system, as well as first class personal service through a dedicated intermediary support team.”


Weekly Round-up, 20th July 2015.

ONS Price check.

According to the latest Office of National Statistics release, UK house prices have increased by 5.7% in the year to May 2015, up from 5.5% in the year to April 2015. Looking at the countries that make up the UK, house price annual inflation was 5.8% in England, 2.5% in Wales, 2.9% in Scotland and 10.5% in Northern Ireland.

The pace of annual house price growth increased slightly across the majority of the UK in May 2015 with the majority of any increases in England driven by an annual increase in the East (9.3%) and the South East (8.2%).

Excluding London and the South East, UK house prices increased by 5.2% in the 12 months to May 2015 which, when seasonally adjusted suggests average house prices increased by 0.9% between April and May 2015.

In May 2015, prices paid by first-time buyers were 5.1% higher on average than in May 2014. For owner-occupiers (existing owners), prices increased by 5.9% for the same period.

Inflation back to Zero.

The Consumer Prices Index (CPI) was unchanged in the year to June 2015, that is, a 12-month rate of 0.0%, down from 0.1% in the year to May 2015. Falls in clothing and food prices were the main contributors to the change in the rate along with smaller rises in air fares than a year ago.

There were no large upward effects on the items the in the shopping basket to offset the change.

CPIH (not now a National Statistic) which includes the impact of costs of housing services associated with owning, maintaining and living in one’s own home grew by 0.3% in the year to June 2015, down from 0.4% in May 2015.

Confidence slips.

According to the Halifax Housing Market Confidence Tracker, confidence in the outlook for house price growth hit its highest level in four years following the General Election in May, but dropped back in June.

House Price Optimism (HPO) hit +68 in May 2015, and although it slipped back slightly in June to +64 it remains substantially higher than at the beginning of the year (+52 in the January survey measure).

The dip in confidence in June comes despite continued rise in real wage growth, together with record low numbers of homes available for sale pushing average house prices over £200,000 for the first time ever.

Nevertheless, while the May high was short-lived, the percentage of Britons predicting an increase in the average property price of more than 5% over the next 12 months has still risen from 34% to 38% in the last quarter (comparing the March and June 2015 measures, respectively).

This increased optimism also corresponds with a fall in the net figure for buying sentiment from +35 in February 2015 to +25 in June 2015). More than half (56%) of Britons said in June they think it will be a good time to buy property over the next 12 months, compared to 61% who said this in February 2015. At the same time there’s been an increase in the net figure for selling sentiment from +27 in February 2015 to +32 in June 2015).

With the Governor of the Bank of England saying improving economic figures means an interest rate rise has moved closer, nearly half of Britons (48%) expect mortgage interest rates to be higher in 12 months’ time (compared to 45% in Q1, March 2015). For more information visit their website.

Withdrawal symptoms.

Nearly a quarter of a million payments worth £1.8 billion were made to customers from pension pots in April and May, according to new figures published today by the Association of British Insurers.
In the same period £1.3 billion was put in to buying nearly 22,000 regular income products, with over 50% of this going into income drawdown products rather than annuities. In 2012, when annuity sales were at their peak, over 90% of the total value of sales were annuities. Less than 10% of total sales were income drawdown sales.

This data publication coincides with 100 days since the pension reforms came into force, and shows the choices savers have been making about their retirement.

Savers have completed 65,000 cash withdrawals and the average pot taken was £15,500. These cash lump sum payments take advantage of new forms of withdrawal called Uncrystallised Funds Pension Lump Sum (UFPLS). Savers have taken out £800m worth in payments from income drawdown policies in 170,000 withdrawals.

Savers have put in £630m to buy 11,300 annuities and a further £720m to buy 10,300 income drawdown policies. This compares to nearly £1.2 billion a month in sales of annuities at the peak in 2012, when only £0.1 billion per month was put into income drawdown products. The average annuity was purchased with £55,750 and the average fund put into drawdown was £69,900.

The data also shows that many customers are shopping around for the best deal, with nearly half (45% of sales) choosing a different provider when buying an annuity and over half (52% of sales) switching when buying an income drawdown product.

