second charge loans Second-charge mortgage
Marketing No Comments

Brokers have been increasingly searching the second charge market

Mortgage brokers have been increasingly searching the second charge market for loans to help customers raise capital in March, Knowledge Bank said.

Three of the top five most-searched second charge criteria terms featured “capital raising” during the month.

The most searched for term in the sector was “maximum loan to value (LTV)”.

However, capital was sought for purchasing buy-to-let (BTL) property, followed by home improvements, then debt consolidation.

In the residential segment, “furloughed workers,” topped the searches for the third month in a row, followed by “maximum age at end of term”.

To find out more about how we can assist you with your Second Charge Mortgage please click here

“First-time landlord,” ranked first in BTL, then “lending to limited companies.”

Matthew Corker, operations director at Knowledge Bank (pictured), said the pattern of searches “demonstrate the economic divide in the UK at the moment.”

“Some have increased savings through lockdown and are using a larger deposit either to invest in property or add to their existing home. Others have been hit hard, losing their job or being put on furlough,” he said.

“Lenders continue to adapt criteria to keep up with the evolving market,” Corker added.

Source: Mortgage Solutions

Discover our Second Charge Mortgage Broker services.

UK economic growth Labour squeeze Omicron UK economy Pound UK banks
Marketing No Comments

UK economy will grow more than expected in 2021

The UK economy will grow more than expected in 2021 and will regain its pre-crisis peak earlier than predicted, according to one of the country’s most prominent forecasters.

The EY Item Club expects output to increase 6.8% this year rather than the 5% it forecast in January after the economy showed resilience in the past two quarters. As a result, GDP will return to its pre-pandemic high-point in the second quarter of 2022 and not the third, Item said.

The economy shrank by just 1% in the first quarter of 2021 instead of the expected 3-4% and will expand by 4-5% in the current quarter, Item said. Prospects have also been boosted by further support in the February budget, the government’s reopening plan and the NHS’s successful vaccination programme, the research group added.

Item said its forecasts indicated the economy would suffer less permanent damage such as long-term unemployment and the failure of otherwise solid businesses. The forecaster cut its estimate for peak unemployment to 5.8% from 7% forecast in January.

To find out more about how we can assist you with your Second Charge Mortgage please click here

Surveys on Friday showed services and manufacturing activity accelerating as the economy began to reopen from lockdown and with vaccines increasing confidence in the recovery. Consumer sentiment jumped in the first quarter, paving the way for a sharp rebound in spending, a Deloitte report showed on Monday.

Howard Archer, Item’s chief economic adviser, said: “The UK economy has proven to be more resilient than seemed possible at the outset of the pandemic. Businesses and consumers have been innovative and flexible in adjusting to Covid-19 restrictions and, while restrictions have caused disruption, lessons learned over the last 12 months have helped minimise the economic impact.

“Our latest forecast suggests that the UK economy will emerge from the pandemic with much less long-term ‘scarring’ than was originally envisaged and looks set for a strong recovery over the rest of the year and beyond.”

After plunging by almost 11% in 2020 consumer spending is expected to rise by 4.4% in 2021 and 5.7 in 2022 as unemployment falls and real earnings rise, Item said. Archer said inflation was a risk to watch out for as the economy springs back to life but that the Bank of England was unlikely to increase interest rates until late 2022 at the earliest.

Archer said: “While not every household has been able to save more over the last year, there is likely to be significant pent-up demand released as the economy reopens. Overall, consumers will play a significant role in the economy’s recovery.”

By Sean Farrell

Source: ShareCast

Discover our Second Charge Mortgage Broker services.

Second Charge Mortgage
Marketing No Comments

Prime borrowers show growing interest in second charge loans

Borrowers with prime credit ratings accounted for an increased share of second charge mortgage lending in the past six months, according to a tracker by Evolution Money.

The lender divided its customer base into two groups – those with prime credit ratings and those with below-prime scores.

It found that in the below-prime borrowers accounted for 75 per cent of second charge lending by volume between September 2020 and February this year, while prime borrowers accounted for 25 per cent.

