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Fixed rate mortgages become more popular

Fixed rate mortgage deals are becoming more and more popular as eight in ten mortgage shoppers are considering the option.

This month’s Experian Credit Barometer, out yesterday (June 20), showed May saw 81 per cent of searches directed at fixed rates, compared with 72 per cent in March and 77 per cent in April.

In comparison, interest for variable repayment rates slowed with only 10 per cent searching for a tracker and 9 per cent for a variable mortgage in the month.

Last year, The Bank of England raised interest rates for the first time in 10 years while governor Mark Carney has previously said interest rates were likely to rise twice more over the next three years.

The possibility of rate rises could mean homeowners increasingly value the stability that longer term fixed rate mortgages provide.

The Bank yesterday (June 20) announced it was holding the base rate at 0.75 per cent, which could encourage more savers to lock in the low rates while they can.

Amir Goshtai, managing director of Experian Marketplace & Affinity, said: “People want certainty when it comes to their finances, especially in times of such economic uncertainty.

“Rising popularity in fixed term mortgages and high searches for loans for debt consolidation tell us borrowers are looking for low, fixed monthly payments to effectively manage their outgoings and keep control of their finances.

“Interest rates for mortgages and loans are relatively low so now is a good time for borrowers to shop around and seriously consider locking-in their monthly repayments.”

It emerged in February that the number of fixed rate residential mortgages available has reached a 12-year high, as 5,214 fixed rates were available on the market compared with 4,570 in the previous year.

Daniel White director of White Financial Services said two-year rates have always been a popular choice because they provide “the flexibility of allowing a client to review over a shorter term”.

However, he added it is “the longer term security in a period of uncertainty” that is pushing more mortgage shoppers towards longer term fixed rates.

Jonathan Harris of mortgage broker Anderson Harris, said five-year deals were proving particularly popular at the moment.

He said: “The attraction is they give protection from potential rises for the medium term, without locking the borrower in for too long.”

Providers have also increasingly been introducing 10 year plans in order to meet growing demand for this option.

Research from consumer champion Which out earlier this year showed the number of providers offering such a mortgage had doubled in the year to January, to 14 providers.

For example, Santander was the latest lender to add a long-term fixed rate mortgage to its range with the launch of a ten-year deal in May this year.

By Eveline Vouillemin

Source: FT Adviser

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Plummeting London sales and flat house prices fail to deter foreign buyers

Foreign buyers are returning to London property despite the subdued state of the housing market, according to new figures.

Property prices are still falling in Greater London, with the latest LSL/Acadata house price index showing a 0.2% annual drop in April.

Sales have also plummeted in and around the capital, down 12% in the three months to April compared to the same period in 2017.

But foreign buyers “have returned in numbers” to the London market, according to a report by Peter Williams, Acadata’s chair, and John Tindale, its housing analyst.

International investors are taking advantage of lower prices and favourable exchange rates as they bet on future growth, “taking the view that this is a good long-term investment.”

The market is also picking up among British buyers and sellers, particularly “those prepared to take a risk or who must move,” according to the report, released on Monday.

With Britain’s scheduled exit from the EU delayed from March of this year to October, and no end in sight to the political crisis, people are “taking the plunge” to buy or sell.

“With seemingly no immediate end in sight to the political situation in Westminster, there is some evidence that pent-up demand held back by events of the last few months is breaking through,” the report said.

Record levels of employment and recent wage growth will also give some households more buying power, amid strong competition in the mortgage market and low interest rates, according to the report. But it notes many would-be buyers are still struggling to get a mortgage.

The rate of decline in property prices in London has narrowed significantly as demand has risen over the past few months.

In February, prices were 3% down on a year earlier, but by April this year the decline had dropped to just 0.2% on April last year.

Sales volumes are also down across England and Wales compared to 2017, but up 3% on 2018.

English and Welsh figures for house prices show prices ticking upwards 0.3% over the year, a rise of around £1,000.

By Tom Belger

Source: Yahoo Finance UK

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Bank of England says it is watching mortgage price war ‘like a hawk’

Regulators are watching a price war in mortgages “like a hawk” and may need to impose stricter minimum capital requirements on lenders, Bank of England Deputy Governor Sam Woods said on Friday.