And finally…fond memories.

Family and friends of a 56-year-old grandmother who died from cancer filled a crematorium last week to celebrate her life with a Halloween-themed funeral. Witches, Beetlejuice and the Tasmanian Devil were among about 100 people remembering Lorna Johnson at a service conducted by Darth Vader.

Mrs Johnson’s son Neil said the funeral at Luton Crematorium reflected his mother’s love of Halloween and fun.

He said: “My mum’s favourite time of year was Halloween. We always had parties, dressed up, decorated the house. The kids loved it, we loved it. It was something we always did. She classed herself as a white witch and was into the tarot readings and that sort of thing. We’ve added an extra little personal touch to the funeral, it’s helped a lot.”

Mr Johnson, 34, said music at the service included Dolly Parton’s “I’m Gonna Miss You”, some indie rock and a trance song to end the funeral.

Greece is the word! But in other news…

Of course in a week where Greece is the time, is the place, is the motion, and Greece is the way we are feeling, it’s hard to write about subjects closer to the UK Mortgage Market.

We have seen the publishing the latest thematic review by the Financial Conduct Authority where it’s been highlighted from mystery shopping that there are significant differences between the advice process in a bank where a customer spend several hours sitting in front of an adviser going through a system driven interview, and that of an independent broker working from a large panel trying to determine the right product from a range of lenders. Sitting on the independent side as we do, we should welcome the exercise the regulator has completed on our behalf, and take on board the suggestions that have been made. Yes we know that the vast majority of advisers will use their experience and knowledge to determine the right outcome for the customer, there is a lot of “sourcing knowledge” which can’t be quantified on a system or decision tree, but we mustn’t forget that we need to take the customer on the journey so they understand what they’ve got and why. Jumping straight to the cheapest most suitable product does not truly reflect the hours of work and professional development that has created the result so why do we do it?. Customer engagement in the advice process is absolutely key to producing a customer plan which creates long term value both for the broker and their client. Soft fact gathering is an art which needs to be balanced against the regulatory requirements of giving mortgage advice; an interview which feels like a chat about life rather than an interrogation about spending. Do we have enough training in the art of conversation now we have email, social media and a fast paced consumerist world where we live in the here and now, demanding an immediate answer? Lenders talk about time to offer, speed of decisions and quick quotes, but should we be talking more about long term planning, in-depth knowledge and building a solution. With the market like it is, I cannot see the balance between consumer lifestyle with all its demands and litigation risk, and that of the desire for good customer outcomes from those of us in distribution, coming together without a culture shift from all those involved in the housing market.

Neil Hoare

Commercial Director

Weekly Round-up, 13th July 2015.

Moderating HPI.

The Chancellor has delivered his summer budget and here are a few highlights from his speech. There will be new National Living Wage of over £9 an hour by 2020 and from April next year a £7.20 rate will be introduced for the over 25’s. It is the intention for the Government to be running a surplus in 2019-20 where more tax is raised than is spent. The amount people earn before they have to start paying Income Tax will increase to £11,000 in 2016-17 and the government will meet the NATO pledge to spend 2% of national income on defence every year of this decade.

Welfare reforms will take centre stage with working-age benefits, including tax credits and Local Housing Allowance, will be frozen for 4 years from next year. Child Tax Credit will be limited to 2 children for children born from April 2017.

There are changes to inheritance tax and reforms to pension contributions for those people with an income of over £150k. Home and Car Insurance premiums will increase by 3½% as a result of a tax increase and landlords won’t be able to claim full tax relief on the cost of the properties they manage. Non Doms and Banks have new tax regimes to work in and working families with 3 and 4 year olds will receive 30 hours of free childcare – an increase from the 15 hours they’re currently offered by 2017.V

Students become borrowers under plans to reform student grants and road tax will be reformed and the money raised spent on the road network. And finally, the government will continue to clamp down on tax avoidance, planning and evasion, as well as increasing resources for HM Revenue and Customs (HMRC) so they can make sure people pay the tax that’s due.

HPI with the Halifax.