The share of lending to below-prime borrowers in the previous six months had been 81 per cent, with 19 per cent of loans going to prime applicants

Across both groups, debt consolidation was the most common motivation for borrowing.

Borrowing increased across the board, with prime customers taking an average loan of £35,726, up from £33,242.

Below-prime customers borrowed an average of £20,588, up from £18,019 in the previous six months.

The average LTV for below-prime borrowers was 74.2 per cent, down from 75 per cent and for prime borrowers it was 77.41 per cent, down from 81 per cent.

Prime borrowers consolidated average debts of £26,657, while below-prime borrowers consolidated an average of £15,277.

To find out more about how we can assist you with your Second Charge Mortgage please click here

Evolution Money chief executive Steve Brilus says: “In terms of our overall product split over the last year, we have seen a notable uptick in both the volume and the value of second-charges being taken out by those customers with prime credit ratings.

“However, what tends to remain unchanged is the reasons why customers require a second-charge mortgage; this tends to focus on the debt consolidation opportunities it provides, although it’s also been clear through the pandemic period that borrowers also want to use their funding to make home improvements alongside paying off other debts.

“The increase in prime borrowers shows there is a distinct and growing customer demographic who may well have a mortgage need but are unwilling or unable to remortgage their first-charge product in order to secure their funds.

“As you might expect, the average loan amount for prime borrowers is higher and their uses for the money more varied, although we are still seeing most customers taking the opportunity to consolidate and pay off debts, with many also use the cash to improve their existing properties.

“This data – which will be updated every quarter from now on – does show second-charges may have a much broader appeal, especially to those prime borrowers who are not willing to extricate themselves from a first-charge mortgage especially if it means paying a substantial early repayment charge in order to do so.

“Between the two six-month periods we saw a 40 percent-plus increase in the volume of seconds, and with the market environment as it is, we anticipate further increases particularly as advisers work with more clients with such needs and circumstances.”

By Leah Milner

Source: Mortgage Strategy

Discover our Second Charge Mortgage Broker services.

UK inflation economy Omicron UK economic recovery UK Economy Bank of England
Marketing No Comments

UK remains steady as economy slowly starts to reopen

UK remains steady as economy slowly starts to reopen – European stocks started the week in a subdued fashion, with the FTSE100 only just managing to close above the 7,000 level, while the DAX also slipped back from its record highs of last week.

US markets also finished the day on the back foot, weighed down largely by weakness in tech stocks, which may well have been prompted by a large fall in Bitcoin over the weekend.

Despite yesterday’s modest weakness, sentiment by and large still remains positive, with most discussion/outrage on social media more about the European Super League, than the big falls seen in bitcoin and Ethereum, pointed out Michael Hewson, chief Market Analyst at CMC Markets UK, this morning.

“It is perhaps not surprising that after the gains seen last week, that we might see some modest profit taking as we gear up for further big earnings announcements this week, as well as the latest ECB rate meeting on Thursday,” Hewson told City A.M. this morning.

Markets in Asia have continued the softer theme with the Nikkei 225 falling sharply, although this weakness doesn’t look like it will translate too heavily into today’s European open in a couple of hours’ time, he added.

The US dollar also had a disappointing day, which given the weakness in stocks was a little surprising, losing the most ground against the pound, blowing a rather large hole in the notion that sterling was being weighed down by uncertainty ahead of next month’s Scottish elections, as it pushes back above the 1.4000 level for the first time in over a month.

UK unemployment figures
On the data front its eyes down for the latest unemployment numbers from the UK today.

“With the UK economy slowly embarking on an unlocking process and business optimism showing significant signs of bullishness, hopes are rising that any further increases in unemployment will be limited in nature, and then start falling back. Against that expectation today’s latest ILO unemployment numbers are probably a bit of a distraction, given that we all know that they are very much a lagging indicator,” Hewson said.

To find out more about how we can assist you with your Second Charge Mortgage please click here

In January the ILO unemployment number fell back to 5 per cent, and it isn’t expected to deviate from that when the February numbers are released this morning.

“Though there is a worry we could see the number nudge back up, given the sharp jump higher in the jobless claims number a month ago,” he noted.

