What the FSA was hoping, was that this could be achieved with as little side-effects as possible, especially given the state of the housing market in general at present.

The good news is that this morning the FSA have every right to have a smile on their faces after producing a thorough, though no doubt provocative, piece of work which achieves a great deal of its original aim. What is most pleasing, is that there is evidence that the FSA have held a genuine consultation period, taken much in, listened and ignored where both was necessary.

Of course there will be those that say these rules have either gone too far or not gone far enough, but on the whole it would be perhaps a little unfair for us to sit here and pontificate on the “could have should have” debate.

In essence, the whole underlying premise can be broken down into three key words; affordability, advice and realism.

At its’ core are 3 main principles for “good mortgage underwriting” :-

1. Mortgages and loans should only be advanced where there is a reasonable expectation that the customer can repay without relying on uncertain future house price rises. Lenders should assess affordability;
2. This affordability assessment should allow for the possibility that interest rates might rise in future
3. Interest-only mortgages should be assessed on a repayment basis unless there is a believable strategy for repaying out of capital resources that does not rely on the assumption that house prices will rise.

Let’s face it, it is pretty hard to argue with any of those as a basic starting point. What is important however, is how they are interpreted and whether there are strict rules on each.

At first glance, and let’s be honest although I had an advanced copy I have not read all 438 pages, this is quite a balanced blend of prescriptive rules and general guidelines that leave some flexibility for both lenders and consumers.

The first key point is around income and affordability; and here it is prescriptive “Income will have to be verified in every mortgage application”.

This means an end to self-certification, which although this has disappeared anyway, the lid is being well and truly bolted shut to prevent a return. It also means potentially an end to fast-track lending, where whilst mortgage advisers needed to have evidence of income on their file ready to present to the lender at a moment’s notice, lenders only checked a sample.

Whether lenders will still find a way to do this now they are ultimately responsible remains to be seen, but I for one will not shed a tear for the end of fast-track in its entirety. All of this is sensible and will help to combat worrying levels of fraud.

Before you start to shout about the self-employed, for whom self-certification was initially designed for before it became so miss-used, again refreshingly the FSA have recognised this. There are no “prescriptive requirements for self-employed customers” and therefore lenders do retain a level of discretion over how they underwrite in this sector. As the report says, ” Our aim is to ensure that lenders take an informed lending risk based on the evidence – not disregard the risk altogether.”

Also, affordability will need to be calculated on a capital repayment basis, again something that many lenders do now anyway. Recognising that interest only is a “niche product”, which is suitable for some, gone are proposals to outlaw interest only mortgages altogether.

Instead “interest only mortgages can still be offered as long as borrowers have a credible plan to repay the capital, but relying on hopes of rising property values is not enough”.

So whilst lenders retain some discretion over how they calculate affordability, they must be robust and must also take into account possible future interest rate rises. In other words, if you can barely afford the mortgage at today’s historically low tracker rates, and / or on an interest only basis, well, you won’t qualify for a loan in the future.

This is of course entirely sensible and is something that any mortgage adviser worth their salt has been doing anyway for many years. Which leads on nicely to one of the other most important parts, advice.

The FSA have recognised that proper advice should be the cornerstone of any mortgage proposal and that there is a large degree of confusion from the general public over whether they are receiving advice or not. It has always seemed crazy that in this day and age, especially after the events of the last few years, a 1st Time Buyer with no experience can walk into a bank branch and obtain a 90% LTV mortgage with no advice!

Therefore the FSA propose to remove the non-advised sales process, “requiring all sales which involve spoken or other interactive dialogue with the consumer to be advised“.

This is a brave and necessary step taken by the FSA which not only levels the playing field between Mortgage Advisers and direct lenders, but will improve the prospects for all consumers taking out the largest loan they are likely to obtain in their life.

There are opt-outs for those to proceed on an execution only basis for professional or High-Net Worth consumers, although I have seen a good many mortgage advisers who need advice just as much as the next guy!

This means that a purely online basis where no conversation is had can proceed without any advice.

