November 2014

Computershare has received official approval from the FCA

for the acquisition of HML

HML has won two MFG Awards and been Highly Commended

for a further two

Repossessions declined to 5,000 during Q3 2014, the CML

says

HML News

The Financial Conduct

Authority has approved the

purchase of HML by global

financial services company

Computershare.

HML has been purchased by Computershare

in order to extend its mortgage servicing

business into the UK. Computershare plans to

invest in the mortgage servicer, grow it and

provide the scale and capital to allow it to take

advantage of developing opportunities.

Computershare provides financial and

governance services across 22 countries on

five continents and employs more than 15,000

people worldwide, with an annual global

turnover of approximately US$2 billion (£1.2

billion), and already owns a mortgage

servicing business in the USA. In the UK,

Computershare is based in Bristol, Edinburgh,

Halifax, London and Jersey; and will retain

HML‟s office locations.

Andrew Jones, chief executive

officer of HML, said: “Computershare

becoming our parent company is excellent

news for the business and those who work at

HML, as well as our clients and their

customers.

“Computershare is committed to investing in

and growing HML, allowing us to continue to be

the leading third-party mortgage administration

company in the UK and Ireland. With the desire

to grow the business and develop the specialist

expertise that HML has, it‟s clear to me that

culturally we are much aligned with

Computershare.

“HML has had 25 years of successfully

delivering value to clients, customers and our

people and this deal will secure the future of the

company for many more years to come.”

Naz Sarkar, regional chief executive

officer of Computershare, said: “We‟re

pleased to welcome HML to the Computershare

group and I‟m delighted that Andrew and his

senior team will be remaining with the business.

Several experienced Computershare staff will

be relocating to Skipton to supplement the HML

team and assist with the transition to

Computershare. Together, we‟re excited at the

opportunities that lie ahead.”

HML News

HML has won two MFG

Awards.

The company took home the Customer

Service/Treating Customers Fairly Award in

the Mortgage Servicing Companies category and

the Best Debt and Arrears Strategy Award.

HML also achieved Highly Commended in both

the Innovation (Non-Lenders) and Best Use of

Technology (Non-Lenders) categories.

The two award wins follows last year‟s success,

where the financial outsourcer won three MFG

Awards in the Best Use of Technology, Innovation

and Best Debt and Arrears Strategy categories.

HML has won the competitive latter category for

the third year in a row.

Andrew Jones, chief executive officer

of HML, said: “It is fantastic news that HML

has won two awards and has been awarded

Highly Commended in two more categories. The

fact we have been recognised for our customer

service and arrears and debt management is

particularly important, as we continue to be a

market leader for quality within the mortgage

industry.

“Taking home the Best Debt and Arrears Strategy

Award for the third consecutive year is testament

to our focus on appropriate outcomes for

customers, which lies at the centre of our clients‟

debt and arrears management strategies.”

Best Debt and Arrears Strategy

HML won this award for its two-pronged arrears

management approach for a UK client that

wanted to support those borrowers at risk of

falling into arrears and increase payment on

underpaying accounts.

Each customer‟s case was managed in

accordance with their particular circumstances,

with the appropriate support applied.

HML implemented call campaigns targeting those

borrowers who, based on its advanced analytics,

were considered to be most at risk of falling into

arrears in the near term. Early contact is key, as it

gives borrowers more time to assess their

finances and work towards a sustainable solution

with their lender.

Ian Carr, portfolio servicing director at

HML, said: “By enhancing customer

engagement through early contact, customers can

enjoy better financial outcomes and targeted

support. It is fantastic that our arrears

management strategy has once again been

recognised among respected industry peers.”

Customer Service/Treating Customers Fairly

HML won this award for Destination 100%, its

evolutionary journey to a total quality concept in

the third-party mortgage administration sector.

HML wants to set a market-leading quality

benchmark and support the financial services

sector to be preventative against poor customer

outcomes rather than reactionary, which the sector

traditionally is.