Nonetheless, various forecasters, including the Bank of England, do appear more optimistic about the outlook for unemployment this year revising their forecasts lower once the government starts to withdraw the furlough support that has been in place over the last 12 months.

The monthly jobless claims number showed a big increase in February, rising from 7.2 per cent to 7.5 per cent, and the highest level since August last year.

End of lockdown
With the UK economy slowly starting its reopening process this month, the hope is that this claims number will exhibit a similar fall this time around as businesses restart and take back furloughed employees and start to drift back down towards 7 per cent again, Hewson explained.

“The rise in the claims number was undoubtedly due to the reimposition of lockdown in January, however there was some evidence of a pickup in hiring in some other areas of the economy,” he said.

That still can’t disguise the reality that there are 700k fewer jobs in the UK economy since this time last year, with most of those job losses in the hospitality sector, and in the under 25 age cohort, Hewson continued.

In retail the picture is equally as bleak, as according to the BRC 67,000 jobs have been lost between December 2019 and December 2020.

The outlook does appear to be starting to look a little brighter if the latest economic projections from the OBR are any guide.

They upgraded their economic projections for unemployment down from a peak of 7.5 per cent to 6.5 per cent last month, as the Chancellor set out his various measures to extend the furlough as well as some reductions to key tax and business rates.

“This raises the prospect that companies that are struggling will delay cutting staff, until the reopening path is clearer, while companies that are growing will recruit more quickly, to take advantage of new investment opportunities,” Hewson concluded.

By Michiel Willems

Source: City AM

Discover our Second Charge Mortgage Broker services.

Bank of England coronavirus Pound Sterling UK economy UK economic recovery UK Government borrowing UK economic recovery UK economy
Marketing No Comments

Sterling rises to two-week high against the dollar

Sterling rose to hit a two-week high against the dollar on Monday at the start of a data-heavy week that is expected to provide more evidence that Britain’s economy is rebounding from its deepest recession in 300 years.

The pound had a strong first quarter, supported by dwindling expectations of negative interest rates and by a fast roll-out of vaccinations against COVID-19 across Britain.

As England re-opened shops, hairdressers, gyms and pub gardens in April, analysts expect a faster economic recovery in the United Kingdom than in the European Union, which is facing a third wave of infections.

Traders will be watching PMI surveys for the UK, together with data on the labour market, inflation and retail sales this week.

Both ING and UniCredit analysts told clients there was scope for sterling to strengthen to $1.40 this week.

To find out more about how we can assist you with your Second Charge Mortgage please click here

“GBP continues to find support on dips and it seems like investors are happy enough staying positioned for the 2Q UK re-opening story,” said Chris Turner, Global Head of Markets at ING.

“Today we have already seen some encouraging April Rightmove house price data,” he said.

Advertised prices for homes in Britain hit a record high after finance minister Rishi Sunak stoked the market again by extending a tax cut for home-buyers last month, property website Rightmove said on Monday.

Speculators’ net long position on the pound versus the dollar rebounded in the week to April 13 after slipping to its lowest since February in the previous week, futures data from CFTC showed.

Versus a weakening dollar, the pound rose 0.4% to $1.3900 at 0958 GMT, its highest level since April 6. It was 0.1% lower versus the euro at 86.61 pence, after it hit its highest of 86.30 pence since April 8.

“Current domestic COVID data is encouraging and a further easing of lockdowns will all point in the direction of the UK economy early out of the block on economic recovery expectations,” said Neil Jones, Head of FX Sales at Mizuho Bank.

Source: ZAWYA

Discover our Second Charge Mortgage Broker services.

Possession claims second-charge help to buy Mortgage arrears Protection second-charge mortgages Second charge lending Property repossessions second charge mortgage
Marketing No Comments

Second Charge lending up 31% in March

Second charge lending totalled £91.4 million in March 2021, a 31.27% increase on the previous month.

The number of completions also topped 2,000 for the first time since the pandemic began, with 2,202 second charge loans funded in March 2021.

The increase in the number of high LTV mortgage products returning to the market in recent months seems to have started to impact the second charge market, with a decrease of 4.18% being recorded for loans over 85% LTV.

