Investors use bridging to finance bargain basement buys

Brokers have seen a 200% increase in demand for bridging finance in the last nine months as investors have been seeking bargains at auctions and through other distressed sales.

A number of smaller bridging firms have had to withdraw because of a lack of funding over the past year. However, unlike the mainstream market, the main bridging lenders have been able to offer a consistent supply of products without having to alter LTVs or rates dramatically.

Gary Booth, CEO at Tiuta, said: “Brokers that have adapted to the changing environment have been very successful in 2008. We are regularly seeing brokers place several cases a week as their more experienced buyers snap up bargains. With falling interest rates we expect this to continue as the primary residential market is still relatively static, but the demand for rental is increasing, which is creating a thriving market for brokers and their clients that can move quickly when opportunities occur.”


Face-to-face beats the web, say brokers

RBS research suggests that most intermediaries do not see the internet posing a threat to their businesses over the next five years.

In a poll taken at the most recent RBS Intermediary Roadshow held in Manchester last week, 15% of brokers thought that there was no threat at all because people prefer to arrange their mortgages face-to-face.

60% said that they felt that despite the increased competition coming from online sources, there will still be room for mortgage advisers. Only 6% felt the internet was going to be a big threat to their businesses. Around 1 in 5 (18%) said that they would embrace the web and ensure that their online presence takes advantage of the benefits the internet offers.

Chris Pearson, drector of Intermediary Mortgages, Royal Bank of Scotland commented: “It’s good to see that mortgage intermediaries remain confident that their specific offer of expert face-to-face mortgage advice will still appeal to consumers. The internet will undoubtedly play a significant role in the way people research mortgages but with it being such a fast-moving and sometimes complex marketplace, sound advice is something people should heed.

“Having said that, our research does indicate that many advisers have recognised that having a visible and informative online presence can have a really positive effect in their bid to attract new clients. Investment in search engine optimisation, online directories and web content can make a real difference to intermediary firms’ digital profiles.”

FSA bans broker for life assurance fraud

The FSA has banned Peter King and his Bournemouth-based firm New Forest Mortgage Company Ltd for knowingly submitting applications for fraudulent life assurance policies.

The regulator found that, since June 2007, King submitted applications for 39 fraudulent life assurance policies – 30 of which were in the names of applicants whose personal details were either wrong or who knew nothing about the applications – in order to benefit from commission payments in excess of £250,000.

King, the sole director of New Forest Mortgage Company, admitted that his plan was to submit the policies, claim the commission and use the money to settle substantial outstanding debts.

Margaret Cole, FSA director of enforcement, said: “Peter King acted dishonestly and without integrity and posed a risk to consumers and to confidence in the financial system as a whole. The FSA will not hesitate to take action against individuals or firms who break our rules and put customers at risk of fraud.”

Cautious optimism pervades landlords

In a poll taken at the most recent RBS Intermediary Roadshow held in Manchester, nearly a third (31%) of mortgage intermediaries thought that their landlord clients are taking an optimistic view about their prospects for the next 12 months and will be looking to add properties to their portfolios.

Nearly six in 10 (58%) thought that their landlord clients will maintain neutral positions over the next 12 months whereas only 10% felt that their landlord clients would take a pessimistic view and reduce the amount of properties in their portfolios. Only 1% believed that their landlord clients will be selling up and getting out of the market altogether.

Graham Felstead, head of sales, RBS Intermediary Partners, said: “Buy-to-let is one of the sectors of the mortgage market that is proving to be more resilient. With reductions in house prices and a robust demand for rental property, many landlords are viewing the current market as a good one for expanding their portfolios. At RBS Intermediary Partners, we are well placed to help cater for this interest as our NatWest buy-to-let proposition enables landlords to take out mortgages on up to 10 properties.”

Alliance & Leicester unveils new tracker and fixed rate

Alliance & Leicester is re-entering the tracker market with the launch of a two-year product at 4.89%, as well as bringing out a new two year fixed rate at 4.49%.

The new offers will be available from Friday via brokers, Alliance & Leicester branches and by telephone from Mortgage Direct.

Richard Taylor, head of mortgage products at Alliance & Leicester, said: “We have enhanced our current range of mortgages by reintroducing a two year tracker product into the portfolio and a new two year fixed rate. They are very competitive products offering customers the choice of setting their monthly payments or tracking the Bank of England base rate.”

FSA bans brokers over advice failings

The FSA has banned and publicly censured Tyne & Wear mortgage brokers Edward Allen and Ronald Allen for failings which exposed the customers of their firm to the risk of receiving an unsuitable mortgage.

The Allens, directors of Homeplan, failed to implement adequate systems and controls to ensure that the quality of mortgage advice to customers was up to the standard required and gather relevant customer information and ensure that recommendations given were suitable for the customer.

The regulator also found they had failed to monitor adequately Homeplan’s sales of mortgage contracts and produce adequate management information.

In addition Edward Allen, during an extended period of absence from the firm, did not ensure his roles for direction and oversight of the firm were delegated effectively.

Jonathan Phelan, head of retail enforcement at the FSA, said: “Both directors lacked the competence and capability needed to make sure their firm delivered good quality mortgage advice. The failings were particularly serious because the FSA first identified problems with the firm’s systems and controls during a visit in 2006 and no steps were taken to remedy the situation by the time of the FSA’s visit in 2008.

“The failings warranted a fine of £15,000 for each director but as they have provided verifiable evidence that they would suffer serious financial hardship if this financial penalty was imposed, we have issued a public censure instead.”

The trading permission of Homeplan has also been cancelled.

Mortgage Next to hold self-build finance event

Mortgage Next is holding a self-build workshop for mortgage advisers. It will detail the full range of finance options available to borrowers who are planning to build or renovate their own homes.

The workshop, which is open both to ARs of Mortgage Next and directly authorised brokers, is being held on Tuesday 18 November at the National Self Build & Renovation Centre in Swindon. The event is being co-sponsored by BuildLoan, The Source and BM Solutions and will start at 10am and finish with a tour of the Centre at approximately 2pm.

Places are limited and brokers need to register in advance via Mortgage Next’s website:

Gemma Harle, managing director of Mortgage Next, said: “Approximately 12% of all housing completions each year are self-builds, which means the self-build sector represents an important market opportunity for mortgage brokers. The workshop will explain in detail the range of mortgage facilities available to self-builders and will also explore the specific financial issues they have to address. There is already considerable interest being shown in this seminar and we therefore urge brokers to register quickly if they want to avoid disappointment.”