The price war over the past two years may be good news for consumers wanting to buy their first home, but it was less good for a bank or building society concentrated in mortgages, Woods told the Building Societies Association.

High loan-to-value ratios and higher loan-to-income home loans can be well captured by the BoE’s capital requirements.

“But we should be watching them like a hawk,” Woods said.

Falling capital levels have been seen at lenders who use their own computer models to work out the riskiness of loans on their books and therefore how much capital to hold.

“The amount of capital being set aside to cover mortgages has been falling,” Woods said.

The BoE’s supervisors were making strenuous efforts to check on how models are being used.

“Still, I think we should approach this trend with a very sceptical eye and need to consider whether there is a case to impose more floors in firms’ models, particularly given the current stretch in some measures of house price valuation,” Woods said

(Graphic – BOE high loan to value chart, tmsnrt.rs/2X3xkZl)

RING FENCE FACTOR

Woods’ warning comes after the Bank forced Metro Bank to correct how much capital it was setting aside to cover mortgages after under-reporting the risk from its loan book.

Metro raised 375 million pounds to bolster its capital buffers earlier this month.

Tesco Bank said this week it was quitting home lending due to tough competition, and Nationwide Building Society its measure of underlying profitability fell in the year to April 4.

Credit ratings agency Fitch has said that rules requiring big banks to “ring fence” their retail arms with capital have led to increased competition as lenders seek to boost revenues.

Europe’s biggest bank HSBC has renewed its focus on home loans to boost revenue in its ring-fenced arm.

Asked if ring-fencing was to blame for the price war, Woods said: “Everyone involved agrees to some extent that that has been a factor in the intensification of pressure in the mortgage market.”

“We don’t think it’s the dominant factor. We think that the effect so far is manageable,” Woods said, adding that his staff were seeking to measure the impact of ring-fencing.

The regulatory system is also unable to properly capture risks from margin loans, or loans are granted using shares held by the borrower as collateral, Woods said.

Banks in London lost more than a billion euros in a single deal in 2017, Woods said.

Britain’s departure from the European Union could give Britain more leeway to adapt rules that are currently written in Brussels.

“My view is that a simpler system of regulation for smaller firms would be a good thing,” Woods said.

Reporting by Huw Jones

Source: UK Reuters

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Mortgage Approvals Reach 9-Month High

Homebuyers and lenders appear to have brushed Brexit uncertainty in March, as mortgage approvals reached their highest level since June of last year.

Industry data from UK Finance, a lobby group for the financial services industry, revealed that high street banks approved 39,980 mortgages in March, up 6% from a year ago and up 2% from February. That’s the highest number of mortgages approved in a single month since June 2018.

The numbers were greeted as a sign that the housing market is rebounding following a slowdown in 2018 as Brexit negotiations stalled.

The figures confirmed the optimistic prognosis from the Royal Institute of Chartered Surveyors (Rics), which found that house prices had risen last month for the first time since July 2018. However, Rics warned that worries about Brexit would continue to put a damper on price growth.

Jeremy Leaf, north London estate agent and a former Rics residential chairman, told the Financial Times: “Mortgage approvals for home purchase are always a useful lead indicator of future market activity and these are no exception.

“They confirm what we have been seeing on the ground and in other surveys — that transactions are holding up reasonably well despite political and economic distraction,” he added.

However, he noted that sales are taking longer to complete and that buyers and sellers are having a hard time finding middle grounds on prices. He attributed some of the market turbulence to the withdrawal of buy-to-let investors from the market, following the introduction of a stamp duty surcharge on second homes and cuts to the mortgage interest tax relief. Those buyers haven’t yet been replaced by fist-time buyers.

The market varied regionally as well, he noted.

“The picture is very patchy and can vary considerably between areas which are quite close together and between London and elsewhere.”

The United Kingdom was due to leave the European Union on 29 March, but was granted an extension until 31 October, after Prime Minister Theresa May failed to gain parliamentary approval for her withdrawal agreement.

With the new deadline looming, other analysts cautioned that the recovery in the housing market would be limited.