To find out more about how we can assist you with your Second Charge Mortgage please click here

The increase is also significant when you compare year-on-year, with March 2021 just 1.72% below the figures posted in March 2020 – just a 1.5 million difference.

The average completion time shows the industry is well-positioned for growth: despite the monthly second charge lending increasing by 21.8 million, there was just a single day increase in completion time.

Source: Mortgage Finance Gazette

Discover our Second Charge Mortgage Broker services.

UK business output UK recovery Covid lockdowns FTSE 100 UK GDP Almost half UK economy Sterling Furlough redundancy UK economy UK economic growth
Marketing No Comments

UK economy back to growth ahead of predicted spending spree

The UK economy grew by 0.4% in February, new data from the Office for National Statistics (ONS) has revealed.

The return to growth followed a sharp drop of 2.2% in January recorded by the ONS, though it’s notable that it was still down by 7.8% from February 2020.

The ONS found that the service sector grew by 0.2% over the month, pointing to a “little” pick up in wholesale and retail trade sales, though this was far lower than the jump of 1.6% seen in the construction sector. This was driven by growth in both new work projects and repair and maintenance.

Meanwhile, output in the production sector increased by 1%, while manufacturing grew by 1.3% over the month.

Learning lessons
Howard Archer, chief economic advisor to the EY Item Club, argued that the figures show the economy is being affected less by lockdown measures than was originally the case, which suggested lessons had been learned and experience gained in how to keep activity going.

He added: “Companies and employees have got used to home working and, significantly, many workplaces, offices, sites and plants have been adjusted to meet Covid-19 social distancing requirements so that employees can continue to work on site.”

Archer said that with confidence on the rise, EY Item Club was revising its GDP forecast for 2021 to a much higher 5%, continuing: “The UK economy is expected to benefit progressively from the second quarter as restrictions on activity are eased, supported by the rapid roll-out of Covid-19 vaccines.”

To find out more about how we can assist you with your Second Charge Mortgage please click here

Time for a spending spree
Danni Hewson, financial analyst at AJ Bell, said that whole there was still lots of ground to make up, the images of packed pub gardens and lengthy queues on the nation’s highstreets suggested that many people were set to put restrictions behind them and embark on a spending spree.

She added: “There is also small comfort to be had in February’s trade figures. Exports to the EU which dropped so dramatically off a cliff in January have bungeed back up, though they are still £2bn down on pre-Brexit levels. Notably imports from the EU were less resilient and remain more than £5bn down. It’s clear there are still issues but many of those will have been exacerbated by lockdown restrictions, something which will undoubtedly continue further into the spring.”

Robert Alster, CIO at Close Brothers Asset Management, agreed that growth will be driven by spending and corporate investment, but argued the true state of the jobs market remains a big unknown.

He continued: “The furlough scheme will phase out from July to September, and it’s unclear whether businesses will re-hire all their workers. In a worst case scenario, a sustained rise in unemployment could undermine a strong UK recovery.”

Written by: John Fitzsimons

Source: Your Money

Discover our Second Charge Mortgage Broker services.

GBP sterling UK economy pound UK recovery
Marketing No Comments

UK economy will be back to its pre-COVID-19 level around the middle of next year

UK economy will be back to its pre-COVID-19 level around the middle of next year, according to economists in a Reuters poll who said unemployment would peak at 6.2% as 2021 draws to a close and the pandemic job support scheme ends.

The UK has suffered the highest coronavirus-related death toll in Europe. But a swift vaccine rollout and plummeting infections has allowed the government to begin easing restrictions and on Monday non-essential retail and outside hospitality reopened.

Last year the economy shrank by the most in more than three centuries, but the April 7-12 poll of around 70 economists said it would expand 5.0% this year and 5.5% in 2022. In a March poll those forecasts were 4.6% and 5.7%, respectively.

With much of the country’s dominant service industry closed, and citizens encouraged to stay at home, the poll suggested the economy contracted 2.3% last quarter. Now that lockdowns are being loosened, it was expected to grow 3.5% this quarter and 3.0% next.

