The lender says fixed-rate loans on its product transfer and further advance lending will lift by up to 32bps on two-year deals.  

It adds that remortgage offers, including large loans, affordable housing – shared equity/shared ownership and equivalent green products, will lift by up to 17bps on two-year fixes.  

These price rises take effect on Friday (15 March), and come after the firm raised selected two- and five-year residential house purchase loans by up to 20 basis points today (13 March).  

The business warns brokers to secure existing product codes on its second round of price rises, applications must be submitted in full by 8pm on Thursday (14 March).  

The move comes as Santander, the Co-operative Bank and NatWest all announced rate rises this week, as they adjust to City forecasts of a Bank of England rate cut in June, rather than in the spring, as many lenders had hoped.      

The BoE base rate is 5.25% as the central bank battles to bring down inflation, at currently 4%, to the 2% target set by the Chancellor. 

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Some have been in this position for 10 years or more and, worryingly, there are more on the boil.

The good news is that brokers can help.

Soaring rates combined with falling house prices could be creating what Sarah Olney, the Liberal Democrat spokesperson for the Treasury, calls “a negative equity ticking timebomb”. Fears are that this could see a further 10,650 owners trapped in their home and at risk of being hit by higher rates.

Whether the client is 53 or 103, lenders can be more lenient

While Olney is calling on ministers and regulators to come up with a plan to “help homeowners on the brink”, the Financial Conduct Authority believes that a third of mortgage prisoners should be able to switch to lower rates. Ultimately, this boils down to lenders modifying their affordability assessment.

The original mortgage prisoners took out their secured loan before 2014, when lending rules were more relaxed. Some have been paying interest rates as high as 9%, unable to switch to a cheaper one because they don’t pass today’s affordability tests.

This is of particular concern to older borrowers, especially those who are nearing retirement, are retired or have no typically accepted source of income.

Other mortgage prisoners include those who find themselves in negative equity, when a property’s value drops below the borrowed amount. This could leave them trapped if they’re unable to sell their property without a substantial payment to the lender.

People aged 50 to 90-plus deserve to be listened to. They have the right to be offered good mortgage advice

Remortgaging also becomes a problem — potentially forcing them onto more expensive rates when their fixed-rate mortgage deal expires. This is no doubt a concern for some of the 1.5 million people whose fixed-rate deal expires this year — many of whom will be more than 50 years old.

Ageing population

In 2022, LiveMore surveyed more than 2,000 homeowners aged 50-plus. Only 4% of respondents aged under 80 believed they could get a mortgage. This dropped to 2% for those aged 80 and above.

Depending on a borrower’s circumstances, they could meet the criteria for 200+ potential mortgages

That amounts to a huge number of borrowers paying their lender’s standard variable rate (SVR) because they believe there’s no option for them to remortgage.

But we are an ageing population, and society is adapting to that, including our attitude towards lending.

Between April and June of the following year (2023) there were 30,400 mortgages agreed for borrowers aged 50-plus, worth a total of £4.3 bn, according to UK Finance. More than 5,000 of these were for borrowers aged 70-plus. And 60% of all the new loans agreed were due to end after the borrower’s 65th birthday.

Until the scrapping of the affordability test in 2022, borrowers had to prove they could cope with a future rise in interest rates. Now, however, it is up to lenders to set their own affordability criteria.

In our survey, only 4% of respondents aged under 80 believed they could get a mortgage

Some lenders are happy to carry out a modified affordability assessment. Whether the client is 53 or 103, they can take a more lenient approach to the definition of income, viability of assets and type of property they’d be lending against. For example, some lenders accept non-standard construction, property near commercial premises and pylons, buildings containing spray foam and properties in flood-risk zones.

Depending on a borrower’s circumstances, they could meet the criteria for 200+ potential mortgages. from standard capital and interest, standard interest-only and retirement interest-only mortgages through to lifetime mortgages/equity release.