Pushing the quality boundaries in the UK and

Ireland‟s outsourcing sector reduces the tolerance

for poor customer outcomes, something which is

deemed as good practice by the Financial

Conduct Authority.

Richard Wade, customer service

director at HML, said: “It is testament to the

hard work of everyone at HML that our drive to be

a market leader for quality has been recognised by

such an esteemed publication as Mortgage

Finance Gazette. This stands us in good stead to

further push the market‟s quality boundaries in

2015 and beyond.”

HML News

76% of people think the

base rate will rise after the

General Election. In October, HML launched its base rate survey

and asked when people thought the Bank of

England would increase the base rate.

The choices were:

• During Q4 2014

• During Q1 2015

• During April 2015

• During May 2015

• After the General Election

Despite the then optimism of Philip Shaw from

Investec who said a rate rise could occur in

November, none of the respondents thought

the 0.5% rate would increase during Q4 2014.

Back in October, Mr Shaw said the rise could

happen in November “not least because we

struggle to envisage the committee either

beginning to tighten in the first few months of

next year, so close to May‟s General Election,

or waiting as long until the summer”.

In an update earlier this month, Mr Shaw said

he now believes the first base rate rise will

occur in August 2015 due to a “cautiously

dovish tone” within the Monetary Policy

Committee.

The survey found that 8% of respondents

thought the rate could rise during Q1 2015 and

16% believed it may happen during April 2015.

However, as Mr Shaw alluded to, none of those

who responded to the HML survey thought a

rate increase would happen in May, perhaps

with this being too close to the General

Election.

Instead, 76% stated that the base rate would

rise after the General Election.

Comments included:

“I think too many factors are indicating

uncertainty in the market and therefore I

anticipate that decisions on interest rates will be

delayed until some of the market trends can be

assessed and analysed. I think the view from

the Monetary Policy Committee will be to not

rock the boat at this point in time.”

HML News

Paul Smee, director-general

of the CML, provides his

thoughts on the recent

Annual Conference.

As we planned the 2014 CML Mortgage

industry conference, one thought was

uppermost in my mind. How on earth would we

fill the gap previously filled - to overflowing - by

MMR? MMR, the consultation(s); MMR, the

implementation; MMR the unintended market

consequences. Always good for a slot or two,

since the start of the decade.

And now in 2014, the conference could no

longer rely on this staple prop to fill the day. If

only there had been a few more glitches in the

industry‟s implementation, we could have

wrung another hour or two from the subject.

True, we listened to an excellent speech from

Linda Woodall on regulatory issues in general

(and was I the only delegate to detect the

Financial Conduct Authority (FCA) now has

more troublesome fish to fry than mortgage

lenders?). The text on the FCA website is well

worth a read.

But then we could actually move on to look

at the future and some bigger pictures.

Nigel Wilson, Chief Executive of Legal and

General, set the visionary tone with a really

inspirational description of how he wants to

see more houses built for all tenures to

occupy; he placed housing at the heart of UK

social policy, its rightful place but one from

which it keeps getting bumped by more

transitory concerns. I was amazed that it now

ranks eleventh on a list of public worries in a

recent IPSOS Mori poll.

CML Chairman, Stephen Noakes of LBG,

chipped in to remind us of the scale and

importance of the mortgage sector. The total

stock of UK mortgages apparently is larger

than the GDP of Canada; a statistic which is

going to be given a lot of airtime by me in the

future, (but probably not if I am asked to speak

in Canada).

It is so important that the sector appreciates

quite how central its role is to economic life in

the UK. The minutiae of how business is

conducted is a worthy subject but should not

be all consuming. We will need to set out

where and how the sector contributes to the

national wellbeing, especially as we approach

an election year.

Looking to the future

There are many ways of looking to the future.

One of the best is to identify new talent. In a

new initiative, the CML ran a rising stars

competition and attracted some really

interesting answers to the statement “If I could

improve the mortgage industry, I would….”.

