Some of us have already been talking about this since the start of the year, and it is nice to be backed up by some weighty reports. Moneysupermarket.com, for example, have stated that even when taking the new mortgage product arrangement fees into account the “best” fixed rate and the “best” tracker product over 2 years will beat the majority of lenders SVR’s.

With a lot of publicity around those mortgage lenders who have already increased their SVR’s recently and other lenders rumoured to be following suit, many borrowers are looking to mitigate the risk of further rises and taking advantage of some great fixed rate product offerings.

Others are finally jumping on the much trumpeted Offset bandwagon, with offset tracker rates below 3% currently this is a marvellous time to really make the offset work and shed years off the mortgage term.

Of course, it is important to note that whilst this is the case, generally speaking this only applies to those with at least 25% equity in their properties. Whilst this area of the mortgage market will always have the very best headline rates, the continued squeezing of lenders in this area has meant that some are beginning to look further afield for higher margins.

We have therefore seen not just an increase in mortgage products available at higher loan-to-values, with 90% LTV looking like the new 100% LTV, but also lenders are returning to the large loan and buy-to-let arenas.

The buy-to-let mortgage market is most interesting, as this seems to have started to return much quicker than many expected with lenders such as BM Solutions and The Mortgage Works actively looking for new business. BM Solutions have also made a tentative step at reducing the high percentage  Arrangement Fees that discouraged many and have reintroduced products with competitive rates and much lower, flat Arrangement Fees.

There is however, one potential drawback of this policy. The cost to lenders in terms of capital adequacy requirements of lending in perceived “riskier” areas or at higher LTV’s, means that overall lenders may have to lend less in pure volume terms. This is a worrying thought as lenders are not exactly throwing their, or rather our, money around at the moment.

Overall, it is nice to have a broader spread of mortgage products back and I suspect that lending will continue to ease, albeit it slowly over the remainder of the year. Whether rates remain this low remains to be seen, however, and I do believe that the first half of this year will be the best time to remortgage, potentially for quite a while.

Whilst there are suggestions that this spike in inflation has been expected and is merely temporary, it is unlikely to drop off sharply if recovery does continue to grow and will undoubtedly put pressure on the Bank of England to seriously consider finally raising interest rates.

This is a real shot across the bows for borrowers, many of whom are quietly banking on a low interest rate environment in the short term. But this is a risky game to play.

More people than ever are on variable rate mortgages at present, either because they cannot remortgage or because they have decided not to given the discount on variable rates relative to fixed.

If rates do indeed rise to contain inflation then many borrowers will find themselves with significantly higher monthly payments and many borrowers who should be fixing may well be leaving it dangerously late.

The prices of fixed rate mortgages have fallen slightly due to an increase in competition in the mortgage market, although this trend could well reverse given today’s figures.

I guess that is why in much online writing and message boards many use the kind of annotation symbols I used to find rather annoying but have now embraced with glee, you know the ones; lol,
:-0)* (no idea on the last one, but you get the idea).

Anyway, the point is that because much of what I write, certainly in the banter with colleagues over company issues, is tongue in cheek, I think I am going to have to go further and start annotating my expressions after almost every line. Maybe I should do that with all my writing so people understand the tone in which I am addressing them.

In fact maybe all people in business should do that, and it could be very useful in our own industry. I would love to see new rate release emails from lenders with a bit of honest annotation, as well as some media releases.

Go on, try it

I know you may well be asking what is mortgage related about that, but not everything in this blog needs to be about that does it (genuinely furrowed brow)? I often think my best blogs are when someone says to me, “what the hell were you on yesterday?” (self-obsessed smirk as if anyone actually reads this).

But, talk about mortgages I shall (stifling yawn), after all that is ostensibly what I do!

There does seem to be a bit more get-up-and-go about the market at the moment with a plethora of new product releases, some of which fly in the face of recent SWAP rate increases, especially on a fixed rate basis. Lenders do seem to be a bit more relaxed about the future and are starting to concentrate on the core business of actually lending money again, (about bloody time to).

