Wednesday, 17 October 2012

Court case ruling helps bury PPI mis-selling claims

Samantha Cordon, 17 October, 2012

On 4 October 2012, Recorder Yip QC ruled over the Manchester County Court case in what was one of the first judgments in PPI litigation since the Harrison v Black Horse appeal was withdrawn from the Supreme Court earlier this year. In Plevin v Paragon Personal Finance Limited & LL Processing (UK) Limited (in Liquidation), the Court was faced with a claim which had already been subject to four amendments with another proposed at the start of the trial. In 2006, Mrs Plevin took out a £34,000 secured loan to be paid back over ten years, to fund some home improvements and consolidate her existing debt. Via the broker LL Processing (UK) Limited, she took the loan, plus a five year PPI policy for £5,780, out with Paragon Personal Finance. After moving house in 2007, Mrs Plevin took out a further, smaller loan with Paragon without PPI.Two years later Mrs Plevin took legal action against both the broker and the lender over a number of grounds including the claim that the broker had said or implied that the PPI was compulsory when in fact it wasn’t and that the broker and insurer would receive commission which also created an ‘unwholesome incentive’ for the broker to sell PPI.Fiona Hayles, senior associate at SGH Martineau, who represented Paragon, said: “The problem faced by Mrs Plevin in maintaining these arguments was that following the withdrawal of the appeal to the Supreme Court in Harrison v Black Horse, the robust decision of the Court of Appeal remains good and binding law. “Recorder Yip QC noted that whilst Mrs Plevin had suffered ‘buyer’s remorse’ in relation to her decision to take out PPI following the Harrison decision, a seller is not obliged to warn a buyer of whether his product is expensive or why he charges the prices he does.

“The Court found that there could be no unfair relationship between Mrs Plevin and Paragon and also decided against Mrs Plevin’s claim under section .18 of the Consumer Credit Act that the PPI agreement was incorrectly executed and therefore unenforceable.”
Mrs Plevin’s legal representatives, Miller Gardner, ran up costs amounting to £320,000 by the time of trial, against a maximum claim value of some £5,000, yet failed to get to the bottom of the factual case. Paragon had made a without prejudice offer to Mrs Plevin back in 2010 on a commercial basis simply to see an end of the litigation, which was rejected by Miller Gardner.  Hayles added: “Recorder Yip QC held that as a result, and given her ‘real concerns’ over Miller Gardner’s conduct, it would be appropriate to order that Mrs Plevin pay Paragon’s costs on the indemnity basis in relation to the entirety of the action. “This is the strongest order that a Court can make and is illustrative of the displeasure with which Miller Gardner’s conduct was regarded. It was clear from the amount in question that the litigation had been run only to benefit Mrs Plevin’s solicitors and not to achieve the best result for her. “Given the findings by the Court of Appeal in Harrison and Recorder Yip QC in Plevin, claimant solicitors now have little chance of successfully continuing with claims in relation to PPI mis-selling. “Further, the Courts are now very much alive to the fact that such claims cannot be regarded as being in borrowers’ best interests. The industry that has grown up around PPI should beware.”

As a brokerage that has never sold single premium PPI you can rest assured their will be no claims made against us.  We deliberately decided not sell these policies as we saw them as morally wrong due to the excessive interest charges incurred and the fact that the ability to claim on them was, in most cases, diffcicult at best!

Monday, 24 September 2012

Mortgages Leeds: Govt plans for pension pots to fund mortgage depos...

Mortgages Leeds: Govt plans for pension pots to fund mortgage depos...: Govt plans for pension pots to fund mortgage deposits 24 September 2012 8:16 am | By Samuel Dale Deputy prime minister Nick Clegg has u...

Govt plans for pension pots to fund mortgage deposits

Deputy prime minister Nick Clegg has unveiled plans to allow individuals to use sizable pension pots as a guarantee to help their children raise a deposit to buy their first home.
The plans are currently being investigated by the Department for Work and Pensions and the Treasury and would allow parents to use up to 25 per of their pension pots to guarantee first-time buyer mortgage deposits by setting aside part or all of their future tax-free cash lump sum entitlement.

