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Q&A

What effect has the liquidity squeeze had on the mortgage market?

At Savills Private Finance (SPF), our main expertise as independent mortgage brokers is at the top end of the market – houses in the £5 million-plus bracket. It’s generally more complicated getting a loan at that level anyway, because buyers may have bonuses to take into account or different sources of income, or a lot of their wealth may be tied up in fine art, stocks and shares. The liquidity squeeze (the shortage of money caused by current global economic factors) has made the situation even more complicated. Lenders are being more cautious now and are looking very carefully at applications.

What kinds of specific problems have buyers been encountering?

High loan-to-value mortgages are seen as particularly risky, for the simple reason that you’re committing less of your own money and there are fears in some quarters about falling prices pushing the effective loan-to-value even higher. Before buyers might have, for example, borrowed 85 per cent of £5 million, but now lenders may offer 80 per cent, depending on circumstances. If you’ve got any form of blip on your credit history – perhaps a payment was late because your bank messed up a direct debit – lenders will take more notice of this than they would have done before. The level of bonuses is being more closely scrutinised. We’re certainly seeing more people who have struggled to get a competitive deal by going direct to their usual lender coming to us for assistance.

What help can SPF offer?

The value we add is that our brokers deal with these kinds of situations all the time, so they know which lenders to approach to get a deal that’s appropriate for a client’s circumstances. A problem borrowers have is that if you approach several lenders yourself, each will do a credit score and that will appear on your credit file. Even if they don’t lend to you, that will be recorded and your credit rating won’t be as good as it was because the searches have been made. It looks like you’re desperate for funding. Also, when it comes to borrowing £5 million-plus, the lender’s decision is made on a case-by-case basis, so if your broker has a good relationship with the lender, they should be able to argue your case or present it so that you get the loan-to-value you want and a competitive rate.

How is the liquidity squeeze affecting the buy-to-let mortgage market?

Caution is also extending to the buy-to-let market where some lenders are tightening their rental criteria. Some require the rent to cover the mortgage and leave a surplus of around 20 per cent to cover maintenance and other expenses. Fees have increased and some of the best rates now have hefty fees of as much as three per cent of the mortgage amount.

The good news for buy-to-let investors is that there’s still a lot of demand from tenants and rents are rising for the first time in quite a while. Nevertheless, the market may be better suited to experienced investors than novices at present.

Have you any other advice for buyers?

It’s important to have a sense of urgency this year. We’ve certainly had problems with clients who have seen rates they like the look of, but have perhaps taken a while to make a decision and then the rate has gone. Some deals have been pulled within days of coming on the market.

SPF is authorised and regulated by the Financial Services Authority.

A tight completion schedule

Speed is of the essence when buying an in-demand property. This was certainly the case for Effie and Tony Kassimiotis. The couple made an offer on a two-bedroom flat in Chelsea, West London, which had generated a lot of interest. The vendor agreed to accept their offer as long as they completed within 10 days. The couple were referred to Savills Private Finance (SPF) by the Sloane Street Savills office, one of the agents handling the sale. They already had a broker, but he was unable to meet the timescales required. Their SPF consultant, Adrian Anderson, met the deadline with a competitive mortgage deal, to the huge relief of the couple.

“My husband spoke to Adrian on the phone,” says Effie, “and the next day I had an 8.30am meeting with him: he asked me to bring along the necessary documents and if there was anything I wasn’t sure about he explained it to me. Within three days our mortgage had been approved. Adrian was amazing. He worked well with our lawyer and gave everyone consistent feedback,” adds Effie. “We missed out in the past because we couldn’t get the finance. Adrian made it happen this time.”

Insurance

Obtaining the right cover for your home, investment property and valuables is vital. Making sure you have enough of the right kind of cover can be a complex and time-consuming business. The expertise of an independent insurance broker can make life much easier and this is where Savills Insurance Services (SIS) can help. The team works with a panel of leading specialist insurance providers to achieve competitive and comprehensive cover for clients.

SIS specialises in arranging cover for:

• Buildings and contents insurance for homes valued at £500,000 or above
• Valuable articles
• Travel insurance
• Higher value motoring cover
• Landlord’s building and contents cover

For more information, contact Savills Insurance Services +44 (0)20 7330 8502