According to the Halifax House Price Index(HPI) prices in the latest three months (April-June) were 3.3% higher than in the preceding three months (January-March) with the quarterly rate of change picking up following two successive falls. Prices in the three months to June were 9.6% higher than in the same three months a year earlier which was higher than May’s 8.6% and the highest since September 2014 (9.6%).

House prices increased by 1.7% between May and June; the fourth consecutive monthly rise as did the number of sales, up by 1.0% between April and May to 98,540. Similarly, sales in the three months from March to May were marginally higher (+0.5%) than in the preceding three months, but were 4.2% lower than in the same period last year. (Source: HMRC, seasonally-adjusted figures)

The volume of mortgage approvals for house purchases – a leading indicator of completed house sales – fell by 5% in May however approvals in the three months to May were 6% higher than in the preceding three months (December 2014-February 2015). (Source: Bank of England, seasonally-adjusted figures)

Protect your deposit.

Savers are getting a new deposit guarantee limit from the New Year. The current £85,000 level of protection continues until 31 December 2015. So there’s no immediate change for consumers. That means people with more than the new limit have six months to spread their money around to keep within it. The new limit will be £75,000, which will protect more than 95% of all savers. The overwhelming majority of people have £50,000 or less in savings.

The change comes under the European Union Deposit Guarantee Schemes Directive. It fixes a harmonised limit of €100,000 (or the equivalent) across Europe. The new UK limit was set last week.

There’s also other good news for some consumers with higher balances. People with some types of temporary high balances will have FSCS protection up to £1m for up to six months. Things like the proceeds from a house sale qualify for the new protection limit.

Large companies and small local authorities (such as parish councils) will also benefit from FSCS protection from this week. FSCS will now cover them up to the new limit of £75,000.

And finally…It’s the taking part that counts.

The Federated States of Micronesia have an international soccer team that is ranked 200 in the world by FIFA. The team entered this year’s Pacific Games in an attempt to qualify for the 2016 Olympics. Things did not go so well!

In their third and last game of the tournament, Micronesia lost 46-0 to Vanuatu. Prior to that they fell 38-0 to Fiji and 30-0 to Tahiti. Naturally, these three games put some insane stats in the box score. Tahiti racked up seven hat tricks in their 30-0 win, Vanuatu’s Jean Kaltak scored 16 goals in Tuesday’s game, and Fiji’s Antonio Tuivuna put 10 balls into the net.

In defence of the Micronesian players, most of them had never even been in an 11-on-11 match before or played in anything resembling a real, competitive game. By the sounds of it after the tournament, they still haven’t been in a competitive game.

The Tenant will pay.

The Chancellor’s budget headlines may be all about the living wage and the reduction in tax credit support for working people, however, has anyone thought about the impact of the speech, which will have many people suddenly becoming nervous about the next rent review, on landlords and tenants?

Landlords will see the price rise for their Buy-to-Let Insurance – Insurance Premium Tax will be increasing from 6% to 9.5%, not a big rise I admit, something around £7 per year for a decent policy, but the ability to offset the costs of running the Buy-to-Let suddenly becomes restricted too. Currently, individual landlords can deduct their costs (including mortgage interest) from their profits before they pay tax which means wealthier landlords will be enjoying tax relief at 40% and 45%. This tax relief will be restricted to 20% for all individuals by April 2020. In addition, from April 2016, the ‘wear and tear allowance’, which allows landlords to reduce the tax they pay (regardless of whether they replace furnishings in their property) will also be replaced by a new system that only allows them to get tax relief when they replace furnishings. For many Lenders this will see their credit risk departments reaching for their calculators, asking themselves whether affordability models are correct and if assumptions about the performance of their ever increasing Buy-to-Let books are correct based on new profitability models. Have we seen the end of the low rate high fee product as claiming back costs becomes increasingly hard?

Of course the vast majority of landlords will simply pass the reduction in their tax relief and impact of wear and tear onto the tenant so expect rents to rise. Interestingly, a few of the budget announcements this week were also trailed by the Labour Party before the election. But the one Miliband talked about that didn’t come into play was offering capped rents for a period of 3 years. You do have to ask yourself who the Chancellor was targeting in his move on the Buy-to-Let market as many of those who are better off from the living wage may simply be paying the increase back in their monthly rental payment.