The policy was initially considered for inclusion in the Government housing strategy in December 2011 but was dropped when it was published.
Yesterday, Clegg told the BBC’s Andrew Marr Show: “This is part and parcel of something which I think most people agree with, which is that as we fill in the black hole in the public finances we have also got to make sure that we do not put Humpty Dumpty back together again and make the same mistakes, that we rewire the British economy and make it fairer and give people more opportunities.”
Treasury chief secretary Danny Alexander told the BBC: “There are an awful lot of parents who don’t have enough cash to help their children get on the housing ladder. In many cases, they might well have built up a substantial pension pot - that’s their only asset - which they will be able, when they reach retirement age, to release a tax-free lump sum.”

Tuesday, 18 September 2012

Mortgage Analysis - Will we see a remortgage bounce?

A rise in remortgage lending and an optimistic forecast for the rest of the year offered a rare piece of good news last week but experts are still cautious about future growth. The LMS Remortgage Report estimates remortgage lending for July rose 13 per cent compared with June, from £3.1bn to £3.5bn. Signs of market improvements are to be welcomed.

Remortgages now represent only 25 per cent of all gross mortgage lending, down from 32 per cent in July last year.

LMS chief executive Andy Knee says: "The good news is that better deals have materialised. Lenders have recently launched a number of sub-3 per cent rates with terms of four or five years."

Coreco director Andrew Montlake says the backdrop of rising SVRs from a number of the major high-street lenders could give the remortgage market the push it needs to return to a position of strength.

"Every time another lender puts up an SVR, as Santander did recently, you get a rush of phone calls as people think about getting something in place for when their rate expires."

Santander became the latest lender to announce an SVR hike as it wrote to customers informing them that it intends to increase its standard variable rate from 4.24 per cent to 4.74 per cent from October 3 with its SVR cap margin – the maximum amount above the Bank of England base rate that it can charge – rising from 3.75 per cent to 4.99 per cent from September 24.

"For those who are on interest only, the self-serve clients, what are they going to do? They are just stuck and until that logjam is unstuck, the market is never going to return to what it should be."

The Council for Mortgage Lenders agrees. A spokeswoman says: "We have seen movement from some lenders on SVRs and new business pricing and that will be a motivator for those borrowers who are not sitting on such great deals or who are more risk adverse.

"People on very low interest-only rates may still adopt a wait and see attitude which may have even increased in the wake of eurozone wobbles as they believe policy rates will stay lower for longer."

What does this all mean for you the man on the street?

Basically that irrespective of your circumstance you should review your mortgage with your mortgage broker to calculate the best route forward, even if you are on a low variable rate.  A good adviser will tell you when to move and plot a regular review period for you to ensure that if the market do move you can capitalise on it as quickly as possible.

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Saturday, 25 August 2012

Lenders rein in high LTVs

The number of 90% mortgages has fallen by 26% from 330 products this time last year to the 244 now.

Sarah Davidson, 22 August, 2012
Moneysupermarket said in the past six months alone the number of mortgages available for loans up to 95% of the property’s value has fallen by 43% from 49 products to just 28. In the past 12 months first-time buyer mortgage products have fallen by 31% from 1,786 to 1,225. A number of lenders that were offering 95% mortgages six months ago have since withdrawn them from the market. 

These include Cambridge, Ipswich, Nottingham and Skipton building societies.  Clare Francis, mortgage expert at MoneySupermarket, said: “Our analysis shows the continuing difficulty facing first-time buyers and those with smaller deposits looking to find a suitable mortgage. "Despite the launch of the Funding for Lending Scheme which was designed to encourage further mortgage lending by the banks, there appears to be few signs that the initiative is helping those with small deposits. "It is still early days and we won’t see any data on the impact of the initiative until the end of the year, but so far there is little to indicate that the scheme will kick start the beleaguered mortgage market.”

