Digital Mortgages target Buy-To-Let market

Atom

AtomDigital Mortgages by Atom Bank, which has been offering residential deals for nearly two years, has now expanded in to the buy-to-let (BTL) mortgage market through an exclusive, pilot scheme.

Atom bank is regarded as the first in the UK to have been built exclusively for smartphones and tablets.

It began offering its two-year, fixed-rate residential mortgages through independent advisers in December 2016, shortly after the bank launched with two Fixed Saver accounts and an SME business lending product.

Residential mortgage customers are able to track changes in the progress of their mortgage when they have received a decision in principle (DIP) through the Atom app.

In the latest move, the initial product offering consists of two- and five-year BTL remortgages for landlords who have anything from four to 25 properties in their portfolios.

The two-year product is available at up to 75% Loan-To-Value (LTV) at 3.70% (2.95% above the base rate), while the five-year product is also available at 75% LTV, at 3.80% (3.05% above the base rate).

Both products command a 1% product fee and feature a maximum loan period of 25 years. Maria Harris, Atom’s intermediary lending director explains that as the bank’s mortgage proposition expands, the aim is to make mortgages both easy and transparent to buy while offering landlords a “great all-round deal”.

Harris believes this will transform the market, adding that this initial pilot with selected intermediaries will enable the bank to make improvements before rolling out the product to a bigger audience. Atom is also already working on increasing its range to include fixed-rate products.

Selected brokers will not be able to access early repayment charges and Atom says automated valuations may be used in certain cases to speed the process and keep the costs low.

In a separate development Atom and Newcastle University have announced they are conducting research into both how trust works in financial services and to look into developing ways for businesses to design better digital banking services.

The two institutions have set aside three years for the million-pound project, which has been dubbed “FinTrust”. It will involve experts in the fields of computer science, banking and psychology in order to understand why customers are reluctant to trust technology.

Atom and Newcastle are also trying to find parallels between digital design and behavioural science to bring the scope of Open Banking into focus. Atom’s officer in charge of innovation, Edward Twiddy, says that the research will inform Atom and help the bank enhance the design of future innovative products and services. An early application will be in developing the bank’s blockchain to build better mortgages.

Buy-to-let mortgages are specific types of mortgage for people who need financial assistance when they wish to buy and rent out properties. You can find out more with our Buy to Let Mortgage Guide

New lifetime mortgage to pay monthly income

lifetime mortgage

lifetime mortgageLegal & General’s new Income Lifetime Mortgage aims to give customers more flexibility when accessing the value of their property in later life

By paying customers a fixed monthly income the mortgage is aimed at people who want to supplement their income.

The new product aims to offer a mortgage solution for those people who would rather have a monthly income instead of a lump sum, or who have not been able to save the amount into their pension as they had hoped.

The lender believes this makes it compelling for those people who want to bridge a gap in their retirement income in order to be able to benefit from a standard of living in later life that is more comfortable.

The mortgage is designed so that the interest will roll up through the life of the loan. Then both the loan and the interest will be recouped by the lender when the property is sold after the last surviving borrower’s death or move into long-term care.

With Income Lifetime Mortgages compound interest’s effect is reduced because funds are released on a monthly basis, rather than as lump sums.

People aged 55 and over who own a property with a minimum value of £100,000 are eligible for Legal & General’s new Income Lifetime Mortgage. Those that take it up will be offered an interest rate that is fixed for life at the outset. Then the monthly income generated by the mortgage will run for a term of 10, 15, 20 or 25 years that is agreed and then cannot be extended.

When the fixed term ends so will the monthly income but interest will continue to roll up until when the mortgage has been repaid. Mortgagees can choose to end the income at any point, but when it is stopped it can’t be restarted.

Steve Ellis, L & G’s Home Finance CEO says that the mortgage will provide that little bit of extra income to pay for things like a day out with the grandchildren or weekends away in the country. Ellis adds that he and his colleagues know how useful this could be for keeping people “doing the things they love”.

He believes it’s a new option giving consumers a chance to enjoy the benefit of their housing wealth with a fixed interest rate for life, along with the security of a regular monthly income for as many as 25 years.

Ellis says that retirement lending  has “a bright future ahead for” and L&G is intent on seeing more people enjoying the positive role the value of their homes can play when they get older.