It was an interesting budget from many angles and certainly hit the headlines for many good reasons. As with all budgets though, time will tell whether the intended consequences work their way through the increasingly complicated world in which we live.

Neil Hoare, Commercial Director

UK Summer Budget Summary 2015.

With the Summer Budget now published, here’s a summary of a few of the key points. If you want to read the full report you can find it on-line here.

A National Living Wage.

The Government is introducing a new National Living Wage of over £9 an hour by 2020. From April 2016, the new initiative will start at £7.20 an hour for the over 25s, which will rise to over £9 an hour by 2020.

Tax Allowances.

The tax-free Personal Allowance will be increased from £10,600 in 2015-16 to £11,000 in April 2016 which, when compared to 2010, will mean a typical taxpayer will be £905 a year better off in 2016-17.

The government has an ambition to increase the Personal Allowance to £12,500 by 2020, and a law will be introduced so that once it reaches this level, people working 30 hours a week on the National Minimum Wage won’t pay Income Tax at all.

The amount people will have to earn before they pay tax at 40% will increase from £42,385 in 2015-16 to £43,000 in 2016-17.

The dividend tax credit (which reduces the amount of tax paid on income from shares) will be replaced by a new £5,000 tax-free dividend allowance for all taxpayers from April 2016. Investors with modest income from shares will see either a tax cut or no change in the amount of tax they owe.

IPT to Rise.

From November 2015 the standard rate of Insurance Premium Tax (IPT) will be increased from 6% to 9.5%. According to the Government, households’ insurance prices are falling and the standard rate remains lower than that of many other EU countries.

Inheriting the family home .

Currently, Inheritance Tax is charged at 40% on estates over the tax-free allowance of £325,000 per person. Married couples and civil partners can
pass any unused allowance on to one another. From April 2017, each individual will be offered a family home allowance so they can pass their home on to their children or grandchildren tax-free after their death. This will be phased in from 2017-18.

The family home allowance will be added to the existing £325,000 Inheritance Tax threshold, meaning the total tax-free allowance for a surviving spouse or civil partner will be up to £1 million in 2020-21. The allowance will be gradually withdrawn for estates worth more than £2 million.

Landlords to claim less.

Currently, individual landlords can deduct their costs – including mortgage interest – from their profits before they pay tax. Wealthier landlords receive tax relief at 40% and 45%. This tax relief will be restricted to 20% for all individuals by April 2020.

In addition, from April 2016, the ‘wear and tear allowance’, which allows landlords to reduce the tax they pay (regardless of whether they replace furnishings in their property) will also be replaced by a new system that only allows them to get tax relief when they replace furnishings.

Paying your dues.

The government will continue to clamp down on tax avoidance, planning and evasion, as well as increasing resources for HM Revenue and Customs (HMRC) so they can make sure people pay the tax that’s due. The number of criminal investigations HMRC can undertake into complex tax crime will triple, concentrating on wealthy individuals and companies.

A ‘general anti-abuse rule’ penalty will be introduced and tough new measures for serial avoiders, including publishing the names of people who repeatedly use failed tax avoidance schemes.

MOT and Road Tax.

The road tax system will be revised from 2017 where we will see a flat rate of £140 for most cars, except in the first year when tax will remain linked to the CO2 emissions that cars produce. Electric cars won’t pay any road tax at all and the most expensive cars will pay more. Existing cars won’t be affected – no one will pay more for a car that they already own. The money brought in from road tax in England will be spent on England’s roads from 2020.

The government will extend the deadline for the first MOT of new cars and motorcycles from 3 years to 4 years.

Weekly Round-up, 3rd July 2015.

Moderating HPI.

According to the Nationwide Building Society, the annual pace of house price growth continued to slow in June, moderating to 3.3% from 4.6% in May. This maintains the gradual downward trend that has been in evidence since mid-2014, though this is the smallest annual rate of increase for two years. House price growth continues to outpace earnings, but the gap is closing, helped by a pickup in annual wage growth, which moved up to 2.7% in the three months to April from 1.9% at the start of the year.