Capital Economics property economist Hansen Lu said: “Looking ahead, the delay to Brexit suggest that demand and sentiment in the housing market will stay subdued for at least the next few months. As a result, we don’t expect to see a further recovery in mortgage approvals this year. At the same time, a no-deal Brexit looks less likely than before.”

However, recovery in the housing market was matched by and related to other good economic indicators.

While consumers were still wary of big-ticket purchases, “it may well be that housing market activity has gained some support from recent improved consumer purchasing power and robust employment growth,” Howard Archer, from economic forecasting group EY ITEM, fold the Evening Standard.

Annual wage growth is at nearly a 10-year high and unemployment has fallen to 3.9%, a 44-year low.

Soruce: Money Expert

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Mortgage approvals up nearly 10%

The number of people being approved for a mortgage increased by nearly 10 per cent in March.

The latest data from UK Finance showed the number of approvals for home purchase were 9.3 per cent higher in March 2019 than the same month the year before.

Year-on-year, the number of people getting approved to remortgage increased by 11.1 per cent.

Gross mortgage lending across the residential market in March 2019 was £20bn – 0.5 per cent lower than the same month in 2018.

This fall was mainly seen in high street banks, where lending dropped by 3.5 per cent year-on-year.

Gareth Lewis, commercial director of property lender MT Finance, said the subdued lending in the first quarter came as no surprise due to the uncertainty surrounding Brexit.

He said: “There was never going to be a huge growth in lending in the first quarter. However, as far as the second quarter of the year and beyond is concerned, if the levels of activity we are seeing are anything to go by, the picture may be changing.

“With Brexit pushed back, far enough away for people to forget about it a little, and with fewer column inches in the papers, this is all a positive as it stops people from worrying about it too much.

“They are getting on with life, looking at opportunities to improve their portfolios – from an investment point of view, Brexit is getting less attention now, which has to be a good thing.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Mortgage approvals for home purchase are always a useful lead indicator of future market activity and these are no exception.

“They confirm what we have been seeing on the ground and in other surveys — that transactions are holding up reasonably well despite political and economic distractions as might be expected at this time of year.

“However, it is still tough to find common ground between even realistic buyers and sellers, and sales are certainly taking considerably longer, not least because as we are finding, buy-to-let investors have not been replaced completely by first-time buyers.

“The picture is very patchy and can vary considerably between areas which are quite close together and between London and elsewhere.”

By Imogen Tew

Source: FT Adviser

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Mortgage approvals made to home buyers jumps to nine-month high

THE number of mortgage approvals made to home buyers in the UK jumped to a nine-month high in March, figures from a trade association show.

There were 39,980 approvals for house purchase, marking the highest total since June 2018, according to UK Finance.

Meanwhile 29,448 re-mortgage loans got the green light in March – the highest figure since August 2018.

UK Finance said personal deposits grew by 0.4 per cent in the year to March, with savers’ money held in instant access accounts growing at a faster annual rate, of 2 per cent.

This reflects consumers’ preference to keep cash close at hand amid ongoing economic uncertainty, UK Finance said.

Howard Archer, chief economic adviser at EY ITEM Club said: “UK Finance reported mortgage approvals for house purchases somewhat surprisingly edged up to a nine-month high of 39,980 in March.

“The housing market has been constrained for an extended period by overall challenging conditions – relatively limited consumer purchasing power, despite recent improvement, after an extended squeeze and fragile consumer confidence.

“It should be noted that the overall national picture has been dragged down by the particularly poor performance in London and parts of the South East.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said looking ahead, mortgage lending is likely to continue to “flatline”.

“Mortgage rates look set to hold steady, keeping the proportion of home buyers’ incomes absorbed by loan payments at historically low levels,” he said.

“Nonetheless, households’ overall confidence still is low and surveys show a marked deterioration in households’ view that housing is a good investment, which only will have been strengthened by the recent slowdown in house price growth.

“It’s hard to see lending returning to 2013-to-15 levels any time soon.”

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said:

“It is still tough to find common ground between even realistic buyers and sellers, and sales are certainly taking considerably longer, not least because as we are finding, buy-to-let investors have not been replaced completely by first-time buyers.

