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Negative charge

Chatting to a family lawyer, she commented on the downturn in Middle England divorces. The main reason is lack of liquidity in the mortgage market.

Some divorcing couples have been unable to finalise a financial settlement due to reduction of equity in their main asset and lack of mortgage availability. This is true of the whole population, not just those divorcing.

We need change in the mortgage market. Many lenders have pulled out of the 10-15 per cent deposit bracket, leaving first-time buyers floundering.

I recently had a client who I referred to a high-street lender because I could not match the direct deal on offer. The lender inexplicably carried out six credit checks and then penalised the client with a higher mortgage rate because of the credit enquiries.

When the client complained about their treatment, the lender said their mortgage adviser had not given actual advice on the contract but purely offered a range of options, so it was nothing to do with them.

This behaviour is allowable under legislation but it is a copout. If a client takes out a mortgage through an adviser, whether tied or independent, the adviser should take the responsibility for the advice.

The other issue is the lack of assistance for clients in the negative equity trap, who are unable to remortgage to a better deal. The main saving grace is that most lenders’ standard variable rates are at a historically low level but there will be repossession trouble ahead when interest rates start to rise.

Coventry Building Society has led the way with a positive move by offering competitively priced fixed deals to existing customers who are caught in the trap. These clients are more likely to keep their mortgages under control, secure their homes and possibly be able to afford overpayments to reduce the debt. We need more of the same from other lenders.

Institutions which offered mortgages in excess of 100 per cent by way of mortgage and additional unsecured loans need to reconsider the structure of those products if they have not already done so.

One lender increases the rate by several per cent on the unsecured loan element at the end of the original deal, whether the client remains with them or not. There may have been a good reason for this at product development stage but it may not be so appropriate now, leaving the client stuck.

There is room for improvement, from a product and advice perspective. We need trust and liquidity in the market and innovative deals to help those in disadvantaged situations.

Fiona Sharp is a senior consultant at Almary Green Investments


Phoenix in row over renewal cash

An adviser has hit out at Pearl owned-Phoenix, claiming the firm has stopped paying renewal commission on a client’s Scottish Mutual policy and tried to deal with them direct.

In with the new

With much positive sentiment these days, opportunities are presenting themselves on a number of investment fronts. By no means is everyone yet convinced of the current rally and there is debate over the asset class of choice but adding to the plethora of choice for investors are a number of new funds – and not just straightforward equity funds.

Banks steady FTSE

The FTSE 100 opened at 4,330 today and after a rollercoaster ride morning managed to hold onto gains in afternoon trades.

Johnson Fleming is a finalist at UK Pensions Awards 2016

The UK Pensions Awards shine the light on excellence and recognise the advisers, providers and investment managers that offer the highest level of innovation, performance and service to occupational pension schemes and their members. This year’s awards looked at advisers and providers across 31 different categories and were rigorously judged by a panel of senior […]


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