Weekly Round-Up: 18th May 2018
IO, Lets go
Figures out this morning from UK Finance show the number of interest-only mortgages has almost halved in the past six years. There are currently 1.7 million outstanding interest-only mortgages (including partial interest-only), down 46 per cent since 2012, when this data was first collected. The total value of the interest-only mortgage book is £250 billion, down 37 per cent in the same period.
There has also been a particularly steep decline in higher loan-to-value mortgage as many borrowers continue to redeem ahead of schedule or switch to a repayment mortgage. However, the trade body for Banks and Lenders highlight that there remains plenty more work to do over the coming years to ensure that those remaining borrowers who have so far been reluctant to engage have viable repayment plans in place.
UK Finance continue to encourage all borrowers with interest-only mortgages to contact their lender or broker as soon as possible, as the sooner they do so the more options will be available. They will also be developing new best practice for lenders in this area, to reflect the changing regulatory landscape and help the industry engage successfully with more borrowers.
UK Finance’s Mortgage Trends Update for March 2018 has revealed a small increase in lending to first-time buyers compared to a year earlier, while remortgaging levels softened slightly after a busy start to the year.
There was £5.1bn of new lending to first-time buyers in the month, up two per cent year-on-year. 31,200 new first-time buyer mortgages were completed in the month, some 1.9 per cent fewer than in the same month a year earlier. The average first-time buyer is 30 and has a gross household income of £42,000. New lending to homemovers in the month was £6.1bn of, 4.7 per cent down year-on-year. There were 28,400 new homemover mortgages completed in the month, some 7.8 per cent fewer than in the same month a year earlier. The average homemover is 39 and has a gross household income of £56,000.
The £5.6bn of remortgaging in the month was 9.7 per cent down year-on-year. There were 32,400 new homeowner remortgages completed in the month, some 12 per cent fewer than in the same month a year earlier.
5,500 new buy-to-let home purchase mortgages completed in the month, some 19.1 per cent fewer than in the same month a year earlier. By value this was £0.8bn of lending in the month, 20 per cent down year-on-year. UK Finance research suggests the recent softening of the buy-to-let market is mostly down to a number of recent tax and regulatory changes including the limiting of landlords’ Mortgage Interest Tax Relief (MITR), the three per cent Stamp Duty Land Tax (SDLT) surcharge and new underwriting requirements introduced by the Prudential Regulatory Authority (PRA). There were 12,600 new buy-to-let remortgages completed in the month, some 0.8 per cent more than in the same month a year earlier. By value this was £2.0bn of lending in the month, the same year-on-year.
The Fraud Fighters
An innovative new team of fraud-fighters has already frozen £1million from fraudsters trying to trick people known as ‘money mules’ into receiving and transferring cash. Lloyds Banking Group’s ‘mule-hunting team’ was formed to stop the movement of money from scams, shutting down fraudsters’ attempts to shift money using cutting-edge defences developed by specialists from across the bank.
The offer of quick cash is being used by criminals – most commonly on social media – to recruit money mules. Last year, 8,652 18-24 year-olds in the UK were already lured into working with fraudsters between January and September.
If caught moving fraudulent funds, mules risk being left with no bank account and a damaged credit score, meaning they could be unable to apply for a mortgage, loan or even a phone contract in the future – as well as facing up to 14 years in prison.
As part of the industry-leading pilot, the Lloyds Banking Group team has developed a number of new techniques to rapidly analyse data, spotting tell-tale signs, patterns and behaviour to halt fraudsters in their tracks. It can identify mule accounts and block them using the new defences and has already stopped more than £1 million being transferred to fraudsters’ accounts since the beginning of 2018.
For all of the frozen funds, Lloyds Banking Group is contacting the sending banks in order to help them get the money back to the victims. The bank is now planning to roll-out the trial, incorporating these new methods into its state-of- the-art fraud systems, to help stop fraudsters getting away with their ill-gotten gains.
Its Dying Matters Week and research from Royal London shows one in three adults (33%) have dealt with the financial affairs of someone who has died, yet only a quarter (23%) have their own comprehensive file of financial information.
Royal London has a top five list of things to-do, to help loved ones after an individual has gone. The first step is to write a will that ensures that the right people inherit and while most of us know how important it is to have a will and keep it up to date, many of us don’t do it. Royal London research shows that three in five adults (60%) don’t have a will, and a quarter (26%) of those are aged 55 and above. It’s especially important for cohabitating couples to have a will, as the surviving partner does not automatically inherit any estate or possessions left behind.
If there are children in the family it’s important to decide on guardians, but three in five (58%) parents with children under 18 haven’t chosen guardians should they die. Parents need to think about who they would want to step into this role and ask them if they’d be happy to do so. They then need to be included as guardians in the will. More than one in 10 (12%) adults admitted that it would be very difficult for anyone to handle their financial affairs after they died. Pulling together all personal and financial information into one simple document can really help loved ones. Royal London has produced a ‘When I’m Gone List’ to help keep note of all important financial documents and funeral wishes in one place.
Royal London’s research shows that the average cost of a funeral is around £3,800, with one in six people (16%) saying they struggled with the cost. Having a plan in place to pay for a funeral will mean the family won’t have to find several thousand pounds at a difficult time. And finally having a conversation with the family can remove a great deal of uncertainty for them at a difficult time. Royal London research shows that for those that have had to arrange a funeral, two in five (41%) were not left any instructions from the deceased. Starting a conversation might include talking about funeral wishes with loved ones or showing them where important documents are kept.