The slowdown in house price growth is not confined to, nor does it appear to be driven primarily by, developments in London. In quarter on quarter terms, London has continued to see price growth at or above the rate in the UK overall over the past three quarters, while the annual rate of price growth in the capital remains the second highest in the country.

Eleven of the thirteen UK regions as measured by the Building Society, saw a slowdown in the annual rate of growth in Q2. Most parts of the country continued to see annual house price gains – the exceptions were Wales and Scotland, which recorded small declines

The Nationwide’s chief economist highlighted that given the gap between population growth and rates of housebuilding (which has been evident for some time) the housing stock is likely to be used increasingly intensively until building activity catches up. There are signs that this has been occurring, with the number of vacant properties trending down since 2008, though council tax changes in 2013 impacted reporting and probably overstate the decline in the last two years.

Considered yourself enrolled.

Retirement saving in the UK has reached the highest level ever recorded, with 56% of the population now saving adequately, according to new research. The Scottish Widows Retirement Report revealed that outside of pension savings, people are saving on average £142 a month towards their retirement, rising 8% from £130 last year. Almost one in five (19%) expect to save more over the next 12 months and 40% feel positive about their long-term financial situation, up from 37% last year.

For the first time in 10 years, the average proportion of earnings being put away each month towards retirement has reached the 12% recommended by Scottish Widows – more than twice the level in 2006 (6%) and a third higher than in 2013 (9%).

Despite the recent raft of reforms designed to shift retirement planning higher up the nation’s financial agenda, there has been no improvement in the number of non-savers since last year, with one in five people (20%) – around 6.2million – not saving at all for retirement, the same level as recorded in 2009. This is the equivalent of double the population of Wales. A similar proportion of people have no savings or investments whatsoever, increasing from 17% last year to 19%.

The research found that the savings gap is widening among the self-employed and those working for small businesses, with 39% of self-employed people and 30% working in a small business not saving anything at all, up significantly from 23% last year. Meanwhile 43% of those with annual personal incomes under £10,000 are failing to save anything for retirement, compared to 24% of those earning up to £30,000 and just 9% of those earning more than £30,000 a year.

The study of 5,000 UK adults highlighted a clear disparity between expectations of retirement income and the reality of how far savings will stretch. Whilst the average income Britons aged 30-65 believe they would need to feel comfortable in retirement is £23,469, people saving at the current average level can expect an annual income of £15,600 in retirement – an annual shortfall of over £7,800.

Reporting favorably.

The Financial Conduct Authority (FCA) has published its second annual report this week. The report details work the supervisory body has carried out over the last year, including regulating consumer credit, bringing the number of firms within their remit to 73,000 and launching “Project Innovate” to help bring new and innovative financial products and services to the market. The FCA has also implemented a new Senior Managers Regime, conducted regular market studies, including cash savings, retirement income and review of competition in the wholesale sector and responded to the Davis review.

Chairman, John Griffith-Jones said “We take appropriate steps where we find risks or issues that threaten our objectives, but we aim to work with the industry and communicate transparently to ensure not only that our expectations are clear, but that firms and individuals are reasonably able to meet them – “Measurement of regulatory outcomes is not an exact science, but there are some indicators of a positive direction of travel highlighted in this report. Credit for this lies with the firms we regulate, who have embraced the conduct agenda.”

Not breathing easily.

Cases of lung cancer in women have reached 20,000 a year in the UK for the first time since records began, according to new Cancer Research UK statistics. Lung cancer rates in women have increased by 22 per cent, soaring from around 14,200 cases diagnosed around 20 years ago.

Despite falling smoker rates, the number of lung cancer cases are yet to fall in women. This reflects different patterns in smoking behavior, with men’s smoking peaking in the 1940s while women’s peaked around the 1970s.

As lung cancer cases continue to climb, much more needs to be done to tackle the poor ,long term survival from this disease – more than 35,000 people die from lung cancer every year in the UK, almost 20,000 men and 16,000 women. Because of this, Cancer Research UK is focusing on lung cancer as part of its research strategy, and has already doubled its research spend on the disease over the last year.

