Market Overview: June 2008 | Chase De Vere Mortgage Management
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Market Overview: June 2008

Monthly overview June

After 9 months of uncertainty the fallout from the Northern Rock debacle finally hit the mainstream mortgage market in May.  During the early Post Northern Rock months it was those with adverse credit history and mortgage brokers that needed Sub Prime mortgages who felt the squeeze. But mortgage lender’s started to tighten their lending criteria and, one by one, retired from the market.
 
Mainstream mortgages became more expensive and criteria less flexible during the first four months of 2008. Borrowers became increasingly aware that mortgages were becoming more difficult to arrange. And finally, in May, the whole of the UK’s mortgage broking community juddered to a halt as the market hit the bottom of this cycle.
 
For many operations turnover levels seen in May would make remaining in business unsustainable over a longer period, and as a result have had to re-focus on what they can do best. Here at Chase De Vere we have been busily re-focussing since the beginning of the year and trimming our costs, also our  expectations as any sensible business would do.
 
As a result, we are continuing to offer a full mortgage broking service and will remain whole of market;  We are concentrating our efforts in 3 main areas and borrowers in these markets can really benefit from our assistance.
 
The first area is remortgaging. In particular those people who have recognised that, not only their mortgage costs are increasing, but they also have other short term finance that is getting out of hand - Car loans, Credit Cards, Home Improvement loans from Kitchen or Bathroom suppliers etc etc. 
Whilst they still have healthy equity in their properties this is the time to reorganise their finances and improve their net cash flow after finance costs – effectively giving themselves a pay rise at a time when real inflation (fuel, utilities, food council tax….) appears to be outstripping wage rises.  
Give yourself a financial breather by contacting us and we will design a bespoke solution for you.   
 
Many lenders have significantly restricted lending for larger loans. In particular loans over £500,000 are very difficult to obtain and even more difficult to arrange at a competitive rate; the more money you want to borrow, the more expensive it becomes. We have specialised in this area over the last 26 years and at present we have rates available from as low as 0.74% over Bank Base rate for loans up to £5,000,000. We are dealing with an increasing number of clients who need our services in this high loan area and in these difficult times, these clients are finding our services even more valuable.
 
Finally, we have always supported and financed experienced landlords. We’re finding more of our long term clients who have some equity and/or cash are buying distressed property for letting, either from auctions, or occasionally from our clients that have cold feet from being landlords in a difficult market. While Buy to Let mortgage finance is more difficult to raise at present. For Professional landlords with solid portfolios, this option is becoming more attractive. At this stage of the housing cycle there are many bargains for those who have access to capital of their own, or lending tranches that we can help arrange.
 
The media is full of gloom and doom-laden stories about the economy (and recently about the precarious funding of Bradford and Bingley) but the fact remains, we all need to live indoors.  We all want to pay as little as possible for this benefit and use finance in the most constructive and imaginative ways. This is what we have been doing now since at Chase De Vere since1982 with great success.
 
The Association of Mortgage Intermediaries (AMI) who represent the interests of mortgage brokers when dealing with the Financial Services Authority (FSA) and the public at large, have just conducted a review of mortgage advice in the UK and some of their findings are as follows:
 
61% of all mortgages are now arranged by intermediaries.
 
The average borrower saved just under £1,000 per annum by dealing via an intermediary.
 
And yet only 20% of consumers approached intermediaries because they wanted a cheaper rate than they could obtain elsewhere.
 
All this adds up to more endorsement of our services at a time when borrowers need help more than ever.
 
Here at Chase we have the knowledge, brand and experience to help you and your colleagues. 21 of our team of 54 are in their 10th year or later, with 7 in their 20th year or later – so if you are seeking an experienced advisor you cannot do better.
 
We look forward to talking to you in the next month.
 
 
Simon Tyler
13th June 2008