“The picture is very patchy and can vary considerably between areas which are quite close together and between London and elsewhere.”

Andrew Montlake, director of mortgage broker, Coreco believes there has been a “marked improvement” in the property market in the past month or so.

“Something has changed, and this week in particular has seen a huge surge in mortgage inquiries,” he said.

“There’s always a surge in activity levels during the spring but this year it has been accentuated by the pent-up demand caused by Brexit.

“Those who aren’t buying are re-mortgaging in order to improve their homes, and many are picking up an even more competitive rate as they do so,” he added.

Source: Irish News

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Remortgage market predicted to grow

The number of people opting to remortgage is expected to reach a peak later this year.

Research from Moneyfacts, published today (April 23), showed the interest rates for those who took out a two-year fixed mortgage in 2017 would more than double when they were transferred to the lender’s standard variable rate.

For example, the average two-year fixed rate in May 2017 of 2.30 per cent is set to hike to the current SVR of 4.89 per cent in May of this year.

Moneyfacts reported the average two-year fixed rate reached a record low of 2.2 per cent in October 2017.

Therefore, the projected average difference in the revert rate will increase from 2.59 per cent to 2.69 per cent, increasing the motivation to remortgage.

By comparison, the revert rate was less than 1.5 per cent at the start of 2017 and from 2009 to 2012, consumers made money when switching to the SVR from their fixed rate.

Last week, lending trends from UK Finance showed the remortgage market was on the rise. About 18,200 people remortgaged their home to gain extra funds in February — 10 per cent up on February 2018 — and those remortgaging without borrowing money increased by 7.8 per cent to 18,360.

Darren Cook, finance expert at Moneyfacts said: “Two years ago, the average two-year fixed mortgage rate fell notably, reducing from 2.31 per cent in January 2017 to a record low of 2.20 per cent in October the same year.

“The following month, the Bank of England increased base rate from 0.25 per cent to 0.5 per cent and the average two-year fixed rate increased to 2.35 per cent by December 2017. In comparison, the average two-year fixed rate currently stands at 2.47 per cent.

“Over the next six months, it is likely many mortgage borrowers who secured a two-year mortgage deal two years ago may see their record low interest rate expiring and will have no intention to revert to a rate that could see their interest rate double overnight.

“This significant increase in motivation for borrowers to switch mortgage deals, and the subsequent potential increase in remortgage business as a result, may push some mortgage lenders to marginally cut rates over the next few months to maintain a competitive edge.”

Daniel White, of White Financial Services, said he was not convinced the low rates would lead to a boom in the remortgage market.

He said: “Two-year fixed rates have been low for some time, so when someone is faced with reverting to a SVR it will of course have a huge impact on the expenditure the consumer has budgeted for.

“However, whether or not the remortgage market will see a huge increase remains to be seen. Given that rates are very low and very competitive, it seems that current lenders are offering very competitive rates to keep hold of the existing client which may then prevent them from remortgaging to a new provider.

“In addition, any change in circumstances may well prevent a client from switching providers and therefore will need to remain with the current provider and switch onto a new product with them.”

By Imogen Tew

Source: FT Adviser

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UK lenders see big drag from house prices on mortgages: BoE

UK lenders think a slowdown in house prices will exert the biggest drag since 2012 on how many mortgages they offer, a Bank of England survey showed on Thursday, as Brexit uncertainty continues to depress the market.

Lenders surveyed by the central bank last month expected to provide around as many mortgages in the second quarter as in the first three months of the year.

But they predicted that expectations for house prices would be the biggest drag on mortgage supply, rather than the economic outlook or financial conditions.

Expectations for demand for mortgages in the prime market — dominated by London which has been hardest hit by the chaos surrounding Britain’s exit from the European Union — fell to their lowest level since late 2010, the BoE said.

Other surveys have shown Brexit to be a major drag on the property market in the capital, which is sensitive to flows of migrant workers from the European Union. A surge in prices in London in previous years has also stretched affordability.

Official data on Wednesday showed British house prices rose at the weakest rate in six-and-a-half years in February, dragged down by London’s biggest price fall in a decade.

The BoE’s survey took place between March 4 and 22.