Finder UK offers a comparison of the UK’s mortgage providers so you can find the mortgage that would suit you. We have a simple guide to remortgaging and to help you de-code the jargon we have put together a handy A-Z glossary.

 

‘Green mortgages’ aimed at enhancing property energy efficiency

Green mortgages

Green mortgagesEnergy provider E.ON teams up with banking giant BNP Paribas to pilot ‘green mortgages’ that could save homeowners £380 a year.

The aim is to offer homeowners finance via their mortgage of their property. This innovative approach to financing property purchase will mean people who are moving, buying for the first time, or remortgaging their homes will be able borrow more through an ‘energy efficiency home improvement loan’ linked to their mortgage.

It is one of the many arrangements that are on offer for home buyers.  To navigate the maze finder UK has a guide to help you better understand how mortgages work and how you should compare the different deals that are out there.

Under the E.ON and BNP Paribas green scheme, the improvement loan financing would come from BNP Paribas Personal Finance and the managed services that install the appropriate energy efficiency solutions would come from E.ON.

According to the innovators, any improvements paid for by the loan could lead to a discounted mortgage rate when the property’s Energy Performance Certificate (EPC) is updated and the energy efficiency measures verified.

The new move comes after Bank of England researchers discovered that people who live in more energy efficient homes pose a lower credit risk.

Their data indicates that about 1.14% of people living in homes that are energy inefficient are in mortgage payment arrears, whereas only 0.93% of people in energy-efficient properties were behind on their payments.

The research concluded that a home’s energy efficiency is “a relevant predictor of mortgage risk”.

According to E.ON and BNP Paribas about 19 million households in Britain fall below the EPC Band C rating and by putting basic measures in place could save up to £380 a year.

E.ON UK CEO Michael Lewis says green mortgages could a “game changer in the delivery of affordable finance”. He is keen for home-owners to step into “energy efficient living”.

Claire Perry, the Minister at the Department for Business, Energy and Industrial Strategy who looks after the clean growth brief, says she is delighted to see businesses like E.ON and BNP Paribas Personal Finance seizing the multi-billion pound opportunity that exists to energise communities into tackling “the very serious threat of climate change”.

The finder UK mortgage pages can put you in touch with a mortgage adviser, give you access to online mortgage comparison, and allow you to browse the various rates available.

Is Slow-balization substituting for Globalization

Slobalisation
Slowbalisation
Slowing down: Scissors can be exported in 20ft-containers, hair stylists cannot

Globalization has dominated the world economy for years. But recent trends are indicating that many major economies are turning their backs on being drawn deeper together. The signs are that there’s a growing desire to be less inter-connected through global networks of capital flows, trade, and technology.

Global trade is becoming less advantageous. There are even cases where it is also on the way to being less feasible.

This is a major turnaround for what in the last half a century had been seen as the prevailing trend that would inexorably move in the same direction.

What is conspiring to slow globalization? The combination of geopolitical shifts, secular trends and trade tensions are just aspects of this story.

Tariffs are a very visible barrier to global trade, but other hurdles, including the US’s foreign investment review, are also diluting any business incentive to globalize, according to senior bankers.

In addition, changes in consumer preferences along with greater purchasing power in emerging markets are boosting regional trade over global trade. Technology is exacerbating these trends by enabling leaner manufacturing methods. The highly acclaimed Dutch trend watcher Adjiedj Bakas calls it “slow-balization”.

When it comes to investment, there are advantages and disadvantages. Barriers to global trade threaten to disrupt major businesses that rely on smooth flows including capital goods, semiconductors, telecoms, and automobiles – indeed any industries where technologies are sensitive and whose supply chains are globally diffuse.

However, increased localization may turn out to be a bonus for those businesses that don’t rely so heavily on foreign markets, and whose products have a critical economic or national security interest. Good examples of these “emerging regional champions” are China’s internet firms, and local payment processors as well as some smaller US internet operators.

SlobalisationGlobalization Goes Into Reverse

Even before trade tensions began to reassert themselves, secular winds of change were already blowing.

About 20 years ago, transportation and communication costs were decreasing and long-haul trade across the world’s oceans became prevalent. McKinsey Global Institute research shows that between 2000 and 2012 the share of goods traded between the same region’s countries dropped from 51% to 45%. This trend is now reversing and regional trade is again gaining traction.