The FSA has also gone further in identifying vulnerable consumers, such as those consolidating debt, who will not be allowed to opt-out and must always take advice. This is stunningly simple common-sense and the FSA should be applauded for this.

In order to improve client understanding, there are simplifications to the Initial Disclosure Document, changes to Key Fact Illustration trigger points to avoid information overload and the requirement of “firms to give the consumer a plain and simple explanation of whether there are any limitations in the product range they provide.”

There has also been some recognition to those Mortgage Prisoners who can still prove they can afford the loan but need to move and may be in negative equity, for example. Lenders are given some discretion over these rules for existing customers with a good track record in order to keep the market somewhat liquid and allow for some much needed job transiency.

These “Transitional Arrangements” only come into play where there is no additional borrowing and the monthly payment will be the same or less than the existing payments.

Obviously the devil is always in the detail and I am sure there are other points of interest, especially where niche products such as Bridging loans are concerned, which will be highlighted in due course.

However, as the arguments begin until this consultation phase ends on March 30th 2012, it seems that whilst this may not be the ultimate panacea to please everyone, it is a sensible, practical and courageous offering which will do much to ensure the illness does not become an epidemic again, whilst it should also avoid critically harming the patient.

It began with some positives from the previous week; UK growth was confirmed at 0.5% in the 3rd quarter of this year and the Government launched its much anticipated Housing Strategy, pulling together a range of announcements with a couple of new ones to try to stimulate growth and return some confidence back to the house building industry.

Whether you agree with the content of this or not, the point is that at last the Government is trying to do something to help stop a housing issue become a full blown crises. It looks like there are two main strands to the policy, which is firstly set out to bring back some confidence, (key word that), to the house builders. For the most part they seem quite pleased with it all and let’s face it, if builders are not building at all there is not much hope for much needed housing supply.

The more contentious issue is around the so called 95% LTV guarantee. I have had more than a few twitter banters this week around this with some commentators and journos suggesting that this is creating a false market, lending to people who otherwise would not be able to buy and putting the taxpayer on the hook when it all goes Pete Tong. I disagree.

The reality is that the taxpayer is the last resort; it assumes all these buyers will not be able to pay their mortgages, slip into negative equity and subsequently get repossessed. The claim that they will take out loans that are not affordable is plain wrong. In reality the loans will only go to people who in a “normal” market can afford the monthly payments of a 95% LTV mortgage but are struggling to raise the “abnormal” levels of deposits.

If they can afford the loan at say 3.5 or 4 times income, (my guess is that it may be more stringent than this anyway), so what if they slip into negative equity? We have to get out of the view that a house is a short-term investment. For most, here’s a novel idea, you could always just live in it – it is a home.

If people are then forced to move for whatever reason lenders should be big enough to underwrite the reason effectively and work out a sensible plan. If I have a 120% mortgage, have no issues with the payments and need to move to a similar property in another area keeping 120% LTV, fine. It is affordability that should govern everything – get that right, with a sensible degree of comfort then issues will be fewer.

Whilst the Euro turmoil is starting to turn into a full-scale endgame with the markets becoming more and more convinced of an EU zone break up of some description, we may yet need our tin hats and bayonets. However, as an industry we need to welcome every little move made to try to improve matters.

The real issue, like an annoying soap opera you don’t really like but can’t help watching, is still playing itself out in Europe. Rumours are both good, that the IMF is preparing a EU600 billion bail out of Italy to solve its issues, (denied by the IMF for now) and bad, that ratings agencies are poised to basically downgrade the whole of Europe causing further issues, (not denied)!

The mortgage market however is still busy re-pricing upwards on-the-whole, however there are the odd moves downwards especially in the higher Loan-To-Value bracket where 85% and 90% LTV lending is improving, at least as far as the actual rates are concerned.

In the last few weeks we have seen the likes of Northern Rock, Nationwide, Woolwich, Coventry, Natwest, Halifax and Abbey all become more involved in this market which is a real boost.

