Simon Carr, Sales Development Director
I may be showing my age a little, but do you remember that festive time of year when your parents would rush around getting those last-minute items ready for the holiday period?
I imagine many of you will recall a mandatory item on the shopping list being a Christmas issue of the Radio Times or TV Times. You would open up the pages in sheer excitement and gasp at the vast array of TV programmes on offer. You simply could not believe the choice on offer from three channels. Then, in 1982, we were dazzled by a new station called Channel 4.WOW – what choice.
In 1989, Sky launched and we saw Penny Smith grace our screens alongside Alistair Yates on Sunday 5th February. This must have sent the fear of god down the corridors of the “Corporation”. This revolution paved the way for the number of channels to exceed 600, not to mention radio and premium channels.
Nowadays, it feels like the wide choice available to us makes our decisions harder. It makes us procrastinate, scared to make a decision... Just pick a bloody programme and pick it quickly! But no – we carry on scrolling through the endless lists of channels; even looking forward to future events we can watch. The advent of the multi-channel TV with Catch Up, On Demand and all the other good stuff, makes travelling forwards and backwards possible. Apparently you can now even pause live TV – that's amazing! Absolutely mind–boggling. Whatever next... Time travel? Now that would make a good programme. You even have the choice to view either in bog-standard definition or HD, not to mention viewing your programme on one of the multitude of ‘plus 1’ channels.
With more channels than ever before, you could argue we are spoilt for choice. Choice can, very often, be overwhelming. Too many options leave you undecided. Conversely, too few options restrict opportunity.
Now then… I'm not sure if this message will be clear enough or whether you'll be tuned in to this station I am broadcasting from, so I’ve included a subtitled version too.
We previously offered access to our second charge loan products via our Preferred Panel of Master Brokers, but you wanted more. You wanted a choice and quite frankly didn't like us pushing you down one route over another. You wanted to decide for yourself. So here's what we have done.
Don't worry! We haven't added another 600 new options; we have simply given you the option on how to do business with us. Pick a member of our Preferred Master Broker Panel – there are 16 in total (you'll be familiar with all of them and you won't be surprised by the selection on offer – they are experts in their field). What you also wanted, in fact, demanded (call it our version of ‘On Demand’) is direct access to our products, too.
I guess choice still plays a huge part in selection. You want to be able to make your own mind up on whom to use, when to use and for what type of business. You wanted a choice of Master Brokers (premier channels) as well as submitting a case to us direct.
Access to our products comes as no surprise to the forward-thinking Preferred Master Broker or Mortgage Intermediary. The perception of poor-quality products is now a thing of the past, a bit like the first airing of a new TV station. You are now viewing second charge loans in full Technicolor 4KHD.
Precise Mortgages, the specialist lender, has today announced that it is launching a direct to broker second charge proposition on 5th May 2016.
The addition of a direct submission route alongside its newly streamlined master broker panel will give mortgage intermediaries more choice in how they submit second charge lending cases.
Second charge lending is a growth market with excellent opportunities for mortgage intermediaries. The FCA states that it expects the vast majority of second charge sales to be on an advised basis – this is undoubtedly an area where intermediaries excel.
The fact that second charge loans are now regulated by the FCA under the MCoB regime means that the advice and lending processes for second charge loans should become as straightforward as in first charge lending.
In order to ensure mortgage brokers and advisers are properly compensated Precise Mortgages has set the procuration fee at 1.25% for direct business which aligns the fee to a similar level as if a remortgage had been advised.
Customers who wish to raise extra funds may be better off leaving their existing mortgage in place and using a second charge loan instead include:
• Customers on lifetime tracker rates paying low margin over BBR
• Customers with an interest only mortgage
• Older borrowers who may not pass affordability tests on a remortgage but may be able to pass with a second charge on a different term
• Customers trapped with lenders who will not allow further advances
Highlights of Precise Mortgages new second charge loan products:
• Rates from 4.45% with a £300 product fee, or 4.75% with no product fee
• Bank of England base rate lifetime trackers and fixed rates
• ERC and no ERC product choices available
• Affordability on 5 year fixed rates is based on initial pay rate not a stressed rate
• Residential Prime, Almost Prime and Near Prime ranges
• Buy to Let Prime
• Loans from £5,000 - £1,000,000 (loans above £500,000 priced on request)
• Terms of 36 to 360 months
Alan Cleary, Managing Director of Precise Mortgages says: “We firmly believe this direct to broker second charge proposition will improve the choices available to the mortgage intermediary market and to the end consumer. We are in talks with many major mortgage clubs and networks about bringing this opportunity to as many brokers and advisers as possible and anticipate making a number of announcements very soon.”
Despite numerous government schemes aimed at supporting the UK’s first time buyers and renters take their first steps on the property ladder, a significant proportion of these renters are still unaware of the assistance available, according to research from Precise Mortgages in conjunction with YouGov.
Over two fifths (41%) of people in the UK have a low awareness of the government’s Help to Buy ISA, which launched in December 2015. More than a quarter of people surveyed (27%) admitted to not knowing much about the ISA, whilst 14% stated they had never even heard of it. A further 13%, despite knowing about it, don’t think it is enough to help people buy homes, and greater government help is needed.
The announcement of the proposed Lifetime ISA as part of last month’s Budget was greeted with much interest, with many industry commentators suggesting that it could incentivise under-40s to think about saving for either a home or retirement. However, with such little knowledge of the Help to Buy ISA – which is set to last until 2019 – it unclear whether the Lifetime ISA will actually reach the people who it could benefit.