“There are mounting signs that the effects on the UK economy from the third COVID-19 lockdown have started to thaw,” said Paul Dales at Capital Economics.

“We are sticking to our relatively optimistic view that the reopening of the economy and the vaccine programme will allow GDP to regain its pre-pandemic level early next year.”

To find out more about how we can assist you with your Second Charge Mortgage please click here

But asked when the British economy would be back to its pre-pandemic size the majority of respondents to an additional question thought it would take a bit longer, with 10 expecting it to be a quarter or two later.

Finance Minister Rishi Sunak said last month he expected the UK economy would return to its pre-pandemic size in mid-2022. Six respondents in the poll said it would take longer and five said it would be sooner.

FINAL FURLONG

Britain’s job market has been protected by a huge government furlough scheme which is due to run until end-September, keeping unemployment levels relatively low. It was 5.0% in the three months to January.

The median response to a question asking where it would peak was 6.2%, most likely towards the end of this year when the furlough scheme finishes.

“Some rise in unemployment is probable once furlough ends. But the evidence from around the world is that labour markets can recover quickly and if scarring is contained, jobs growth can recover through 2022,” said Brian Martin at ANZ.

Like many of its global counterparts, during the height of the pandemic the Bank of England slashed borrowing costs to a record low and restarted its asset purchase programme to try and support the economy.

None of the 60 economists polled expected Bank Rate to move from 0.1% when the Monetary Policy Committee meets on May 6 and medians in the survey suggest it won’t increase until 2023. The earliest anyone had a hike pencilled in was for Q3 next year.

Inflation has held well below the Bank’s 2.0% target, allowing it to remain accommodative with policy.

The poll showed inflation would not reach that goal until towards the end of this year although an overwhelming majority of respondents to an additional question, 15 of 17, said the risks to their forecasts were skewed more to the upside.

“Higher inflationary pressures are still evident – with shipping costs, input costs indices and commodity prices still up,” said James Pomeroy at HSBC.

Reporting by Jonathan Cable

Source: UK Reuters

Discover our Second Charge Mortgage Broker services.

UK GDP Sterling BoE UK economy UK economic growth Pound Sterling
Marketing No Comments

UK economy improved in February despite lockdown measures

The UK economy rebounded slightly in February amid the third lockdown but was still almost 8% lower than before the pandemic, according to official figures.

The Office for National Statistics (ONS) said gross domestic product (GDP) grew by 0.4%, representing an improvement from a 2.2% decline in January, which itself had been revised upwards from a previously predicted 2.9% fall.

Nevertheless, the February reading was slightly below the forecasts of some analysts, with experts at Investec predicting a 0.7% improvement for the month.

The construction sector saw activity jump by 1.6% for the month amid a lift in new work and maintenance.

Production and manufacturing activity also improved, with the two sectors revealing 1% and 1.3% improvements respectively.

Meanwhile, the service sector remained particularly constrained, reporting just 0.2% growth, as hospitality and retail remained constrained by pandemic restrictions.

To find out more about how we can assist you with your Second Charge Mortgage please click here

The figures also revealed that exports to the EU increased by £3.7 billion – or 46.6% – following a record slump of £5.7 billion in January.

The ONS said the export increases were driven by machinery, transport equipment and chemicals.

It added that the import of goods from the EU also rebounded, increasing by £1.2 billion – or 7.3% – in February.

An ONS spokeswoman said: “The economy showed some improvement in February after the large falls seen at the start of the year but remains around 8% below its pre-pandemic level.

“Wholesalers and retailers both saw sales pick up a little, while manufacturing improved with car producers experiencing a partial recovery from a poor January.

“Construction grew strongly after revised figures showed they had struggled in the last couple of months.

“Exports to the EU recovered significantly from their January fall, though still remain below 2020 levels.

“However, imports from the EU are yet to significantly rebound, with a number of issues hampering trade.”

Suren Thiru, head of economics at the British Chamber of Commerce, said: “The latest data confirms a modest return to growth in February.

“However, coming after a contraction in January, it does little to alter the prospect of a downbeat first quarter for the UK economy.

