The FCA today released their long awaited report into Interest Only mortgages and found that whilst approximately half of the roughly 2.6m borrowers with an interest only mortgage may face a shortfall, 90% of the circa 600,000 deemed at immediate risk do actually have a repayment plan.
Whilst it is of course concerning that there are many borrowers on interest only loans who have not as yet made any concrete provision to repay the loan, this is an issue that is containable and can be dealt with over the longer term.
With apologies to James Carville, the title is of course a slight variation of the phrase “The economy, stupid” which he coined as a campaign strategist of Bill Clinton’s successful 1992 presidential campaign against sitting president George H.W. Bush.
A perversion it may be, but it is the one subject that is guaranteed to get a bevy of brokers, (if that is the right collective term), most animated when discussing the market.
Whilst justifying to prospective clients what an independent broker does, apart from the obvious and most important advice part, service is the secondary selling point.
Last week was dominated by a report from Moneyfacts that found that Mortgage Fees have risen to their highest level for 25 years, on average standing at £1,522.
In my opinion, lenders have been steadily increasing fees over the past few years in order to counter a reduction in the headline rate, make more profit and remain top of Best Buy Tables.
As a result a growing number of so called Best Buys can be deceiving and can actually end up costing a borrower more over the initial period of the loan, once the fees are taken into account, than a product with a slightly higher rate.
As you know I welcome Guest Blog spots so I am delighted to host Mikkel Bates, Head of Marketing at Castle Trust who has contributed the following :-
Shared equity – a shot in the arm of the housing economy
Regular readers of this blog will have seen the recent response of its editor Andrew Montlake to the government’s Help to Buy Scheme (see the previous post).
The initiative could provide a welcome boost to the housing market, Andrew concluded, but the devil will be in the detail.
There was an interesting report last week that Building societies are now dominating best buy tables with 83 per cent of the most competitively priced products being offered by them rather than the larger lenders.
This is important as Building Societies also tend to operate on the old fashioned principles of understanding the customer and service, unlike the tickbox, factory style approach of many of the larger lenders. Now they have become more competitive once more, this gives consumers some real choice.
Andrew Montlake, Director and Spokesperson for Coreco, gives his honest and forthright views on the mortgage market, economy and all things property related. Monty was voted "Mortgage Personality of the year 2008" and is the current holder of the British Mortgage Awards "Best Press Spokesperson" title. Expect expert analysis, delivered in a down to earth style with a side helping of exuberance.
Interest Only – Comments on the FCA Report
The FCA today released their long awaited report into Interest Only mortgages and found that whilst approximately half of the roughly 2.6m borrowers with an interest only mortgage may face a shortfall, 90% of the circa 600,000 deemed at immediate risk do actually have a repayment plan.
Whilst it is of course concerning that there are many borrowers on interest only loans who have not as yet made any concrete provision to repay the loan, this is an issue that is containable and can be dealt with over the longer term.