Four finalists whose proposals really stood out

were quizzed on the CML stage and Michael

Rhodes of Leeds Building Society won the

popular vote and the top prize with his idea for

a new sort of tax-incentivised, deposit-builder

savings scheme. Well done to him and all the

other finalists, Neil Hoare of Personal Touch,

Lynn Jones of Kensington Mortgages and Ben

Morgan of RBS.

I hope that all the excitements of the next

regulatory onslaught - the Mortgage Credit

Directive - do not get in the way of an equally

forward-looking conference in 2015.

Industry Statistics

*Date reflects what the statistic was during that period, rather than

when the statistic was published

** Figure has since been revised downwards to £18 billion

OCT ‟14 SEP ‟14 AUGUST ‟14

Consumer Prices Index 1.3%

1.2%

1.5%

NOV ‟14 OCT ‟14 SEP ‟14

BoE Base Rate 0.5% 0.5% 0.5%

JUL-SEP „14 JUNE-AUG „14 MAY-JULY „14

Unemployment Rate (ONS) 6.0% 6.0% 6.2%

OCT „14 SEP „14 AUG „14

Halifax House Price Index Down 0.4% on SEP Up 0.6% on AUG Down 0.1% on JULY

Average price Average price Average price

£186,135 £187,188 £186,270

Gross Mortgage Lending (CML) OCT „14 SEP „14 AUGUST „14

Up 5% on SEP Down 1% on AUG Down 5% on JULY

£19 billion £17.8 billion £18.6 billion**

Home Repossessions (CML) JULY-SEP ‟14 APR-JUNE ‟14 JAN-MAR ‟14

5,000 5,400 6,400

Industry Statistics

Consumer Prices Index

The CPI increased by 0.1% on September to

1.3% in October. Smaller falls in transport

costs contributed to the rise in the rate. This

was partially offset by reductions in food and

motor fuels prices.

BoE Base Rate

The Bank of England kept the base rate at

0.5%, as well as the stock of asset purchases

at £375 billion.

Martin Weale and Ian McCafferty split the

MPC 7-2 and wanted to increase the base rate

by 25 basis points.

Halifax House Price Index

The average price of a home decreased by

0.4% between September and October to

£186,135. Values in October were 8.8% higher

than the same month in 2013.

Housing economist at Halifax Martin

Ellis said: “Activity continues to decline with

mortgage approvals in September falling for

the third successive month to a 14-month low,

whilst home sales are at their lowest level

since October 2013. The associated

weakening in demand has brought supply and

demand into better balance.

“The economy is, however, continuing to grow

at a healthy pace and employment is still

rising. These factors should support housing

demand over the coming months. However,

while the chances of an imminent interest rate

hike may have receded, a recent Halifax

survey found that many borrowers are

concerned about the impact a rise could have

on their monthly mortgage repayments over

the next 12 months. This concern is likely to

curb buying intentions.”

Unemployment Rate

The unemployment rate for July to September

stood at 6%, representing 1.96 million people.

There were 30.79 million people in work, an

increase of 694,000 compared to a year earlier.

Gross Mortgage Lending

Gross mortgage lending stood at £19 billion in

October, 5% higher than September and 8% up

on the same month in 2013.

CML economist Mohammad Jamei

said: “While the housing market has cooled in

recent months, mortgage lending continues to

be underpinned by positive factors. With

expectations of the first interest rate rise moving

to the fourth quarter of next year, as well as

positive forecasts for growth, pay and

unemployment, there is potential for market

activity to gain traction in the new year.”

Home Repossessions

Repossessions declined to 5,000 for Q3 2014,

down from 5,400 during the previous three-

month period, the CML revealed.

This is the lowest number since quarterly

records began in 2008.