Whilst there is an undoubted return of a semblance of competition to the market, I still feel it is highly likely that the fixed products available in the first part of the year will be better than those available in the latter.

It was also a little bit sad to see the Abbey and Bradford & Bingley brands disappear into the ether of the past and it is a shame to lose something so quintessentially British , certainly where B&B were concerned.  However, Santander is a strong brand with a good reputation and I like what they have been doing, (slight crawl).

Anyway that’s progress folks, something we badly need and I am all for that.

QXRSUDQZ6FTK for all those wondering this is my Technorati claim reference I have to post into a blog – I don’t really know why either

A return of competition to the mortgage market, a rise in interest rates, further property price increases, the return of first-time buyers, a new Government, a world cup win? There are many questions to ponder.

Already we have seen a couple of positive reports; one by the Chartered Institute of Purchasing and Supply suggesting that the UK’s Service Sector had enjoyed the strongest growth in new orders for two years, and another from Zoopla.co.uk stating that house price confidence has returned to levels not seen since before the credit crunch. This states that 81% of people expect house prices to rise in the first 6 months of 2010.

On the other side of the coin, however, we also have Nationwide’s monthly index of Consumer Confidence falling by its sharpest margin since November 2008, as many continue to worry about job security and tax increases. The full scale of the public debt means that most people are fully aware that there is considerable pain to come, whoever wins power in the forthcoming election.

Political posturing began in earnest on the first day back and does anyone else have a feeling that this campaign is going to be a messy business on all sides? The only thing to look forward to is the planned series of televised debates between the Party leaders which is well overdue and if nothing else should make some entertaining viewing. To be honest I am yet to hear anything particularly “vote-winning” on either side as yet, but we live in hope!

For most in our industry I suspect the first quarter of this year will be a crucial one and I hope we do not see any other casualties.

Wishing you all every success in 2010 and remember, as Frank Lloyd Wright said, “The thing always happens that you really believe in; and the belief in a thing makes it happen.”

Talk on the economy has really been dwarfed this week by, of all things, and as our waitress this morning so eloquently put it, by Tiger bloody Woods. Seriously, it is wall to wall coverage now the blizzard is done.

USA Today had an interesting article that 30 year fixed mortgage rates had fallen to their lowest rate for ages which is starting to kick start re-financing, although several commentators are still to be convinced about this.

There does seem to be a view, in the coverage I have seen at least, that whilst the worst is over for now, more issues are to come especially when talking about how to wean everyone off the “financial stimulus”.

Unemployment is still high here but recent jobs figures suggest this has eased, albeit slightly, down to 10%. On top of this the average working week in terms of hours worked increased by the biggest margin in 3 years, showing that those firms who cut down capacity are starting to increase hours again, in turn boosting wage packets.

Another boost was that the number of temporary workers increased by the largest amount in 5 years, which can be seen as a precursor to firms taking on permanent employees once more. Inventories at U.S. factories also increased for the first time in more than a year in October, while factory orders also rose an unexpected 0.6%.

However, bank closures are still going on here, with another 5 being shut today which brings the total in 2009 alone to 130 banks that have been forced to close. Meanwhile individual states in the US are already raising taxes in order to fight budget shortfalls.

What really strikes me is just how politicised everything is over here, much more so than in the UK, and there are many who question every single stat and put their own spin on it to the nth degree.

In the UK we often look across the pond as a sign of what is to come in the short to medium term, and the news from what I can see is we all need a huge slice of realism. Whereas the next few months may represent a welcome lull and some definite silver linings and opportunity there is still an awful lot of pain to go through which may not show itself until the latter part of next year.

The good news is that for many smaller firms in the US, they have proved more robust than many feared and are starting to adapt to the new world and try to take advantage of the opportunities.

