The Mortgage Works, the specialist lending division of the Nationwide Building Society, has today opened up a new chapter in the buy to let mortgage market. For months now many landlords have been struggling to remortgage their properties but it seems that The Mortgage Works is happy to take on new business offering 80% mortgages from today - which is an improvement on the previous 75% cap.
Over the last few days it has become apparent that transaction numbers in the UK mortgage debt market have increased significantly. Indeed a number of investors who have acquired large mortgage debt portfolios, often for well below their face value, have now stepped forward with discount offers if customers remortgage their homes with new lenders. So how does this work?
While February saw a £1.8 billion increase in mortgage lending across the UK this figure dropped to an increase of just £300 million in March amid concerns that the UK property market is slowing down. Even though the fact that UK mortgage lending is still growing is a positive sign there is concern at the steep rate of fall in the growth factor. There may be a number of reasons for the steep fall in growth but it does not help sentiment in the UK housing market.
As we stare head-on towards a hung parliament in the UK come Friday morning there are serious concerns about the potential impact on the UK housing market. When you consider that over 50% of the UK employment market is in some way connected to state operations and the public-sector, there is the potential for significant job cuts in the short to medium term which would impact upon general economic activity and demand for houses.
Santander, the Spanish financial conglomerate which has significant exposure in the UK, recently announced it was behind 20% of all mortgages written in the UK during the first three months of 2010. This is a significant increase in business and bodes well for the future of the Spanish giant which has exposure to the UK via its Abbey and Alliance and Leicester operations. It seems as though the decision to rebrand many operations under the Santander banner has paid dividends, at least in the short-term.
News that the Financial Services Authority (FSA) has widened its investigation into Northern Rock and reporting irregularities regarding mortgage arrears is a devastating blow for the company. This comes at a time when the UK government is looking to spin off the operation after splitting the company into a "good bank" and a "bad bank". It does not reflect well on the UK government that it has taken so long to get to the bottom of the reporting irregularities and indeed the investigation is not yet finished.
There is widespread speculation that the SEC is chasing Goldman Sachs regarding an alleged $1 billion fraud lawsuit because it believes that the deal involved actually brought down the worldwide economy and precipitated the credit crunch. This is a rather major assumption on behalf of the regulator as many in the market place believe the US sub-prime mortgage market pushed too far too quickly and every mortgage company in the sector was chasing the next big buck.
The Council of Mortgage Lenders (CML) has today confirmed that there will be a £300 billion funding shortfall in the mortgage market as a number of government backed financial initiatives come to an end. In the boom times the mortgage market in the UK more supported by various mortgage derivatives although this particular area of the investment arena has stalled of late and is yet to kickstart despite other areas of the market picking up.
Despite the fact that UK mortgage lending was up 24% between February and March the Council of Mortgage Lenders believes that the mortgage market is still "quiet and subdued". The £11.5 billion of mortgage finance paid out in March is an increase on the £9.3 billion a month earlier although only a small rise on the £11.2 billion 12 months ago.
The Financial Services Authority (FSA) has broadened its investigation into Northern Rock to see whether any other figures in the company were aware that mortgage arrears figures were not reported correctly to the FSA. This comes at a time when the UK banking industry is again under the spotlight with revelations appearing in the public domain regarding various practices before and during the recession.