Underpinning this are two things. Goods trade is now growing less fast than service trade. And the success of globalization has led to emerging market countries growing rich enough to be consuming more of the very goods that they have been selling.

In hindsight, it’s a natural evolution of globalization, and, according to McKinsey, the consequence is that between 2007 and 2017 the share of output moving across the world’s borders has dropped from 28.1% to 22.5%.

Trade Patterns Change Shape

Trade patterns are also being encouraged to change. McKinsey reports that the old lean manufacturing approach emphasizing low inventory levels -“just-in-time” logistics – is no longer as popular as it once was.

Now just 18% of the world’s goods trade is founded on labor-cost arbitrage. Indeed, McKinsey expects this share to shrink further as companies streamline their supply chains and adopt more automation.

This is very different from the turn of the century when a large number of businesses based decisions about supply-chains on the ability to source low-cost labor, even when it meant shipping supplies, components and finished goods all over the world.

A final aspect that is also making globalization less attractive is technology. Countries are now thinking differently about the link between economic interests and their national security. The US, for example, is now defining its sensitivity in a much broader manner.

So, taking automobiles as an example, the technology on which driverless cars depend is highly likely to have military applications, and the US doesn’t want foreign powers – least of all China – having any knowledge or influence in this field.

Taking Advantage of Slow-balization

Shifting tides create complex dynamics, but investors can still start thinking about the broad implications by seeking answers to a couple of key questions:

  • How sensitive is a business’s product to a particular country’s economic or national security?
  • What is the reliance on global supply chains, and does this make sense anymore?

Those businesses that are most vulnerable to the effects of “slow-balization” are the ones dealing in economic and security sensitive technologies and still depending on a supply chain that is globally diffuse. Think European capital goods, autos, telecoms, IT hardware, and semiconductors.

It’s less easy to assess internet companies. While the biggest consumer internet businesses are facing higher costs of doing business because platform health and data security are playing bigger roles, smaller rivals could find they benefit for similar reasons.

It’s highly likely companies dealing in sensitive areas, but not closely entwined with the rest of the world, will be better placed. China’s internet firms, for example, are vital for that country’s economic security and outlook but their business has been focused almost exclusively on China itself.

Another area that is worth considering from an investment perspective is payments. Payment firms could be net beneficiaries because they are tuned into issues of tax collection and banking functions as well as national security, while digital payments is unstoppable irrespective of global trade. As a result, payment schemes that are domestically developed could get the edge.

Factory image by kerttu from Pixabay

Salon image by bk_numberone from Pixabay

Easy access rates edge up after Wall Street titan launches high-yield savings account

Savers finally benefit from improving rates following the 1.5% rate from the Marcus account launched online by Goldman Sachs in September.

RCI Bank, which is French-owned has now raised its Freedom Account’s rate to 1.37% and, although it’s typical for banks to only apply raised rates to new customers, the RCI Bank account is giving all savers the benefit of this new increased rate.

The move has been matched by Ford Money, which is also paying the same 1.29% rate to all its Flexible Savers. Smaller building banks and building societies have been scrambling to compete with Marcus’s 1.5% deal since it was launched on 27 September because it pushed easy-access rates to their highest level for two years. The online Marcus account also includes a 0.15% fixed bonus payable for the first year.

Charter Savings Bank launched its new Easy Access account, which pays 1.4%, within hours of Marcus’s arrival. Then, Shawbrook Bank quickly followed by raising its rate for new Easy Access savers to 1.4%. And in the interim, Paragon Bank has also launched a new Limited Edition Easy Access account issue, at 1.37%, while OakNorth Bank’s latest Easy Access account is paying 1.3%.

Kent Reliance Easy Access and AA Savings Member Saver are also up to 1.37%. No restrictions apply to the number of withdrawals that can be made your money is covered by the UK Financial Services Compensation Scheme (UKFSC) to the value of £85,000, or £170,000 on joint accounts.

If you are opening an account, whatever your savings goals, finder UK can help you find one to suit you. The rates that are available on the High Street may be slightly higher, but the arrangements tend to be much more complicated. For example, the rate on a Co-op Bank’s Britannia Select Access Saver issue 9 has been raised to 1.2%, but savers are limited to just four withdrawals in each calendar year.