Back in good old Blighty I see a similar pattern emerging, and one that has no doubt been repeated in the immediate aftermath of every financial downturn. Newer, small/medium companies will take the opportunity whilst larger, more unresponsive companies will struggle to change in time, partly through arrogance, partly through their treatment of their staff, and partly through difficulties in cutting and manoeuvring that size brings.

The property market is slowly beginning to recover in the US, and in the UK I expect this recovery to be slightly quicker, simply due to supply and demand, especially in London and other areas of greater demand.

Whilst we do have a long way to go, the signs are there that if the move away from the stimulus packages around the world are handled correctly and sensitively things will slowly recover without too many serious glitches. If Governments handle this transition poorly, and there is a great deal of pressure on the next incumbents’ to Downing Street, they may be reaching for the red phone to say not Houston, but Washington, we have a problem.

Unfortunately, the sand seems to be capricious ground at best, and another wave of banking losses have been predicted, with reports of anything around the $40 to $50 billion level being the amount that European banks are exposed to. Then again what’s this piddly amount between friends after the recent figures we have seen bandied around?

The question being bandied around is not so much will this issue on its own be enough to cause another sharp financial issue, these losses should be nothing more than a “sideshow” as Stephanie Flanders’ blog describes this far more eloquently than I can here, but really if this is just an example that there are still various other bad news scenarios still to come out that could cause a double dip.

There are some who believe that the gradual recovery we have seen, or believe we have been seeing, is nothing more than a mirage and that more chickens will come home to roost in the second half of 2010.

Some even talk not of U, V or W shaped recession but a double stair, a sharp drop – a period of calm – then another sharp drop. It is true that there is still much to be concerned about, for example will the UK itself be downgraded from its’ AAA rating? If so, though I still believe this will not happen, there could be some nasty side effects.

Also, although unemployment is not quite as bad as predicted, there are no new jobs being created. So whilst some can live on savings and redundancy cheques for while, especially when mortgage rates are low, this cannot go on indefinitely. When rates do start to increase, if lenders have not relaxed criteria to allow those who cannot move the protection of fixed rates then they are storing up some serious issues.

We also have to wean the financial system off the aid it has received and start to pay it back, so any new Government may not be able to avoid a hard period of tax rises amongst other things.

It’s not about painting a depressing picture, but it is important to be realistic.

In the meantime the positive signs of a recovery in mortgage lending still abound. Reportedly more and more applications are in the system for institutions to become banks and lenders, whilst Paragon and Kensington’s’ tentative return to the lending party is welcome.

Mortgage products are increasing all the time, with competition set to increase again next year, and a general election could produce a customary “feel good” factor, as could a decent World Cup run! Two years of issues is a long time, and the growing public hunger for good news could produce the sentiment required for a sustainable, if slow, recovery.

For businesses, especially in our market, the first few months of 2010 will be key to establish a solid core base to take advantage of the early opportunities and ride out future bumps. There is a fine line between being optimistic and just plain naive.

The clever, adaptable companies will continue to weather the storm and be there to reap the rich rewards that will eventually come.

They are going to investigate in-particular, “the sharp rise in repossessions and the chronic shortage of affordable home loans for first-time buyers”.

Brilliant. Is that really the best that the Government can come up with? A cross-party committee of MP’s wagging fingers at bankers and telling everyone what they are doing wrong whilst they try to keep their latest expenses form under wraps!

More worryingly, the question that really should be asked is do they really still not understand what is going on and what the real issues are?

As far as repossessions are concerned, yesterday we saw the Fitch report which suggested that 15% of prime home loans were in negative equity. As someone who took out a 90% remortgage at the height of the market you can add me into that stat! To be honest it was actually a calculated move as I believed if I did not release the equity then I would not be able to for a while!

Anyway, where was I? Oh yes, while on first glance the Fitch report makes grim reading for many homeowners across the country, the key is not to panic. Yet.

