Mortgage Market Comment by TMM


Market Comment

December 2012.

Mortgage Market Update.

One of the wettest years we have witnessed is coming to an end, has our economy and property market managed to stay afloat or are we tracking just below the water line?

In last month’s update we spoke about the strong growth during the third quarter which saw the economy grow by 1%. The Office for National Statistics’ (ONS) first estimate showed the surprisingly strong growth, bringing to an end a nine-month long recession. The ONS will revise its growth figures for the third quarter again next month, when it will have a more comprehensive set of data for the UK’s economic performance.

Despite the confirmation of strong growth, analysts warned that it may be short lived. “If anything, the details in the new data further highlight the temporary nature of the upturn,” said Chris Williamson at research group Markit. “Payback is likely in the fourth quarter.”

David Owen at investment banking group Jefferies said: “People are generally expecting GDP to have slowed sharply into the fourth quarter on the published figure, or indeed to have actually contracted slightly compared to the third quarter.”

In fact, British industrial production unexpectedly fell in October after factory output posted its biggest drop since June, reinforcing fears that the economy will shrink again at the end of this year.

Independent Office for Budget Responsibility predicts a contraction of 0.1% in 2012 before growth of 1.2% in 2013. The government is contemplating a tougher year ahead after the independent Office for Budget Responsibility (OBR) revised down the prospects for the UK economy. Contraction in 2012 will be -0.1%, the OBR predicted, down from the 0.8% growth predicted at the last budget in March. The OBR forecasts growth next year will be 1.2% – down from the previous prediction of 2%. The forecast for 2014 puts the UK’s growth at 2%, from the previous 2.7% figure. Growth is forecast to rise to 2.8% by 2017.

Base rate was held at 0.50 per cent for a 45th consecutive month and the asset purchase programme of quantitative easing will stay at £375 billion. Howard Archer, Chief UK & European Economist at IHS Global Insight said: “An increase in Quantitative Easing looks unlikely despite the very real possibility that the UK could suffer a renewed GDP dip in the fourth quarter, while an interest rate cut appears to be completely off the agenda.” This is despite the latest set of purchasing managers indexes (PMI) for the manufacturing, construction and services sector for November being weak which could mean GDP contracts in the final quarter of the year.

The UK economy officially emerged from its double-dip recession in the third quarter with growth of one per cent but the optimism did not last long before analysts began talking of a renewed dip and the possibility of an unprecedented triple-dip in the New Year.

Last month, the MPC decided to hold fire on more QE despite July’s last round of £50 billion fully integrating itself into the UK economy. However, last month’s minutes suggest that the bank is keeping its options open on the possibility of more QE in the New Year, whilst also hoping that the Funding for Lending Scheme (FLS) will begin to make a bigger impact.

Chancellor George Osborne delivered his Autumn Statement admitting that the ‘austerity’ must continue for longer than he expected. But he insisted that there would be no additional property taxes introduced, while finance would be made available to fund construction projects, including more new homes.

However, George Osborne’s clampdown on wealthy foreigners using offshore companies to buy up huge swathes of central London will bring the top end of the property market to a juddering halt, financial experts warned today. Thousands of homes in Kensington & Chelsea and Westminster have been bought through corporate investment vehicles based in tax havens such as the British Virgin Islands, the Cayman Islands and Panama in recent years. These can be used to reduce, or even avoid completely, inheritance tax, capital gains tax and stamp duty — and have long attracted criticism.

Agents Knight Frank revealed earlier this week that sales of homes in the £2 million to £5 million bracket were down by 44 per cent in the third quarter of the year.

Glentree Estates’ Trevor Abrahmsohn, a specialist in The Bishops Avenue in North-West London where most properties are owned by offshore companies, said: “These people don’t have to buy these properties. It only takes half a reason not to destroy this fragile source of foreign earnings.”

The Halifax announced a 1% rise in property values during November, but a year-on-year fall of 1.3%. The lender said that while the outlook for house prices “remains more unclear than usual” it expects “little change” in house prices in 2013. Prices will remain within a margin of -2% to 2% before ending the year broadly in line with today’s level. House prices will remain flat in 2013 as first-time buyers continue to struggle to secure mortgage loans, Halifax has predicted.