Monday, 6 August 2012

WOW what a weekend have you ever been so proud to be British??  I know I haven't felt this much national enthusiasm for sport in my lifetime.  The unique opportunity the Olympics gives is the vast variety of sports on offer from a spectator point of view and it has to be said the BBC has done a magnificent job of broadcasting a very broad spread of these events even on their traditional headline channels.

It's a wonder any work is getting done such is the fervour and fever spreading throughout the country on this British wave of success.

As a proud Yorkshireman I would also like to pass on my congratulations to all the Yorkshire Athletes, the Daily Mail published an article stating that if Yorkshire was a country it would have more medals than Japan, Australia and South Africa!!

With all this coverage it's difficult to see underneath this success at the business headlines this week but here are couple of tit bits that people might find interesting -

Tesco Bank has launched 4 mortgage products at competitive rates however they won't go above 80% ltv and they come on a non advised basis so be aware if you decide to use these products they might not fulfil your mortgage needs - get some advice first from a qualified broker!  ING were an example of a bank that went down this road around 2-3 years ago and now they very quickly became aware that they need to ensure the customer is protected by being given the right advice hence opening up all their products to brokers.

Marks & Spencer have also announced that they have decided to start offering more banking facilities and are looking to produce their own mortgage range in the future.

The Bank of England is set to downgrade its growth and inflation forecasts as the eurozone crisis and slowing domestic demand continue to hit the UK economy.
The BoE is expected to reveal in its August inflation report on Wednesday that the UK will have almost no growth in 2012, a marked fall from the 0.7 per cent forecast made in its May forecast.
The forecast, which will be presented by Governor Sir Mervyn King, will also downgrade growth to 1.5 per cent in 2013, down from the 2.1 per cent forecast in May.
According to The Telegraph, King is also likely to say that falling oil and commodity prices and a slowing economy will pull inflation down faster than forecast.
The Bank is expected to say annual inflation will fall below the 2 per cent target by the end of the year, from its current level of 2.4 per cent.

For those on tracker mortgages this seems to be good news as interest rates are normally used to curtail inflation, if' its falling without adjusting it then there's no real reason to adjust it in the near future - 0.5% for sometime then!!

Friday, 27 July 2012

Mortgages Leeds: BTL - Good or bad idea?

Mortgages Leeds: BTL - Good or bad idea?: The latest so called industry research seems to be pouring cold water on BTL as a valid way of looking at alternate investment strategies fo...

BTL - Good or bad idea?

The latest so called industry research seems to be pouring cold water on BTL as a valid way of looking at alternate investment strategies for individuals with "The Model Works" claiming most people who bought BTL properties within the last 5 years will have potentially lost all their original capital outlay.

As most of you will be aware the last 5 years has seen the most dramatic impact on the UK housing market in the last 20 years with property prices falling signifcantly in the UK as whole (with the possible expection of London).

This fall though has also brought about the greatest opportunity for buying property.  Negotiation on property is now such that people are more "clued up" due to the press negativity and therefore are prepared to bargain harder for the properties they want.  None more so than those who are looking to invest in property.

This is perhaps where the Brian Hall's "The Model Works" theory falls over to some extent.  His research paints a bleak picture for those who have bought within the last 5 years however I would argue that as long as someone is looking at property as a long term aspiration for capital growth and income then anyone who has bought in this period will reap the rewards as long as they hang on in there.

That being said there is merit in what Brian Hall states in that those with only 1 property, who were perhaps accidental landlords (i.e. those people who couldn't sell a residential property but wanted to move anyway), are most at risk when it comes to maintenance costs and rental voids.  The right advice needs to be sought at the outset when considering these options.  People need to be made aware that the liability still exists and in "lean" months they need to be able to cover these costs from income or savings.

I still believe that BTL is a valid and ultimately profitable way forward for people looking for a diverse range of income streams and investments but care needs to be applied when looking at property in terms of location, cost, rent, demand, funding and above all else what happens if??

My advice is get the information regarding the above before committing and if you don't know where to find it or who to ask get in touch with me and I'll give you some pointers gratis!!

Thursday, 5 July 2012

Welcome to RA Mortgages News

I will be posting weekly updates with industry related information to this news page.