One of the most painful adages of this whole scenario is that of mortgage prisoners ‘who can’t afford a cheaper rate’. Well, it’s different now. More and more lenders are approving applicants who can simply afford to make monthly interest payments.

The Financial Conduct Authority believes that a third of mortgage prisoners should be able to switch to lower rates

This, along with the ageing population, makes later-life lending a growing market full of short- and long-term opportunities for brokers.

The Consumer Duty notwithstanding, people aged 50 to 90-plus deserve to be listened to. They have the right to be offered good mortgage advice and our industry can provide this.

They may not use the term ‘mortgage prisoner’ but so many people mistakenly consider themselves ‘trapped’ on an exorbitant SVR. Brokers and lenders can help them.

Nicola Palmer is key account manager (South West) at LiveMore

This article featured in the March 2024 edition of MS.

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But, although we have seen several swallows, I’m not sure I’m quite ready to call ‘summer’ yet.

There have been some undeniable bright spots so far this year. Swap rates continued to fall in January, lighting the touchpaper that sparked a short ‘rates war’. Buyer enquiries spiked as a result, with sales agreed in the opening week of the year a fifth higher than those in the same week of 2023.

Demand is returning, but this can be a double-edged sword

The mortgage market is clearly on a stronger footing, but the hard work will need to continue as we manage volatility, uncertainty and the pressures of demand. It’s not time to party just yet.

Margins under pressure

The price reductions of the first few weeks of 2024 were warmly welcomed by borrowers, but for lenders the competition over rates is causing a strain.

Inflation is at a stubborn 4% and swap rates have crept back up above 4% too. Net interest margins are increasingly squeezed. Lenders want to remain competitive, but they are becoming particularly reactive to anything that could influence swap rates further, including unemployment and inflation figures, and emerging events like those in the Red Sea.

Reviewing technology requirements and identifying how tech can streamline processes will be vital

This sensitivity to any sort of movement in global economics and geopolitics makes it difficult to predict where interest rates could settle over the year ahead. While they may trade within a new range, whether they move up or down on this scale remains to be seen.

For advisers with clients who took a ‘wait and see’ approach to moving last year in anticipation of falling rates, now may be the time for them to consider pressing ahead rather than keeping life ‘on hold’.

It’s really tough for advisers

Advisers too will have welcomed the market uptick at the start of this year, but they will be feeling the impact of any ongoing volatility.

The constant changing of rates as lenders try to remain competitive has left many advisers reworking cases many times, often at the last minute. This is creating a lot of work for brokers; and, with more of these cases being product transfers, they will be working incredibly hard for a lower reward.

Managing the top and bottom line is essential and remembering the ‘add-on’ sales is critical

Our data at Legal & General Mortgage Club shows a near-50% increase in the proportion of product transfers; up to more than a third (34%) of all lending.

These challenges bring to the fore two important messages I want to share.

First, we must all do more to look after advisers. They play a valuable role in the mortgage journey and many will be actively supporting borrowers to help them navigate a complex market. I understand that lenders are under pressure as margins tighten, but my plea is to continue to keep advisers in mind, with a fair reward for the valuable work they are doing and giving them as much forewarning as possible about rate changes.

The hard work will need to continue as we manage volatility, uncertainty and the pressures of demand

My second message is to advisers: remember to look after yourselves and your business too. Demand is returning, but this can be a double-edged sword. As brokers get busier, supporting more and more customers, many will still want to go the extra mile to help their clients. They must keep in mind their own mental health to avoid burning out.

And, as attention turns to new customers’ needs, it will be easy to forget about supporting the business too. Managing the top and bottom line is essential and remembering the ‘add-on’ sales is critical, not just for borrowers but for the viability of each adviser’s business.

Protection sales are already under pressure. In a market where brokers are working maybe three times as hard for every pound they earn, they should grasp the opportunity to support their clients and their business by ensuring protection conversations continue.