Firstly, the current negative equity predicament is not the unmitigated disaster it could have been if interest rates were still at 2008 levels. Also, negative equity is only a problem if you have to move or remortgage, and for many homeowners they are not in this position and can hopefully ride out the storm and wait for prices to rise again.

The blow of falling prices has been lessened by many people also seeing their mortgage payments fall dramatically in the last nine months. Homeowners can still take advantage of low rates and try and pay off a large chunk of their mortgage while payments are so affordable.

For example, if you have an interest only mortgage, you should look, if you can, into converting to a repayment mortgage in the short-term, making sure that your lender will let you switch back to an interest only mortgage if rates start to rise quickly. This means any negative equity positions won’t be as pronounced if capital is being paid off.

The real issue will come in a few months time, when rates rise again, before house prices have had a chance to pick up dramatically. That is when I expect to see the repossession figures rise again, and all those people who did not fix in when they had the chance begin to kick themselves.

It is incredibly unfortunate that it has come to this, and great names such as C&G, Abbey, Alliance & Leicester, and Bradford & Bingley disappearing from our high streets is sad to see.

However there are some harsh realities at play here, and any business would struggle to rationalise the fact that one company has several different brands on the same high street competing for the same clients, especially in a market where the availability of finance has dropped beyond recognition and many consumers now do not use the branch network as they used to.

I have nothing but sympathy for all those decent, hard-working people who are being displaced, but we can see from the city’s reaction that this makes economic sense.

The same applies to the long awaited changes elsewhere within the Lloyds Banking Group. These were tough decisions that I know were not taken lightly, made in order to compete effectively and be able to move forward.

Our thoughts are with those on the front line who will bear the brunt of these changes, good, hard-working people amongst whom we have many friends. Perhaps we should also, however, spare a thought for the decision makers who themselves have been forced into this position by the market environment, and arguably by the actions of their predecessors.

I know Union officials will disagree, and I am unaware of internal staff communication, but from an outside intermediary view I think it was handled as well as could be expected. We had the inevitable early morning leak around branch closures, but Lloyds did the right thing and refused to be drawn from their own timetable.

By afternoon we had a clear email explaining the changes and a Q&A document. It was not perfect, but it showed that this was carefully thought out.

As intermediaries we now have four main brands to deal with, Halifax, BM Solutions, C&G and Scottish Widows. All great names.

From a personal point of view Bank of Scotland not being an intermediary brand was the biggest shock, and the biggest loss.

When I started as a young administrator at Charcol I remember clearly my first calls to the Bank. Speaking to a lovely young lass called Sheila with a soft, lilting Edinburgh accent who could not do enough to help. I was hooked from there, (admittedly I had a massive crush but that was not the point)! Over the last 15 years pretty much everyone I came into contact with from Bank of Scotland had the same approach, from top to bottom. Professional, helpful, friendly and efficient. They helped us grow our business, both at Charcol, Cobalt and the support they have shown for Coreco has been dearly valued.

However, times change. As intermediaries we must respect these decisions, and work with what we have. We must hope that Lloyds Banking Group are true to their word that they still see intermediaries as an integral part of their future. We will know this when we see how they handle dual-pricing, retention and proc fees going forward.

At a time when trust in banks is at an all time low, lenders need us more than ever. The footfall into branches will continue to decline as new generations who grew up with a mouse in their hand from before they could walk become ever more comfortable with technology, lenders IT systems become more efficient, and more people demand professional independent advice rather than being offered one providers choices.

So we are where we are. Fewer brands means less consumer choice and less competition which is not in anyone’s interest and we can only hope that the doors of the lending stable open again sooner rather than later.

I wish everyone in the Lloyds Banking Group well.

Apt because of the name. Apt, because in these times everyone is looking for diversity. For many in business, certainly in the mortgage broking arena, diversification is key. And it got me thinking, like many others, why the hell did we all not do this sooner?