There are still, however, some other lenders who see their 90% rates as mere window dressing however, in other words happily proclaiming that they support this sector of the market, but not quite for you, or you, oh and you don’t quite fit either…You get the point.

Ha ha ha ha ha ha ha ha ha ha ha ha ha ha, (stop it, ha, my, ha, sides hurt, ha).

Actually maybe that’s a little disingenuous, as to be fair at least they are giving the impression of supporting the average mortgage borrower and their rates have been consistently attractive. However, in making this comment whilst trying to put the proverbial boot in to mortgage brokers who they clearly see as an irritant, (who needs independent advice pah, advice is for wimps), they are opening themselves up to closer inspection.

So, if 9 out of 10 people who go through their door genuinely go on to get a mortgage offer then that is brilliant. It is so brilliant because it means that there is no mortgage issue at all and I would urge everyone who needs a mortgage, first-time buyers, foreign nationals, the self-employed, those at high loan-to-values, those whose income is from multiple sources, who need a guarantor, who may have a little credit blip, who are on a Visa, who need to stretch beyond the published 4.5 times income multiples, etc, to get down to a branch pronto before the queues get too long. You get my drift.

I have no issue with the fact that HSBC do not deal with brokers, seriously I don’t. Of course I would love them to and even sent a cheeky email to them recently asking them for a pilot, but I don’t like the fact that a 1st time buyer or anytime buyer for that matter, can take out the biggest debt they are ever going to have without getting any advice.

I also have an issue with blind stats like 9 out of 10 blah blah. The reality is probably this :-

“Of the people we see that come through our door for a mortgage, who, after speaking to our mortgage “specialist” to confirm they fit our published mortgage criteria and can demonstrate their affordability and have a clean credit score, who we then allow to actually complete a mortgage application form, around 9 out of 10 receive an offer, perhaps not the exact offer they asked for, but an offer nonetheless.”

In truth, that is still pretty good given the market at the moment, but to give a blurred message without the full explanation when criticising others, is perhaps a little off.

So, dear HSBC, what percentage of the people who walk through the door, go online or phone up wanting a mortgage actually get the mortgage offer they asked for? I do not believe it is 90% – sorry, I just don’t. Also, how many clients accept that offer and go on to complete?

If it is true then why do, as the very wise Ben Thompson, managing director at Legal & General mortgage club, said: “…direct to consumer only mortgage products make up just 19% of all the mortgage products available in the UK and HSBC’s direct only offering represents 2% of this direct only market.”

The statement from HSBC also said that “The bank’s strategy is that it believes it is best placed to sell its own mortgages” (fair point) … “and that lender and borrower need to deal with each other during the sale process to make the best lending and borrowing decisions.”  (Well, if the lender is providing independent advice then ok, but what if the best option for the borrower is a 3 year fix and the lender only has a 2 or a 5 year?).

Even more intriguingly, Peter Dockar, head of mortgages at HSBC, said: “Mortgage customers used to rely on brokers for the best deals but this is no longer the case”.

Unfortunately this shows a misunderstanding of what brokers do. There have always been direct lenders who sometimes offer the “cheapest” headline rates, (when I started it was always Britannia). Then the pendulum swung to brokers because lenders needed the volume and quality they provided, but that is still not the point.

The point is that mortgage customers have always relied on brokers to obtain the right deal for their circumstances.

If it was just always about the lowest headline rate, well then you don’t need me. Don’t worry about the fees, penalties, flexibility, portability, suitability, potential lifestyle changes, timescale, deadlines, service etc..

In fact, if HSBC really offer a mortgage to 9 out of 10 who walk through the door, within the required timescale to secure the property, then I humbly apologise and well, to be honest you don’t need me either then.

Anyway, never mind that I’m off there now to remortgage my 90% interest only loan…er, sorry, what do you mean 2 years full accounts…?

This rise in rates I am alluding to is due to two things; firstly, as the storm in the Eurozone does its best to turn itself into a full scale hurricane of a banking crisis, because quite simply the cost of funds looks set to rise and secondly, liquidity issues are once more emerging from the shadows.

