The latter comes from the daft announcements of 24-hour opening to cope with demand. My view is that anyone who wants to apply for a mortgage at 4am should be tested for drink and drugs as a basic pre-requisite. It all brings back memories of Right To Buy with brokers in camper vans.
Equally interesting is the level of the loans on offer. Government underwriting has persuaded lenders to offer deals at least one percentage point lower than standard 95 per cent deals. But they are still considerably more expensive than those on offer to borrowers who have saved more.
Halifax is offering a two-year fix at 5.19 per cent with a £995 fee for a Help to Buy 95 per cent loan. A normal borrower with a 20 per cent deposit will be offered 3.14 per cent for two years with the same fee. The difference is an extra £114 a month on a 25-year repayment mortgage or £2736 over two years.
The message: we will lend if you want us to, but we still see this as an extremely risky market.
And this is just for the first two years of a seven-year scheme. We have no idea what sort of interest rates will be offered in a couple of years’ time, especially if house prices fall and the lender is looking at a negative equity loan.
HSBC is planning to make borrowers acknowledge a repayment illustration showing what their increased monthly repayments will be when interest rates rise.
This all feels like a step back to 2007, only now it is the government ostensibly taking the risk with taxpayers’ money whereas then it was lenders taking the risk with what turned out to be taxpayers’ money.
The scheme could hurt potential buyers who have saved hard to build a decent deposit and will now find themselves competing against those with government-backed loans. And if, as some predict, prices fall then lenders, borrowers and taxpayers could all lose out as they share the pain on repossessed properties that are sold for a loss.
I’m all for youngsters getting on to the property ladder, but I hope that those who become involved in this scheme are fully aware of the risks they are taking.
“I’m all for youngsters getting on to the property ladder, but I hope that those who become involved in this scheme are fully aware of the risks they are taking.”***
Better way for consumers
How do I find a good financial adviser? It is one of the more common questions to crop up in my mailbag – and it is one of the most difficult to answer.
Often the request is triggered by a life event such as retirement or an inheritance: few people wake up one morning and decide they need a financial adviser in their life. I ask the question because Unbiased plans to revamp the consumer section of its website but this will not include any ability for consumers to rate an adviser.
There are two sides to this argument. Consumers desperately need a way of finding an adviser to suit their needs. But Trip Advisor-style ratings could be manipulated by positive ratings from tame, friendly clients or adversely affected by one person with a bee in their bonnet.
Then there are libel laws. Words such as ‘extortion’, ‘unprincipled’, ‘swindler’ and ‘crooked’ crop up on blogs and message boards with depressing regularity. Proper monitoring of websites rarely happens due to chronic under-resourcing.
For most people financial adviser recommendations are as likely to come from a bloke they meet in the pub as from any sensible source. Surely there is a better way for consumers to swop information on advisers with who they have had a good experience.
More information can only increase confidence and curiosity among consumers with the result that more people would choose to seek advice.
***
Stop moaning and comply
The questionnaire for the second of the three phases of the Financial Conduct Authority’s review into the impact of RDR has gone out.
The first gave examples of good and poor practice. Comments by FCA technical specialist Rory Percival earlier this month suggested that those who persist in ignoring the rules must prepare to face sanctions.
The FCA was generally pleased with what it found the first time around. The main cause for concern was that some were still failing to quote charges in cash terms.
Come on now. This really is not rocket science. Most are complying. So those of you who are not: why not spend less time moaning on message boards and more time reading the rules to make sure you understand and comply?
