The good news is that the days are once again getting noticeably longer.
Before we know it, spring will burst forth in a riot of colour and life, and soon we’ll find ourselves adrift in the warm embrace of summer, pondering how the sands have slipped so silently and speedily through the hourglass.
Maybe it’s my age, or the frenetic dance of modern toil, that makes the days evaporate like mist under the morning sun.
Recently there has been a massive sense of déjà vu, with brokers working all hours to survive a series of rate pulls as lenders decide once again to increase rates, both due to higher swap rates and to protect service levels. Some have done this with little notice, in a throwback to the dark days of 2023; something we had hoped was well behind us, but alas not.
This could easily be another damp squib that causes issues and helps few
With swap rates increasing, it seems the age of the 3% mortgage has stalled prematurely, which will seem a bitter blow to many homeowners and borrowers who had been feeling more hopeful of late.
Of course, this all makes life difficult for those trying to find a new mortgage. Once again, quick decisions are required or carefully worked-out budgets need to be revisited, which can sometimes mean the difference between obtaining their dream home or not.
For us at the sharp end, this entails more long hours and late nights working to secure rates for clients, while often dealing with inadequate lender systems. The ‘You are number 1,187,009 in the queue’ or ‘System error’ photos shared between brokers illuminate the issue.
I have had more than a few conversations with brokers already feeling stressed and anxious, so early in the year after a break, who are having to cancel family evenings, kids’ events or social gatherings to get those cases in. We must be very careful that we do not walk into a mental-health crisis in our industry, losing good people along the way as they leave the industry altogether.
Despite the difficulties of the moment, this industry remains a great one to build a career in
As I have said before, we do understand why these rate pulls happen: lenders need to protect themselves. I heard that one large lender recently had its busiest day ever. But this protection comes at what cost?
A better way
We urgently need to think of a better way to do this — there always is one.
I hope we find a sense of balance but, until then, (and especially for the fellow DWD fan who spotted my last use of his lyrics): if you want my address it’s number one at the end of the bar, where I sit with the broken angels clutching at straws and nursing our scars. You can blame it on me.
Governments getting involved with mortgages, especially when they don’t seem to actually speak to the people within the industry, often doesn’t end well
So, let’s take an early look at those meddlesome swap rates. Three-month Sonia is still paralysed in a streetlight, holding at 5.22%, while swaps have ricocheted back up.
2-year money is up 0.33% at 4.55%
3-year money is up 0.37% at 4.30%
5-year money is up 0.35% at 4.02%
10-year money is up 0.23% at 3.85%
The next inflation and economic data will be incredibly important and, while we could see another turnaround in due course, the Bank of England really needs to take note of the sentiment on our high streets.
I still believe rate cuts are needed, and if they do not come soon the issues of an economy in free fall will haunt the Bank and the government alike, just as much as those staring down the barrel of higher mortgage payments.
There is a theory that swap rates have edged up because of potential concerns over the upcoming Budget. The chancellor has already been warned not to get carried away and find himself ‘doing a Truss’ by planning loads of unfunded tax cuts as the Tories’ electoral desperation grows.
We urgently need to think of a better way to do this — there always is one
Leaving a trap for an incoming Labour government may be on their minds, but get it catastrophically wrong again — although dear, misguided Liz is still doing the circuit and saying she was right — and they will be finished for a generation.
As to what the chancellor has planned for housing, it does seem likely that the Budget will be housing heavy, especially as, according to a poll from the HomeOwners Alliance, almost two million young people do not think they will be able to “follow in the footsteps of their homeowning parents”.
Another stamp-duty holiday or axing of duty for downsizers is still whispered, especially as the Institute for Fiscal Studies has called this a potential “growth-friendly tax cut”. But the main idea of the mythical 99% mortgage is not going away, it seems, and it will be interesting to see how this manifests itself.
Get it catastrophically wrong again and the Tories will be finished for a generation
Governments getting involved with mortgages, especially when they don’t seem to actually speak to the people within the industry, often doesn’t end well, and this could easily be another damp squib that causes issues and helps few.
Own new
Something that could be effective is Own New, a builder- and lender-inspired scheme to help buyers of new-build properties hit the market. In effect, it uses the incentive from the builder (I know, don’t get me started) and gives it to the lender, allowing it to reduce the rate offered. Instead of a product priced around 4%, those with a 40% deposit could get a two-year fix at 0.99%, while those with a 10% deposit could pay only 3.73%.
We must be very careful that we do not walk into a mental-health crisis in our industry
Brokers who want to get involved need to register, embark on the training and pass the test. Darlington, Halifax and Virgin Money are involved so far.
This will be a very ‘Marmite’ scheme and, although it has been created with good intentions and is an innovative idea, for it to really work properly builders and developers need to make sure they do not just insist that their ‘preferred’ brokers handle every case, nor block the customer from choosing to use another broker, as long as they are suitably qualified, of course.
Meanwhile, Santander has moved to 95% LTV on new-builds, and Accord has improved its new-build affordability calculation; perhaps asking the question, ‘Do we really need more government support here?’ and showing that lenders can do more themselves.
There has been a massive sense of déjà vu, with brokers working all hours to survive a series of rate pulls
In other news, Generation Home has updated its affordability calculations for its income booster product to make things simpler, while Metro Bank has made enhancements to its joint-borrower, sole-proprietor option. It will now allow godparents and family friends to support buyers, as well as permit joint borrowers to reside in the property and also gift a deposit.
On a positive note, Paragon’s latest poll of brokers says that almost 40% of firms plan to grow this year, albeit getting new people is described as challenging overall. Despite the difficulties of the moment, this industry remains a great one to build a career in.
Keep the faith, keep smiling, and know that you — yes, you — are special, important and appreciated.
Hero to Zero
Santander increasing its new-build LTVs to 95%
Darlington Building Society for recognising the increased work brokers do and upping its PT proc fee
The work of the Homeowners Alliance Group – hopefully helping to create a better process
An investigation into eight major housebuilders to determine whether their actions are influencing housing development and prices – we need transparency
Rate changes with short notice periods – there must be a better way.
The continued practice of some estate agents refusing to pass on offers to vendors unless their own broker is used
You Know What Really Grinds My Gears?
There has been another groundswell of reports around estate agents refusing to pass on offers to vendors unless their in-house broker is being used, flouting pretty clear rules around this.
I have no problem with agents asking someone to be qualified because, in quite a few cases, agents report that the buyer’s perceived ability to buy and their actual ability to buy somewhat differ. That just sounds like good practice before everyone starts a process that costs time and money.
However, there are too many examples of where this goes much, much further, especially when it is clear the buyer already has the services of a more-than-competent broker.
Some of the examples I have heard involve a lot of misinformation at best, outright untruths at worst, and buyers feeling forced to use an in-house broker they would rather not use, for fear, or in some cases knowledge, that if they do not use them they will not secure the property.
I do not believe that this is a policy set by top brass at all big organisations; they are at pains to stop it. But it is happening regularly and needs to be discontinued, once and for all.
This article featured in the March 2024 edition of MS.
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