Given that almost every report seems to suggest we are heading, if not towards another full-scale recession, but a period of stagnation that feels like a recession anyway, it will come as no surprise that the MPC has decided to print more money, entering into another period of Quantitative Easing, (QE) a month earlier than initially expected. Another £75 billion, slightly more than thought, will be pumped into the system.

On the back of the US’s “Operation Twist”, which in essence involves the Fed selling short-term bonds and, here’s the twist, replacing them with longer term ones, (the result being that as more long-term bonds are purchased interest rates should fall), there was pressure on the Bank of England to do their bit.

As for the Euro issues turning into a banking crisis, we have already seen the first casualty in the shape of the Belgian / French bank Dexia which is about to enter into a Northern Rock style arrangement. Although the Europeans have talked positively about supporting their banks and of course Greece, it seems the markets do not quite believe them and need to see a concrete plan of action.

All this means there is a very high probability that, whilst the UK banks are undoubtedly in a much better position that our Euro counterparts, lending levels will be affected in the coming months. Almost every lender I have spoken to has said the same; unless things change they expect funding costs to rise and therefore mortgage rates on offer will rise accordingly.

With all of this mind and whilst we are experiencing some of the lowest rates for a generation, it does seem that the time to act is now. For those looking to remortgage there are now many products that are available at less than even the lowest Standard Variable Rate and some highly competitive fixed rates.

Tracker products start at 1.98% for 2 years, (the overall cost for comparison is 4.60% APR) and fixes now start at just 1.99%, (the overall cost for comparison is 5.30% APR), which is the lowest 2 years fix anyone can remember, a fantastic 2.69% (the overall cost for comparison is 3.40% APR) for 3 years and 5 year fixes available at an astonishing 3.29% (the overall cost for comparison is 4.90% APR).

Remember most offers are valid for 3 to 6 months, so if Chancellor Merkel et al do get their act together and rates improve again there will still be options.

In truth the average consumer still feels like nothing has really changed, the technicalities of a recession are unimportant, it is how they feel and for most, things still feel tight.

However for all this talk I do get the feeling that most are taking a glass half full approach and despite the gloom the good old British spirit has kicked in. A cursory walk around the City outside our office and you can see the change. Offices are filling up, new tower buildings are being erected and bars are full in the evenings. There is an acceptance that we are where we are and we need to make the most of it.

The Mortgage market is no exception and we have been pleasantly surprised how the level of enquiries has held up over the traditional Summer lull, which quite frankly never really happened. In fact, seasonality seems to have all but disappeared, leaving a steady, though relatively flat, stream of business.

Undoubtedly this is a result of several major factors. Rates are incredibly low and all hyperbole aside, when you see fixed rates for 3 years below 3% and 5 years a smidgeon over it is hard not to react if you can. New tracker products are now lower than even the most competitive lenders’ variable rates so remortgaging is back in vogue.

The most pleasing aspect for us brokers is not just the fact that lenders are now tapping us on the shoulders and asking for more business but the return of the smaller building societies who, not able to just compete on price, are looking for new ways to lend again.

These lenders are able to eschew the frustrating tick box mentality of those banks who claim to offer the very best rates, (the reality being that clients are victims of the long, drawn out, “Yes, Yes, er No” approach), and instead offer the ability to discuss trickier cases with a real decision maker on day one.

If the property market is to kick forward once more, then this lending is essential in the new world where credit and risk rules the roost.

Of course there are still potential dangers ahead; although the reality is that in the short-term at least, inflation and potential interest rate rises are low down the list. With the US making clear that they do not expect to raise their rates until 2013 there is every likelihood, especially with weakening growth figures, that the UK will not see a rate rise until mid 2012.

So, whilst everyone knows that the next change in interest rates will be upwards, we could be seeing a further round of Quantitative Easing before we see a rate rise.