This is all the more concerning when saving for a deposit remains the biggest barrier for renters when thinking about home ownership. Over half of renters (51%) still see saving a large enough deposit as the biggest barrier to owning home. This is followed by finding an affordable property (41%) and getting a mortgage approved (33%). Additionally, 37% of UK renters state that they are not currently seeking to purchase a property simply because they can’t save for a deposit.
Alan Cleary, Managing Director of Precise Mortgages says: “Barely a month ago, the Chancellor announced the introduction of another initiative to help first time buyers. The Lifetime ISA will see the government gift £1,000 to savers who can put away £4,000 a year. It’s clear from this that the government is trying to support first time buyers up and down the country to access the property ladder.
“However, better communication of the support available is needed – if the message isn’t getting to people it needs to, it follows that some of these people will be missing out on help that could prove vital in helping to get them on the property ladder. More must be done by the government and industry alike to increase the knowledge of these schemes across the board, not just amongst first time buyers, but also those who they turn to for guidance when thinking about saving to purchase their first property.”
All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 4288 adults. Fieldwork was undertaken between 28th August - 1st September 2015. The survey was carried out online. The figures have been weighted and are representative of all UK adults (aged 18+).
Simon Carr, Sales Development Director
Whilst working on a marketing initiative, a colleague and I were discussing when a second charge bridging finance would be used over a traditional first charge bridging product. It was a discussion which, after visualising different scenarios, we were able to succinctly differentiate why and when a second charge bridging loan would be used.
I once read a book, by Stephen Covey – you know the one – ‘The 7 Habits of Highly Effective People’. What a great book – it's more of a reference manual really – one that you don't just read and put down, but pick up from time to time.
The first couple of chapters focus on changes in opinion and perception, and using a number of pictures, clearly demonstrate what is being taught. One picture is of a beautiful lady wearing a fur throw, pearl necklace and earrings.
The other (which quite frankly still scares me, even today) is a picture of – shall we say a rather old lady, who's seen better days. I can tell this by her unfeasibly large, hooked nose – a marked comparison to the dainty, little button nose of the elegant lady.
Later, you’re shown another picture. However, as your learning grows, you see the image change from old lady to beautiful lady or vice versa, depending on what you saw initially.
Attributed to William Ely Hill (1887–1962) („Puck“, 6. Nov 1915) [Public domain], via Wikimedia Commons
What do you see? Old lady… young lady... or both?
This change in view is referred to as a PARADIGM SHIFT – the minute you see something from a different position. I guess that my discussion with my colleague gave me my very own paradigm shift. I realised that on the 21st March the residential first mortgage and second charge industries changed, becoming one single picture, if you will, after being seen as separate for many years. Perceptions changed for the better. Let me attempt to demonstrate.
Picture 1: Mortgage Agreement
Picture 2: Secured Loan Agreement
Picture 3: Regulated Mortgage Contract
You can no longer ignore Picture 3 – it contains both... watch… stare… give it a go!
Old Lady/Young Lady First charge/Second charge
You are considering both aren’t you?
In summary, same type of contract, same pen, same security – just a different view of the same thing.
See – I rest my case.
Paradigm shift shared.
My work here is done!
I can’t wait for the 23rd June! I am hoping that once the vote is cast the uncertainty will start to subside and the media will have a different topic to write about. Whilst I am getting slightly bored of the Brexit debate I do fully understand how important the outcome is to every man, woman and child in this country.
Even if you have no interest in whether we stay or whether we go you will be impacted by the outcome. I personally think that the arguments being put forward by politicians on both sides of the debate are, quite frankly, indecipherable. Neither side is saying anything useful that the average person on the street can use to make up their mind and I fear this is only going to get worse as we get closer to the vote.
I decided quite a while ago that I was not going to rely on anything being said by politicians as to how I am going to vote on Europe. As a result I made my mind up ages ago and now I am pretty much ignoring the media. There are two things I think about when weighing up how to vote: first, how will the outcome effect my family, and secondly what will be the impact on the country. In reality the second is how will the effects on the country affect my family, so it’s all the same thing really. I honestly do not know whether it is better in the long run to exit or stay and anyone who says they know is either a liar or deluded. However, I am firmly in the remain camp and here are my reasons why.
I, like you, work in the mortgage market and one thing that the mortgage market does not like is uncertainty and an exit would bring years of it. Bear in mind it took Greenland, which has a population roughly the same size as St Albans, over 3 years to decouple from the EU’s predecessor in 1985. It is therefore, highly likely it will take the UK considerably longer.
As part of my job I speak to institutional investors and capital markets people regularly and without exception every one of them has asked us for our views on the impacts of an exit and what are we doing about it.
These are the people that help fund the mortgage market and indeed to some extent are price setters so uncertainty for them is not a good thing. Our response as a business is that it is impossible to anticipate the first, second, third, fourth order effects of an exit. However, the one that is most troublesome is a significant drop in the value of Sterling leading to rapid rate rises; this would hurt mortgage borrowers, lenders and intermediaries alike.
The UK is simply too small to compete with other countries. Whether it be defence or economics we are competing with 1.5 billion Chinese people, 1.5 billion Indian people, 350 million Americans and 700m Europeans if we decided to exit. In nature there is generally safety in numbers.
The country’s weighted average age is increasing as we live longer. Without young people, whose National Insurance payments will fund the state pension? Where are all the nurses, police, plumbers and construction workers going to come from? The fact is that in order to maintain or improve living standards a country has to grow in the long run and growth takes people. Positive net migration is crucial and by closing our borders we potentially become insular and irrelevant as a nation.
I am also ignoring the polls which so spectacularly got their numbers wrong on the outcome of the General Election and the Scottish vote. Instead I look at what the odds are at the bookies as they have their balance sheets on the line if they get it wrong. Odds for us staying in the EU are 2/5 giving an implied probability of 71.43%.