“The pick-up in output in February reflected a broad-based improvement in activity with all the main sectors recording an increase in growth.

“The clarity provided by February’s announcement of a road map for reopening also helped support output in the month.”

Source: Irvine Times

Discover our Second Charge Mortgage Broker services.

Possession claims second-charge help to buy Mortgage arrears Protection second-charge mortgages Second charge lending Property repossessions second charge mortgage
Marketing No Comments

Homeowners look to second-charge mortgages to raise money

New research from criteria search specialist Knowledge Bank shows that homeowners are utilising second-charge mortgages to raise money to invest in buy-to-let properties, home improvements, and to consolidate debt. These three contrasting usages highlight the state of the economic situation in the country.

Knowledge Bank holds the largest database of up-to-date mortgage lending criteria in the UK and its monthly criteria index shows the terms that brokers are actually searching for. These may well be reflected in mortgage completions in two-or three-months’ time.

Capital raising featured in three of the top five most searched terms in the second charge market in March. The reasons for this capital raising varied greatly however. The second highest-searched term was ‘Capital raising to purchase a buy-to-let’, which follows the trend of investors looking to purchase rental properties as the stock market remains volatile and demand for rental property soars.

‘Capital raising for home improvements’ was fourth on the most searched terms’ list. This is potentially due to homeowners looking to renovate, add an extension, or build an office in the garden, possibly as a result of an extended period working from home. Brokers were also searching for ‘Capital raising for debt consolidation’, which landed at number five on the most searched for terms. This suggests there are clients looking to secure unsecured debts against their home to bring all their debts into one place and take advantage of the lower interest rate they will pay.

To find out more about how we can assist you with your Second Charge Mortgage please click here

The variety of searches in the second charge market appear to be a reflection of the wider economic situation in the UK. Since the start of the pandemic there has been a split, with those in stable employment able to save and invest due to the lack of opportunities to go on holiday or take advantage of hospitality venues; whereas those who have been hit hardest, have struggled financially and need to secure debt.

In the residential market, as the Chancellor announced an extension to the job support scheme ‘Furloughed workers’ was the most searched term for the third month in a row.

Throughout 2021, there has also been consistent interest in ‘Income multiple used for affordability assessment’, and this continued in March. This suggests despite the return of 95% loan to value (LTV) mortgages, home-owners are still looking to maximise the amount they can borrow. For the first time this year however, there was a search in the top five for lenders who would offer a mortgage to people with ‘Defaults – satisfied in the last three years’. This highlights that debt held by some of the UK’s population is not a new problem.

Demonstrating the continued interest in the buy-to-let sector, ‘First-time landlords’ was the top criteria searched by intermediaries for the second consecutive month. ‘Lending to limited companies’ featured in the top five terms searched, and has been a constant since July 2018. This is due to changes set out by the government in the 2017 Budget, including a reduction in the amount of tax relief available for interest on buy-to-let mortgages for individuals. This policy is continuing to change the landscape of the buy-to-let market.

In the bridging sector, ‘Heavy refurbishment’ was in the top five most searched for terms for the first time since December 2020. This potentially is as a result of clients turning to bridging loans to undertake major renovations, most likely extensions or remodels on their homes. A hot topic in the industry, ‘Regulated bridging’ was the top searched term by intermediaries. This could be due to homeowners using bridging finance when a property chain has broken or to purchase a property at auction.

Knowledge Bank operations director Matthew Corker said: “The second charge market clearly demonstrates the current economic divide in the UK at the moment. There are those who have increased their savings through lockdown and are now using a larger deposit to either invest in property, or add to their existing home. But there are also those who have been hit hard, either losing their job or being put on furlough.

“With extensions to the stamp duty holiday and job support scheme announced by the Chancellor during the latest Budget, lenders are continuing to adapt criteria to keep up with the evolving market. With criteria changes coming thick and fast, brokers could spend hours every day searching for the latest criteria, so using a comprehensive criteria search system can save them a massive amount of time and ensure they are providing best advice.”

BY PETE CARVILL

Source: Property Wire

Discover our Second Charge Mortgage Broker services.