The threat is actually a second retreat by lenders triggered by, for example, a further disintegration in Europe or the mighty Bank of America seriously faltering and pushing up the cost of funds and stifling lending appetites.

I make no apologies therefore for suggesting that the next few months could well represent one of the best opportunities to purchase or remortgage. The remortgage benefits are obvious as rates are so low.

On the purchase side the lack of stock is obviously an issue, but whilst this is keeping values steady the gap between vendor aspirations and actual purchase prices seems to be easing. There are also more affordable rates at higher Loan to Values that will help first time buyers.

It will be interesting to see what the rest of this year holds, but I for one will continue to top up my half-full glass.

Not that inflation is worrying the Bank of England as all 9 members of their committee that sets interest rates decided unanimously to keep rates on hold last month. This represents a small sea-change as at one stage at least 3 of the members were voting for an immediate rise, (although the main protagonist calling for rises has now left the committee of course).

The evidence of slowing growth and the issues in the financial markets, coupled with reports that suggest home finances fell for 40% of households in August, have been enough to put back rate rises to next year, if not beyond.

The biggest discussion point now is whether Quantitative Easing, the much heralded QE3, will be seen at some stage soon, with even some speculating that Bank Base Rate will be cut even further.

Talk of “a lost decade” and a “Japanese era” are being whispered with growing concern as has the much dreaded term “Stagflation”. The Wikipedia definition is that this “is a situation in which the inflation rate is high and the economic growth rate is low. It raises a dilemma for economic policy since actions designed to lower inflation may worsen economic growth and vice versa.”

The issues that such a period can cause are often seen as more difficult than dealing with straightforward inflation. However, whether or not we do indeed fall into a new recession, or whether this is just actually a continuation of the first one, it is what it is.

All this means that at present mortgage rates continue to be ridiculously low and the financial cost of purchasing a property, especially compared to renting, remains more affordable than it has been for a long time, (as long as you can raise that much needed deposit of course).

On the back of these low rates, especially the longer-term ones, we are seeing a steady increase in remortgaging, after all, when you can fix for 4 years at 2.99% or for 5 years at 3.39% for example, the benefits in years 3, 4 and 5 could potentially be massive.

The good news from across the pond is that a deal has finally been done in the US to avert a crises, that, let’s be frank, would have been a disaster to everyone. Although the “right wing nutters” from the Tea Party could still do some damage the markets seem to have been calmed – for now.

Here in dear old Blighty things have been relatively boring this weekend compared to previous weeks which is somewhat of a relief. Lenders are still improving rates and we are now seeing a welcome return to the fray of the oft-forgotten regional Building Societies.

Their return is most welcome and shows that things really are looking up as the likes of Newcastle, Leeds, Nottingham and the rather brilliant Saffron Walden offer some inventive products.

Of course these Societies have not actually gone anywhere, but it is noticable that suddenly we are seeing alot higher profile in lending terms from them, joining the likes of Skipton, the lovely Coventry and naturally the fabulous Nationwide amongst others.

In any healthy mortgage market we need a strong showing from both banks and building societies so this is all very pleasing and bodes well for the future.

Meanwhile, jaws dropped when Chelsea Building Society, (although now owned by Yorkshire) announced their latest 5 year fix at just 3.39% – that’s crazy money!

As today is apparently “Yorkshire day” that seems very apt.

Eh up & have a great week.

The good news is that this is actually a myth. There is no mortgage shortage and lenders actually have begun to compete for your business. How else can you explain the new trend of 7 day sales from certain lenders who are offering tracker rates from as low as just 1.99%, (4.0% APR)?

Meanwhile, 2 year fixes are now down at 2.68%, (3.5% APR) and 5 year fixes are available at  just 3.89%, (4.1% APR), so from a product point of view this year really does seem like the best time to lock in to a great product.

In fact, according to a report by Moneyfacts, mortgage rates are now the lowest they have been for 23 years, not only due to the expectation that rates will now not change this year, but also because lenders are finding it cheaper to raise funds in the financial markets and have more of an appetite to compete.