Although we have seen several swallows, I’m not sure I’m quite ready to call ‘summer’ yet

Brokers will also need to find efficiencies within their business. I wrote in November that it was a crucial time for advisers to look within and see how they could set themselves up for future success. The market has changed since then, but the questions are just as relevant if brokers are to manage growing demand. Reviewing technology requirements and identifying how tech can streamline processes will be vital.

The start of 2024 has brought about an air of positivity in the mortgage market — but there will be more hard work to come.

Kevin Roberts is managing director of Legal & General Mortgage Services

This article featured in the March 2024 edition of MS.

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The watchdog has brought a string of cases against building and investment firms on behalf of homeowners who have been tied down in new build homes because of these leases  

More than 30 companies have signed undertakings to change their ground rent terms since 2019 affecting more than 21,000 households, says the body.  

In this case, the authority brought actions against eight investment firms who bought freeholds originally owned by housing developers, including Crest Nicholson, Taylor Wimpey and Redrow.  

Homeowners then came under leasehold contracts that caused their ground rents to double in price.  

It says: “These terms, which kick in every 10 or 15 years, can leave people trapped in homes they cannot sell or mortgage, and their property rights can be at risk if they fall behind on payments.”  

The regulator says all affected leaseholders will now see their ground rents “returned to the original fee amount, the amount charged when the property was first sold” and will not rise over time.    

CMA interim executive director for consumer protection and markets George Lusty says: “Over the past five years, we’ve achieved real and impactful change, with over 21,000 households freed from issues such as costly doubling ground rents.  

“We hope those affected by this update can breathe a little easier knowing they won’t have to struggle against this type of rising fee anymore — particularly when many are already grappling with high costs elsewhere.”  

The eight freeholders in this case are: 

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The letter – jointly sent by StepChange, Money Advice Trust, Citizens Advice, and Christians Against Poverty, alongside the Law Centres Network – calls for the Secretary of State for the Department of Levelling Up, Housing and Communities (DLUHC) to “prioritise” reforms of the rental sector in this parliamentary session.

The charities are calling for a new ‘tenancy support programme’, which would mirror the Pre-Action Protocol that exists for social tenants in rent arrears. 

This would introduce reasonable steps private landlords must take to support tenants in financial difficulty to sustain tenancies wherever possible, including referring them to benefits advice and seeking to agree an affordable repayment plan for arrears. 

These steps would be supported by giving judges discretion to suspend eviction proceedings where these steps have not been taken.

The charities point out that the Renters (Reform) Bill as it stands gives landlords an automatic right to evict private tenants in two months or more of rent arrears, without offering any support or seeking to agree a repayment plan.

The charities point out that according to DLUHC figures rent arrears remain the most common reason tenancies are ended by landlords and estate agents, most often through section 21 notices. The letter points out that rather than offering more protection for those struggling to keep up with their rent, the Renters (Reform) Bill introduces an additional ‘repeat arrears’ ground.

The letter points to new research from StepChange shows private renters are twice as likely to be in problem debt as the average person, with more than half saying they have found it difficult to keep up with bills and credit commitment in recent months.

In addition it says that rising private rents are driving low financial resilience among private tenants, many of whom match the financial profile of social tenants but are unable to get social housing due to the limited supply of these properties. 

The charities claim there is strong public support for this approach with 72% of UK adults agreeing private landlords should be required to offer their tenants an affordable repayment plan before being allowed to pursue eviction. 

StepChange debt chart chief client officer Richard Lane says: “We’re currently experiencing a crisis of housing affordability which is leaving millions of private renters on the cusp of falling into problem debt simply because they do not have the income to cover exorbitant rents alongside rising essential costs.

“While a mortgage holder or social tenant has the security of knowing that their lender or housing provider will follow a process of engagement and support if they fall into a difficult spot with their finances, private renters are not afforded the same protections.”

Money Advice Trust runs the National Debtline. Its acting deputy chief executive Jane Tully adds: “Reform of the private rental sector is long overdue, and the government’s intention to deliver greater security for tenants is welcome. Proposals as they currently stand, however, do not get close to providing the protections needed for private renters.