The new areas of research includes way to study ate disease once it has spread by isolating and studying individual tumor cells carried in a patient’s blood. This is part of a growing body of lung cancer research aimed at developing blood tests to monitor and understand how it changes and becomes resistant to drugs.

Professor Caroline Dive, a lead scientist on the project from the Cancer Research UK Manchester Institute, said: “It really is devastating to see that the number of women diagnosed with lung cancer continues to climb. We also know survival remains poor and one of the problems is that lung cancer tends to be diagnosed at a late stage when it has already spread. Cancer is very difficult to treat once it has spread around the body.

“It’s very challenging to biopsy lung cancer and very hard for the patient too. The new technique we’re testing uses magnets to capture rogue cancer cells in patients’ blood and could be a more effective form of biopsy – providing vital information on the biology of the disease. And, ultimately, this could lead to better ways to treat patients.”

And finally…a leap in time.

Global time stood still this week, delaying midnight by a second. An extra sliver of time – a “leap-second” – has being added to the world’s clocks to adjust for the inaccuracy of the spinning Earth. Before the invention of super-accurate atomic clocks, time was based on the Earth’s rotation, one complete turn taking 24 hours.

Now a plethora of time-sensitive systems, including computer programmes and financial markets, rely on the precise ticking of atomic clocks that measure the energy transitions of atoms. The problem is that due to the moon’s gravity the Earth is slowing down, and not in a regular way. So every now and then a leap second is added to allow astronomical time to catch up with atomic time. It is similar to the introduction of leap years keep our calendars lined up with the Earth’s orbit around the Sun.

Computer programmers try to take account of leap seconds but many systems may have been caught out, warns atomic clock expert Professor Judah Levine, from the US National Institute of Standards and Technology (Nist) in Boulder, Colorado.

He told National Geographic magazine: “It’s a major interruption mostly because there are a lot of systems that aren’t prepared to handle the leap second correctly.”

The last leap second in 2012 temporarily disrupted a number of high-profile websites including Mozilla, Reddit, Gawker, LinkedIn, FourSquare and Yelp. In Australia, more than 400 Quantas flights were delayed as staff were forced to switch to manual check-ins.

Leap seconds were first introduced in 1972, by which time atomic clocks and astronomical clocks were already out of kilter by 10 seconds. That year, scientists had to add 10 seconds to the world’s astronomical clocks in one go. The impact then in the pre-internet age was nothing like as great as it would have been today.

Regulated Buy-to-Let.

The Bank of England (BoE) this week released its risk review in which it highlighted the Buy-to-Let mortgage market. With the risk appetite from Lenders still challenging for First Time Buyers, no notable decrease in divorce rates, and a building sector struggling to keep up with demand, it’s no surprise that lending has continued to grow in Buy-to-Let with the sector now accounting for 15% of the stock of outstanding mortgages and nearly 20% of the flow in 2015 Q1.

Last year HM Treasury said it will consult later this year on giving to the Financial Prudence Committee (FPC), in addition to the power of direction to limit residential mortgage lending at high loan to value or high debt to income ratios, the ability to influence interest coverage ratios, for Buy-to-Let lending. Combine this with the unknown impact of the Mortgage Credit Directive on the “accidental landlord” or consumer Buy-to-Let as it’s more commonly called, and you achieve an interesting future for the sector. With BoE powers to regulate Buy-to-Let and the European influence, it’s hard to think of this type of lending as anything other than fully regulated.

The sector can do nothing but grow over the coming years. New lenders, relaxation of existing criteria, pensions freedoms, poor returns on annuities, people living longer, interest-only policies, a UK workforce prepared to relocate to employment hotspots and wild swings in property prices across the UK all contribute to a healthy “short-termist” approach to meeting the housing needs of the UK. Restricting access to funding is not going to stop the rise of Buy-to-Let, the private rented sector will continue to grow at a pace. The challenge is not the entry into a rented Buy-to-Let for a tenant, it’s the exit plan – perhaps an area for the Bank of England to consider when it decides how to cool a market that is meeting the demands of an ever growing UK population.

Neil Hoare

Commercial Director