First-time buyer numbers in London hit three-year high. Council of Mortgage lenders (CML) figures show 10,000 first-time buyers took out mortgages in the third-quarter of 2012, but the figure remains historically low. The figures, published by the CML, reflect a general increase in the number of first-time buyers across the UK, indicating that money provided by the government through its Funding for Lending scheme to encourage banks to lend to mortgage borrowers is beginning to filter through to the first-time buyer market. But despite reaching a three-year high, the number of first-timers taking out a mortgage in London falls far short of the levels borrowed in 2006 and 2007 before the credit crisis and housing slump began.

Coventry Building Society has become the latest lender to stop offering interest-only mortgages to borrowers, hot on the heels of RBS and NatWest. Nationwide building society and Co-operative bank pulled out of offering interest-only loans in the summer, ahead of the Financial Services Authority’s report on the mortgage market which introduced new rules for lenders. Although tighter lending criteria and more caution among borrowers and lenders means interest-only deals are becoming a niche product, one lender, Santander, has said it is willing to be more flexible on the loans.

So, what action should borrowers be taking presently. Well, with a number of lenders having raised their Standard Variable rates over the last couple of months, there is absolutely no sense in sitting on your lenders SVR, especially with the competitive Tracker and Fixed rates, such as a five year fixed rates of below 3% currently available. However with the extremely vigilant underwriting taking place currently now is also not the time to be dabbling with lenders that you are not familiar with. Now, more than ever, the role of an experienced mortgage broker is extremely important in being able to identify lenders that are not only offering competitive interest rates but those that will actually lend.

To discuss your mortgage and the different options available to you please call one of the Tyler Mortgage Management Account Managers.

Our advisors with an average of 20 years or more in the Mortgage Market can help guide you to the most appropriate solutions for your next mortgage and their wealth of experience should help ease the way for you to find the package that is most suitable for you.

You may have to pay an early repayment charge to your existing lender if you remortgage.

Your home may be repossessed if you do not keep up repayments on your mortgage.

A typical fee for arranging your mortgage is 1.5% of the loan amount.

For more personalised comment and for advice about your own mortgage requirements do please pick up the phone and call one of our team on 020 7930 7242 or email one of us having read our profiles on the “about TMM” pages on this site.

Simon Tyler, 10th December 2012.




Client Comments

“I have known Simon for 30 years. He is a thoroughly dedicated professional, and I can guarantee for any prospective client, that you will not be disappointed. He has assisted me with some tricky requests for mortgage assistance and without his help, I would never have been able to achieve my goals. I trust this man wholeheartedly, and suggest that you do the same.”
Tony Eager
International Manager – Security Industry.

“I have dealt with Simon since 1988 and helped develop IT solutions for his companies as well as receiving excellent personal mortgage advice from him as he built up his companies. Simon is unquestionably and honest and genuine person to both work with as a supplier and to receive unbiased advice from.”
Anthony Roy
Technical Director and CEO, Risk Free UK LTD.

“Simon is an expert in his field. He has provided me with sensible, effective advice on mortgages on numerous occasions.” .
Cary Zitcer
Business Owner in the Security Industry. Dealt with Simon since 1980.

“Over the years Simon has advised us on many occasions with regard to our mortgage requirements. Simon stands out from the crowd in this industry for his sheer depth of knowledge, long established relationships with mortgage providers, and general gravitas. Despite several aborted property purchases, Simon has always come up with the goods when we most needed it, and most recently, he assisted us in the purchase of what I can confidently say is my dream home, against stiff competition. Simon is also a great industry commentator.”
Alison Cork
Journalist and TV Presenter.

“I have worked with Simon for over 20 years and he has always come up with good solutions and products that are not generally available.”
Jonathan Lewis

“If you're buying a new home or ever need to borrow money cheaply and reliably, through a new mortgage, a bank loan or any other financial instrument, Simon has always been one of the best experts – and commentators.”
Journalist and Broadcaster.



Your home may be repossessed if you do not keep up repayments on your mortgage.

To discuss your current or future mortgage requirements please call 020 7930 7242.

A typical fee for arranging your mortgage is 1.5% of the loan amount.