Reporting by Andy Bruce, editing by William Schomberg

Source: Reuters

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What fintech innovations can the UK mortgage market learn from and adopt?

Customer expectations are rapidly changing and a new wave of start-ups are transforming financial services around the world. Is the UK mortgage market in danger of falling behind? And what can the UK mortgage sector learn from those at the cutting-edge, and what technologies could it realistically adopt over the next few years?

Dock9 recently hosted a roundtable and we share some of the themes and topics discussed in this article.

In an era of “fintech” and rapid technology developments it’s fair to say the UK mortgage market has lagged behind others in adopting new technology. While other sectors have embraced the new technology, offering seamless instant experiences, the end-to-end mortgage and home buying experience is still slow and archaic. With many parties in the process, each with their own challenges around legacy technology, it’s tempting for some to assume that a seamless end-to-end digital journey just won’t be possible.

So before we looked at specific technologies we kicked-off the discussions by first asking if our sector is just too complex to radically change or if we simply have our heads in the sand?

Most in the room agreed that from an underwriting and case-processing point of view that a seamless, automated customer journey leveraging AI, open banking and digital ID verification would be possible in the not too distant future for “vanilla” cases. We are likely to see a bifurcation between “vanilla” transactional cases, and those that will really need advice in future. Where that line would be drawn between “vanilla” and “specialist” was hotly debated.

On the one hand, some thought that the value of the human conversation element of the advice process, and the ability to pick up the subtle cues and nuanced answers when talking to borrowers, could never be replaced by machine. Most agreed that some people want a conversation and not a pure transactional relationship on what is, after all, likely to be the biggest financial commitment they make in their life.

On the other hand some questioned how real this perceived benefit was and whether in the not too distant future an AI-driven conversation would actually deliver a higher quality, consistent level of advice.

It’s arguable that legacy systems have slowed the industry down to date, with incumbent core technology providers shouldering some responsibility for building systems that are slow, and costly to make even the smallest changes to. As we will explore further below, a new breed of cloud-based, fully API-driven systems have the potential to disrupt these players.

We have arguably also witnessed certain inertia as an industry, as many lenders have waited for their competitors, who often have deeper budgets, to take the first technical leaps. A common refrain being that they want to be “one step” behind the trailblazers.

However the barriers to change are breaking down at lenders and brokers alike, and some incumbents are starting to break free of the limitations of legacy systems and legacy thinking. One notable example is Hinckley & Rugby Building being one of the first to integrate with Twenty7Tec’s MortgageApply. This demonstrated that, perhaps paradoxically, smaller lenders could be at the forefront – by leveraging their size to be more nimble and adopting agile methodologies.

APIs

APIs (short for Application Programming Interface) enable systems, services and websites to talk to one another. While many other industries have long-since adopted standardised, open means of communication between different parties, the mortgage industry is years behind – with manual rekeying of data far from unheard of. There was a clear consensus that the more widespread adoption of APIs would have the biggest immediate impact on the industry.

At a basic level brokers and lenders should be able to pass case data automatically between systems electronically, starting with the DIP (both case information and decision result). With the likely continuation of a low-margin environment for the foreseeable future it is untenable that the manual re-keying and paper forms can continue.

As a next stage full API-driven applications would deliver even more efficiency savings for broker and lender alike. While this is not new to the industry, with MTE being an early pioneer, overall adoption as an industry has arguable stalled over the last decade. Competition could be the key driver in taking adoption to the next level. The recent news of 15 lenders committed to integrating with Twenty7Tec’s Mortgage Apply in the coming year was notable, and there is a feeling that the dam may soon be broken.

Looking beyond efficient data transfer the move to open APIs and companies becoming “platforms” could transform the industry in ways we can’t yet perceive. For example, nobody could have predicted when the Google Maps API was launched in 2005 that over a decade later Uber would utilise it to disrupt the taxi industry.

In the insurance sector we have already seen creative use of APIs to reduce the amount of information a customer has to provide. For example Quilt, a start-up life insurance provider offers automated underwriting based on a “selfie” image taken by the user in the quote journey. Rather than needing to implement this functionality from scratch they plugged the image data in to the Lapetus Chronos API, which returns an accurate estimate of age, gender and body mass index.