Apart from these rate reductions, the interesting thing is the amount of innovation that has re-appeared in the market, with lenders looking to assist on the more difficult transactions. Even at the higher Loan-To-Value (LTV) levels, where we have seen a dramatic increase in products available up to 90% LTV, lenders are now more often than not looking to assist.

Affordability calculations and credit scores have both become more realistic rather than just lax, helping to ensure that the right borrowers are matched with the right loan amounts.

Of course in this new era certain people will still struggle, those with credit issues, looking to stretch income to levels that are just too high to justify and those without at least a 10% deposit. However this is no bad thing and time taken to save for a deposit and rectify past credit mistakes is a good thing.

The biggest real change is around interest only. No longer are those who can only afford the loan on an interest only basis, with no thought about how they are going to pay the loan back, able to do so. Again, this is no bad thing.

The above does not however, constitute a full scale mortgage crisis. More and more we are seeing loans go through in the more difficult areas. So if, for example you have a property above a shop, a property split into 2 or more units or with a short lease then there are some good options.

Alternatively, if you are a borrower looking for high LTV’s on a property above £1m, a buy-to-let for a 1^st Time Buyer or a mortgage based on commission income or only one years of self-employment then do not despair.

Whilst things are still tough, they are nowhere near as tough as the press would have you believe.

Lenders are lending and mortgages are available; and at exceptionally low rates.

Of course there have been many detractors, the piss-takers and technologically inept who continue to see social media as a waste of time.

But with anything new and different, as Philosopher Arthur Schopenhauer said, “All truth passes through 3 stages : First it is ridiculed, Second it is violently opposed, Third, it is accepted as being self-evident …”

Those who do not embrace social media as a way of communicating to and learning from the very clients you aim to attract, risk being left behind in the future.

Not only has it helped us with our PR, but it has also given us some enquiries and a fully signed up introducer.

Leaving the B to C part aside for a moment, it is really the B to B side which I have really been blown away by. The number of times that people within the property industry as a whole, not just mortgage brokers, but lenders, solicitors, estate agents, journalists and property investors engage with comments you have made and before you know it you are part of a wider conversation with many interesting people you would maybe otherwise not have met.

It was during one such “conversation” that we picked up an Estate Agency introducer who has since passed us more than a dozen leads and during another, admittedly a very late night one, that the idea of the TweetMeet was developed by myself and Lea Karasavvas.

At its simplest, we just thought we had been conversing with many people we had never met and we should put that right over a few drinks. However, after a while it began to take on a deeper significance and the idea of trying to unify brokers, lenders, solicitors, surveyors and agents became a more far-reaching purpose.

After the pressures that our industry has faced over the past few years, and continues to face, it is important that everyone connected to the industry, from those at the coal face to those running businesses, come together to discuss these issues openly and honestly.

So far there seem to be around 100 people signed up and it would be great if there were many more. With the kind sponsorship of Tiuta to help things along I hope it will be an enjoyable event.

As with anything like this, there are some simple rules:-

1. The first rule of the TweetMeet is that you must talk about the tweetmeet!
2. Please make an effort to chat to everyone there, at the very least to introduce yourself, no cliques!
3. The event is Charterhouse Rules, so anything you say cannot be directly reported as having been said by you without your absolute agreement, which should help promote free discussion.
4. Enjoy, drink and network, but please no direct selling or poaching/recruiting on the night.
5. Feedback so we can improve the event for next time.

The event is totally informal, no long speeches or seminars, so feel free to wear what you like, relax and enjoy.

As my mate Lea Karasavvas stated: “This gives us an opportunity to remind each other we are all striving for economic recovery and that by working together, and not against each other, we can ensure it happens. It’s a chance for an industry brainstorm, done in a social environment, between influential business categories within the mortgage industry and will hopefully encourage extremely positive working relationships that will benefit us all.”

The event takes place in London on Thursday 23^rd June 2011 from 7pm at The Alchemist, 133 Houndsditch, London. The evening is planned to be an informal networking event, under Chatham House rules.