Mortgage Strategy Updates for This Week

Stay ahead of the curve with this week’s crucial mortgage updates. Santander hires Morris as head of homes and HSBC hikes resi and BTL rates. Read more below:

Santander hires Morris as head of homes

Santander UK has appointed David Morris as Head of Homes. Morris will manage the high street bank’s residential portfolio, valued at around £177 billion and representing an 11% market share, serving 1.8 million customers. His responsibilities include driving new mortgage business and enhancing data-driven solutions for mortgage customers.

Santander to cut product transfer window to 4 from 6 months

Santander for Intermediaries will reduce its product transfer window for existing customers from six months to four next week. The move to introduce longer product transfer windows was part of the voluntary Mortgage Charter last July, negotiated between Chancellor Jeremy Hunt and major lenders, as rates rose following the Liz Truss mini-budget in September 2022. However, the lender now states: “As market rates have stabilised over the last few months and the Bank of England base rate is forecast to decrease later this year, we’ve seen a very low percentage of eligible customers requesting a new deal between four to six months before their current deal ends.”

HSBC hikes resi and BTL rates

HSBC raised rates on its residential and buy-to-let mortgage products from 4 June. This includes rate hikes for existing customer switches, additional borrowing, first-time buyers, home movers, remortgages, and energy-efficient homes. Rates will increase for two-, three-, and five-year mortgages across all loan-to-values. The decision follows TSB’s recent rate hike. Nicholas Mendes of Charcol notes HSBC’s commendable effort in maintaining competitive rates despite market pressures, and he expects other major banks to follow suit due to increased demand.

Monzo mortgage tracker tops 200,000 users, in talks over home loan sales

Monzo’s mortgage tracker has gained over 200,000 users since its April 2023 launch. The digital bank is in early talks to allow customers to apply for home loans via its app. Monzo plans to introduce more features, including pensions and expanded mortgage services, in the coming year. The bank, which boasts 9.7 million customers and aims for 11 million by year-end, reported its first full-year pre-tax profit of £15.4m, up from a £116.3m loss. In February, Monzo raised £350m, bringing its valuation close to £4bn.

Tenet Group appoints administrators as 95 made redundant

Tenet Group has appointed administrators, resulting in 95 redundancies as it winds down its broker network. Interpath, the appointed administrator, laid off staff at Tenet’s Leeds headquarters and is now focused on winding down the business in coordination with regulatory bodies. The administration affects Tenet Group and its subsidiaries, Tenet Limited, TenetConnect, and TenetConnect Services. Despite the administration, customers’ existing products remain unaffected, though recent mortgage offers may be impacted. Last month, Tenet Group sold its national independent financial adviser practice, Tenet & You, to My Pension Expert. Previously, Tenet Group transferred parts of its network to LSL and Openwork following a strategic review that highlighted challenges like consolidation, increased regulation, and inflation.

Landlords set to lose £385m in tax breaks tomorrow

Tomorrow, landlords will lose £385m in tax breaks as the Treasury ends multiple dwellings relief, announced by the Chancellor in the March Spring Budget. The relief, aimed at those buying more than one property, will be abolished on June 1st, with the Treasury citing abuse and a lack of evidence in promoting investment in the private rented sector. Transitional rules allow claims for contracts exchanged before March 6, 2024. Ann-Marie Daly, a real estate solicitor, explains that this change will impact property owners and investors engaged in bulk transactions, as each dwelling will now be individually assessed for stamp duty. However, transactions involving the purchase of six or more residential properties will still benefit from non-residential property stamp duty rates.

Mortgage rate trend downwards: Rightmove

According to Rightmove’s latest data, UK mortgage rates have decreased year on year. The average five-year fixed mortgage rate is now 5.04%, down from 5.11%, while the average two-year fixed rate is now 5.42%, down from 5.47%. The average monthly mortgage payment for first-time buyers remains relatively stable. With the upcoming election on July 4th, Rightmove’s mortgage expert, Matt Smith, suggests reviewing mortgage affordability criteria to aid first-time buyers. Smith emphasizes the importance of regulatory change and collaboration between the government, regulators, and lenders to create long-term solutions for mortgage affordability.

Gen H to show brokers credit commitments during client applications

Gen H, a fintech lender, is introducing a new feature to provide transparency to mortgage brokers regarding clients’ credit commitments. After conducting a soft credit search post a decision-in-principle submission, if discrepancies are found between declared commitments and bureau records, brokers will be able to view details such as type and amount of commitments. This allows brokers to exclude commitments that will be repaid before the loan starts or correct inaccuracies. The aim is to streamline the application process, reduce unnecessary delays, and enhance transparency, ultimately benefiting the customer. The feature took two years to develop due to privacy considerations but is now implemented to improve the overall mortgage application experience.

Higher LTV mortgages pulled from sale: Moneyfacts

Several lenders recently withdrew higher loan-to-value mortgage deals, impacting borrowers with limited deposits. Deals were pulled by Hanley Economic, Principality, Saffron, and Vernon Building Societies. Since 23rd May, the number of fixed deals at 90% LTV fell from 700 to 696, and those at 95% LTV decreased from 329 to 326. While this may concern borrowers, it doesn’t indicate a mass exit, with deals potentially resurfacing later. The ongoing issue of affordable housing shortage may see solutions post-General Election.

Comment: A frustratingly bumpy road

Changes in Bank of England base rates have less immediate impact on mortgage pricing due to fewer variable-rate mortgages. Lenders now consider global factors like US market sentiment and geopolitical risks. Despite decreasing UK inflation, global market volatility has led to mortgage rate hikes. This unpredictability is expected to continue in 2024, but there’s general optimism about the economic trajectory.

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