“With rents rising and many household budgets at breaking point, it is only right that reasonable steps should be put in place to sustain tenancies.Changes to Ground 8A are needed now to reduce the threat of unnecessary evictions and to bring safeguards in this sector in-line with those granted to mortgage holders and social tenants.”

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Thorne joined KSEYE in 2012, beginning his time at the company as a case manager before moving to a telephone business development manager role in May 2023.

Discussing his promotion, Thorne said: “I’m excited by the opportunity to be more hands-on in meeting and establishing long-lasting relationships with brokers throughout the South of England and South Wales.

“My experience as a case manager, working closely with our underwriters, has given me an appreciation of how complex bridging loans can get, and the importance of keeping strong communication with brokers throughout the process.”

He added: “I’m looking forward to being out on the road, putting faces to the people I’ve been working with over the last eight months, making new relationships, and helping them to deliver timely bridging loans to their clients.”

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Ian Miller-Hawes has rejoined the company as sales director and will be responsible for the overall management of the BDM team. Aspen has also hired Mike Allen as a business development manager.

Miller-Hawes was previously head of sales for Aspen, before leaving the business last year. Allen joins from Octane Capital, where he was the company’s internal BDM. He has also worked at Brightstar as a specialist broker. 

These appointments follow a raft of recent promotions aimed at driving growth at the specialist lender. This saw Wayne Hicklin takes the position of risk director while Saif Khalique has become head of underwriting.

Aspen Bridging managing director Jack Coombs says: “Recently we have made several key personnel decisions as we structure the business for £1bn in total lending, having recently hit the £500m mark.”

He adds that the revamped sales team should help the company deliver on these targets. 

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This change will apply to remortgage applications where borrowers are looking to raise additional capital, as well as both purchase and remortgage applications where there is an issue with the overall credit profile of the borrower, or level of credit score. 

The move comes after the lender lifted maximum working age using earned income to 75 from 70 years of age in July 2023.

Halifax says these changes were made as part of a regular review of its lending criteria. The company stress that it will continue to use a maximum working age of 75 for the majority of its customers and this change would not apply to product transfer of further advance applications. 

It advised intermediaries that if a term past 70 years of age is selected for an application that has this new maximum working age, a corrective action message will show at the DIP stage. 

Halifax Intermediaries stressed that while no further changes had been made customers need to consider the sustainability and plausibility of working to their anticipated retirement age. 

This change applies to applications starting from 18 March.

Evelyn Partners financial analyst Adrian Lowery says: “Having raised the limit to 75 only last summer, the lender is apparently reining back on lending that is now perceived as risky.   

“For many older borrowers, and particularly those approaching a loan application, this might feel like the goalposts are being shifted back to where they were before mortgage rates started ballooning.  

Lowery adds: “While many such borrowers will be confident that they can either shorten the loan at a later date, or continue repayments beyond 70 — either because they will keep working or have a good pension in place, or both — the Halifax would probably argue that they need to have responsible criteria in place.  

“There’s no doubt that as property prices remain very high and as we are very unlikely to return to the super-low mortgage rates enjoyed until a couple of years ago, many households will have to revise either their homebuying demands, their cash-flow expectations or possibly even the date and style of their retirement.” 

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In her new role, Windle will be responsible for building and maintaining relationships with intermediaries across the North of England, covering Cumbria and the North East. She will be reporting to David Castling, head of intermediary distribution at Atom bank.

Windle started her career at Northern Rock. She joined Atom bank in 2017, and until this latest promotion worked as a telephone BDM, supporting the regional BDM for London and the South East.

Castling says this promotion builds on Atom bank’s commitment to deliver excellent services levels, alongside good value products and cutting-edge technology. 

Windle says she is looking forward to meeting the broker firms across the North to understand how the bank can help support them and their clients.

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