Looking closer to home open banking is the obvious potential game changer in our sector. Replacing the cumbersome process of providing paper statements to your broker, lender and conveyancer “one touch” digital authorisation to these parties would certainly improve the user experience of the borrower. Lenders would also have instant access to trusted data.

This raised the question: who would take the lead in gathering this information in the future, the broker or the lender?

From one perspective it would be most logical for the broker to augment their case information with open banking and credit risk data and present the lender with a verified “package” of information that they can trust to make their lending decision on. This would avoid the user needing to grant open banking access to multiple parties.

From the lender perspective one questioned whether this would pass the compliance test and their responsibility to do their own due diligence. Could they trust this data? A possible solution was the broker sharing the open banking key with the lender.

But taking a step back, how can lenders offer API’s if their core legacy systems don’t have them out of the box? One approach discussed was to break-free of these limitations through the smart use of Robotic Process Automation (RPA).

Robotic Process Automation

Robotic Process Authomation (RPA) is an emerging business process automation technology that is based on the idea of software robots learning to perform repetitive tasks. These are undertaken directly in the same Graphical User Interface (GUI) that a human would perform the task.

Some RPA systems leverage artificial intelligence (AI) to radically simplify the task of “training” the system. Instead of relying exclusively on code and configuration, the RPA systems learn by watching the performance of a task on a GUI. AI enables the system to learn from previous decisions and data patterns which increases accuracy over time.

The potential use case for lenders is clear: where there is no appetite or business case for replacing a core system that has no easy way of exposing APIs, smart use of RPA coupled with a middleware API could enable them to break-free of the limitations of the legacy platforms and join the API revolution.

Artificial Intelligence

AI is commonly defined as the ability of a machine to perform cognitive functions that we associate with human beings: perceiving, reasoning, learning, interacting with the environment, problem solving and exercising creativity.

Machine learning is a subset of AI, and refers to algorithms that are fed data and experiences. These algorithms detect patterns and learn how to make predictions and recommendations. The algorithms also adapt in response to new data and experiences to improve their performance over time. So, opposed to receiving explicit programming instruction, computers can act without specific instruction.

AI is a term that has had much hype in the mortgage sector over the past few years, with many new entrants touting the “AI-driven” nature of the technology. In reality, however, most are leveraging traditional programming decision trees and have only really experimented with AI in their labs (if at all).

While many in the sector have focused their attention first on the possibility of AI replacing human advice, we highlighted two other possible use cases for the sector that may have more traction in the short term. The first is in improving fraud detection through the use of unsupervised machine learning. ThetaRay is a product in the US that is already in use in the banking sector.

The second is using AI to radically personalise underwriting, with bespoke pricing based on a borrower’s individual risk profile. This risk profile could be based on non-financial data as well. Datanomers has developed a “financial risk profiler” that uses artificial intelligence to search the web for unstructured non-financial data on loan applicants, indexes the information and generates a report for the underwriter.

Cloud-based core systems

As mentioned earlier, it was clear to some that incumbent core system providers in the mortgage space had held the sector back. While Robotic Process Automation opened up the possibility of building middleware API layers on top of systems, this may not ultimately be enough to really enable transformation in the industry.

A new generation of cloud-based core banking systems offer welcome competition to the present incumbents and it is notable that the most pioneering challenger banks have almost exclusively gone down this route. For example Tandem bank adopted Fiserv Agiliti, while N26 and Oaknorth have utilised the Mambu platform.

Could we see a similar disruption of incumbent mortgage technology providers?

Augmented reality

Augmented reality (AR) is an interactive experience where the real world (viewed through the camera on a smartphone or another device) is augmented by computer generated objects and information. Examples of augmented reality experiences include Snapchat lenses and the game Pokemon Go.

Wells Fargo, in the US, has been at the forefront of experimenting with AR in financial services. It has built a proof of concept that enables a user to hold their credit or debit card in front of their phone’s camera, which then displays a panel of information as a pop out on screen containing current balance and transaction information.