Many brokers were the same. Concentrating just on the mortgage and banging it away quickly so they could turn to the next mortgage deal on their desk and enjoy the ever increasing procuration fees on offer. To be honest, in doing this many brokers did their clients a dis-service.

They let them get their own life cover and mortgage protection through the lenders, which in all likelihood would not have been the cheapest, nor maybe even the most suitable. Many people are still walking around without proper cover. How many clients have their life insurances properly written in trust? It takes no extra time or cost to do this.

With alarming rises in the numbers of people who need health protection policies, the benefits far outweigh the costs.

So, it’s all very well everyone saying that they are now diversifying and selling these products, but actually it is more about doing the job properly in the first place. It is about continuing to professionalise our industry so consumers feel even more confident in our advice.

It is not easy to become a Financial Advisor any more. It involves professional qualifications, years of study and annual assessment. For many, like us, it involves monthly assessments and compliance looking over our cases to check the quality of advice. The majority of us work hard to achieve a level of professionalism, so why let clients then go direct to a bank where, on average and in my opinion, the level of experience is much lower and they can only sell their own products.

I admit I have never understood why people, when faced with the biggest debt they are ever likely to have, would not willingly pay a small fee to get professional advice. They pay lawyers, accountants and similar professionals vast amounts for their advice. Estate Agents are paid a percentage of the transaction costs without blinking.

Yet, many in the media lambast brokers for daring to charge a professional fee for proper advise that I bet many wish they had taken at the moment. It could literally save people thousands of pounds.

Again, we have ourselves to blame. In the scramble for volumes and enjoying the proc fees on offer, we could argue we gave up our professionalism. Well, no one can afford to do that any more, and we owe it to our clients to provide a full advice service, just like we always used to.

If you are going to diversify, do it properly. We are offering PR services and property finding services. Diversification is not just doing the job properly. Rumours of a Coreco Street Dance Group, however, have no basis, or do they?

This time I was slated for my comments that appeared yesterday on the BBC News website by a blog entitled Back Office Wine. The nameless person writing writes very well and has some very valid points, although I thought I should clarify my remarks and share with you a precise of my response.

The question arose around my remark that “the general consensus is that fixed rates are as cheap as they are likely to get”, therefore those at higher LTV’s should be looking to fix now.

The world is full of opinions, and especially in these times they vary dramatically, but it does not mean that an opinion is wrong just because you happen to disagree with it.

I am an independent mortgage and financial adviser, I am not just a salesman and I like to think I understand my industry which I have been a part of since the early ’90’s.

My honest opinion, shared by many and disputed by many, is that fixed rates are indeed as low as they are likely to go. Bank Base is not going down any further and lender margins at present dictate that unless competition dramatically changes lenders will not want to reduce their rates further.

My point is generally aimed at those who took out mortgages a couple of years ago at 75% LTV or above. Are the rates going to be that much better in the near future, or is the downside of a potential rate hike in 12 months time a greater risk? Property prices will probably take much longer to recover, and lenders much longer to get competitive again at 90%+ LTV, than it will take for rates to go up.

So if you can fix at historically low and affordable rates now, or risk not being able to remortgage at all in the near future because your LTV has increased beyond lenders acceptable levels due to falls in house prices, why would you not?

Why leave yourself at the mercy of a lenders variable rate which, let’s face it, they will be quick to raise as soon as they can, meaning that mortgage payments will go from being affordable to being uncomfortable?

My job is to put those questions out there for people to discuss, I don’t mind if people disagree with me, and I have evidently succeeded if blogs like this continue to raise issues.

A journalists job is to present a story from a source and to provide comments around it. Exactly like this blogger has done, albeit just presenting one argument.

If it relates to mortgages and property why would you not get a comment from someone who works in that industry?

Seriously, all comments are welcome, blogging like this is a very valuable tool and it would be great if more people offered their opinions like this.