Other High Street deals include Virgin Money Easy Access Saver at 1.16%, Coventry Building Society Easy Access Saver 5 1.15%, and Family Building Society’s Branch Saver is paying 1.21%. It’s worth noting, however, that Family BS has now also launched a new Premium Saver, which as well as being available online, can be opened at its Epsom, Surrey branch or through the post. It pays 1.45% on a minimum £5,000, but it’s only going to be possible to add money until 7 December this year.

Prior to the launch of Marcus, the average rate offered by competitors was just 0.55%.

Picture: Shutterstock

Money management app Emma adds cryptocurrency exchange integration

banking

Emma, the app that helps people avoid overdrafts and identify unnecessary subscriptions, now offers control over other finances including cryptocurrency assets.

London-based Emma Technologies calls itself the “banking app for millennials” and has already integrated with a number of UK-based challenger banks including Starling BankMonzo and Revolut.

But now, by integrating with a number of cryptocurrency exchanges Emma has become the only app that allows UK consumers to see their cryptocurrency assets along with other more traditional banking products for free.

In a few taps, Coinbase, Bittrex, Binance, Bitstamp, Kraken, Bitfinex and individual bitcoin and Ethereumaddresses, can connect to Emma allowing users to access all their banking and investment data under one secure app.

Emma CEO and co-founder Edoardo Moreni says this represents a first step towards account aggregation not only referring to banking products, but also “several financial services”. Emma, which successfully received Financial Conduct Authority (FCA) approval at the start of the year, has since been steadily making Open Banking integrations with other digital banking players.

The banking app for millennials who use either iOS or Android devices is a mobile-only solution that aims to help people avoid overdrafts, cancel unwanted subscriptions, keep track of debt and save money. The integrations with Starling, Monzo and Revolut are helping the various banks’ customers understand their money and more easily manage it. Starling Bank’s Chief Platform Officer, Megan Caywood, says the Emma link is a boost to the startup’s ability to offer customers a wider choice of financial products.

The integration works on the basis that, in the modern world, people tend to have multiple accounts, many contracts, several credit and debit cards and are thus challenged when it comes to keeping things under control. Emma wants to make money management easy and much more straightforward by enabling consumers to access all their personal finance information at the push of a button.

Emma (whose name derives from an anagram of the initials of its founders, Antonio Marino and Edoardo Moreni, who met at the Manchester University) was given the nod by the FCA just over a month from the launch of its beta service.

Emma’s ultimate goal is the building of a private wealth manager driven by artificial intelligence. It is being propelled by the advent of Open Banking whose launch coincided with that of Emma. Open Banking means that, with the account holder’s permission, banks are able to share financial information, including transaction histories and spending patterns, with third-party providers who are also FCA regulated.

Digital banking is evolving all the time. With Finder UK you can read the latest reviews, browse apps and discover more about the latest developments.

Yolt is the first independent app to connect to the UK’s largest high street banks

Yolt, the app that allows customers to view credit card, banking and savings accounts in one place, has become the first third-party provider to tie up with all nine of the UK’s biggest retail banks.

Along with fintech challengers Starling and Monzo, 18 banks are now connected to Yolt, with users able to access a total of 35 different cards and banks. Yolt users can see the shops where they spend the most money. They can also set budgets and plan for upcoming payments as well as seeing how much cash they have available until payday.

Yolt is now the largest user of Open Banking application programming interfaces (APIs) that enable the app to perform about 1.5 million calls every week. APIs are sets of clearly defined ways for various components, in this case accounts to communicate between themselves.

Key features of the Yolt app are its spending tracker, easy budget settings and auto-categorisation.

The app has been working closely with the UK’s nine largest banks and building societies* since the start of 2018 to make it possible to involve all the big retail banking operations. Yolt is the first money app to make a complete Open Banking API link with the Lloyds Banking Group.

Yolt’s COO Leon Muis says that connecting with all the largest banks through APIs is “a huge milestone”. Muis points out that the Open Banking ecosystem has made it possible and for making users able to stay at the front of the Open Banking revolution and empowered to do more with their own money.

He accepts that the public still need educating about Open Banking, which is aimed at providing greater financial transparency for account holders, but believes that as more people get involved, consumers will see the benefits of having increased control over their financial information.

Yolt was launched in 2016 as a registered trademark of the Amsterdam-based ING group. Does it make it easier to manage your finances? Read this review to see what finder UK says. To find out exactly how Open Banking may help you take a look at this analysis.