While a nice demonstration of the art of the possible, it’s arguable that AR is a solution looking for a problem within the financial services sector.

Digital ID

Identity verification is critical to both mortgage application and account management, and is an area open to risk of fraud. Current paper-based identity verification methods are cumbersome, costly and inefficient. A digital identity system provides a simple and secure way of proving identities online. These reduce the risk of fraud and improve the customer experience. Digital IDs are already a reality, with platforms like Yoti in commercial use.

One attendee had already spearheaded the integration of digital ID into their platforms, and the consensus was this was a technology that most lenders and brokers should be exploring.

Blockchain

Blockchain is still in the category of “future” technology to watch, however the potential future use was raised by one participant. Blockchain is a distributed ledger, most famous for underpinning crypto currencies such as Bitcoin. It is an open, decentralised database (every single node has all data and validates all transactions) that removes the central point of attack or failure. Data is immutable (“tamper resistant”) which provides one trusted version of the truth for all parties. Because no third party intermediary is required, no trust in a counter-party or third party is required.

The potential for transforming the home buying process is compelling. Through the lifecycle of the home purchase journey each party (broker, borrower, lender, valuer, conveyancer, mortgage servicer) could be granted instant access to view and add records/update actions when required in the process, based on a set of rules programmed into the smart contract.

Instead of multiple parties keeping separate records on a mortgage in scattered files and systems, a mortgage blockchain could act as a single tamper-resistant store of all data. This would reduce risk of fraud and provide a full, unchangeable audit trail for all parties. In fact Dock9 built a proof of concept mortgage blockchain application testing the ideas above that we demonstrated at a Building Societies Association event last year.

Closing

It’s fair to say we covered a lot of topics in the roundtable, and there was a wide range of opinions on the future. One area of agreement was that the stasis of the last decade can’t continue – if the mortgage doesn’t wake up and push forward, it’s leaving a wide open space for someone else to do it.

By Joanne Atkin

Source: Mortgage Finance Gazette

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UK mortgage approvals tumble to six-year low

Mortgage approvals have slumped to a near six-year low, industry data showed on Tuesday, as heightened Brexit uncertainty rattled the UK housing marking.

According to UK Finance, which represents high street banks and other lenders, 35,299 mortgages were approved in February on a seasonally-adjusted basis. That was down from January’s revised figure of 39,555, a 2.2% decline on February 2018 and the lowest since April 2013.

Gross mortgage lending across the residential market was £19.1bn, 2.5% higher than February 2018.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the sharp fall was “almost entirely due to the recent jump in Brexit uncertainty”.

He continued: “Surveys such as the RICS Residential Market Survey have pointed to a downturn in house buyer demand since November, so the prior resilience of approvals in January had been puzzling. According to RICS, new buyer enquiries fell in February at the fastest rate since May 2008, so we expect approvals to continue to fall over the coming months.”

However, Pantheon Macroeconomics argued that – provided the UK quits the European Union with a deal – the housing market should steady itself as the year progresses, with the UK Finance measure of approvals returning to between 40,000 and 50,000 in the second half.

Howard Archer, chief economic advisor to the E&Y ITEM Club, said February’s fall meant mortgage approvals are now “well below the 38,000-40,000 range that largely held through 2018”.

“February’s drop to a near six-year low adds to recent indications that heightened economist and Brexit uncertainties are weighing down on the housing market,” he added. “It is already under pressure from overall challenging conditions – still relatively limited consumer purchasing power after an extended squeeze, fragile consumer confidence and wariness over higher interest rates.

“With Brexit now likely to be delayed until 22 May at least, further uncertainty is likely to weigh on the housing market. This has caused us to trim our forecast for house price growth over 2019 to just 1%.”

UK Finance also said that unsecured consumer credit growth was 3.8% in February. That is the lowest level since October and only marginally ahead of July’s 3.7%, the weakest since October 2014.

Credit card spending was £9.7bn in February, 1.1% up on the same month in 2018. Personal loans were ahead 2.3% while overdrafts were 0.6% lower.

Archer said it appeared consumers were being “relatively cautious” in their borrowings, while lenders had become “warier” about advancing unsecured credit.

By Abigail Townsend

Source: ShareCast