Paul Smee, director-general of the

CML, said: “Encouragingly, recent research

also suggests that many households are

preparing themselves for the prospect of higher

interest rates, so we expect any uptick in

payment difficulties to be relatively muted if and

when rates do begin rising.

Top News Stories

.

Yorkshire and Clydesdale

Banks are set to float on the

market.

According to a report in the Daily Telegraph,

National Australia Bank is currently planning for

a £2 billion stockmarket float of the lenders. In

addition, it noted that Morgan Stanley has been

appointed to lead the listing.

This follows National Australia Bank posting a

fall in profits, partly contributed to by

compensating customers for mis-sold PPI and

having to write-off billions of pounds of bad

debts.

For the full year to 30 September 2014, National

Australia Bank reported group net profit of $5.3

billion (£3.4 billion), a fall of 1.1% - or $60

million.

Andrew Thorburn, chief executive of

National Australia Bank, told

reporters: “We have an intention to exit the

UK, we think there's an opportunity now that

probably wasn't there before. What we are

signalling is that's our intent, it is an absolute

priority.”

In the full year to 30 September 2014, pre-tax

cash earnings at Yorkshire and Clydesdale

Banks climbed by 90% to £203 million.

Underlying profits, meanwhile, stood at £283

million, a 7% increase.

IMLA has voiced concerns

about older borrowers

securing a mortgage.

A new report notes that concerns about future

lending regulation could see older borrowers be

blocked from obtaining a mortgage.

The association said with many private sector

employees having defined contribution

pensions, this can mean it is difficult to

accurately predict pension income. As a result,

some lenders are unsure of mortgage

affordability into retirement.

In addition, IMLA said the Mortgage Market

Review wants lenders to ensure mortgages are

affordable for the lifetime of the loan. Therefore,

many lenders see lending into retirement as too

risky.

As such, many borrowers who do not purchase

a home until their forties will see their options

significantly reduced.

Peter Williams, executive director of

IMLA, said: “This issue goes beyond the

transitional arrangements for existing borrowers

and means that efforts by the lending

community to follow the spirit of MMR with new

customers are being hampered by the very real

concern that it may be cited against them in

future.

“Uncertain pension incomes make it difficult for

lenders to assess mortgage affordability in later

life, and this may become even harder when the

new pension freedoms take effect next year. To

avoid a situation where regulation brings about

the extinction of mortgage terms that stretch into

retirement, we need clarity and confirmation

about where the boundaries of responsible

lending truly lie.

“MMR has been a big step forward, but having

put a strong framework in place for the future,

attention must now focus on honing the

template so the pendulum doesn‟t swing too far

towards conservatism. Wherever possible,

protecting consumers from themselves should

not rule out options that would benefit them

financially and meet an obvious need.”

Top News Stories

The housing market is

cooling, with fewer house

purchase approvals.

New figures from the British Bankers‟

Association show that approvals stood 16%

lower in October than the same month in 2013.

Despite this, annual unsecured borrowing

growth is at 2.8%, which represents the

highest rate since 2008.

Richard Woolhouse, chief economist

at the BBA, commented: “Despite a

softening in the housing market, consumers

continue to show confidence in the economy

with unsecured borrowing at its highest growth

rate in years. At the same time we all continue

to make the most of new ISA rules, stashing

more in our savings accounts over the course

of the last year.”

New York has overtaken

London as the leading

global financial centre.

A survey by Kinetic Partners of financial

professionals found 59% cited New York as

the top financial hub, compared to 38% who

stated London.

Two years ago, almost two-thirds of

respondents ranked London in the number one

spot.

Over half of respondents also said that in five

years‟ time, Shanghai would be the leading

emerging market centre.

Nicola Sturgeon has become

the leader of the Scottish

National Party (SNP).

In her post-election speech, the first

minister said: “It will surprise no-one to hear

that I will always argue the case for more

powers - indeed, the full powers of

independence - for this parliament.”

She also paid tribute to Alex Salmond, who

resigned in September after the electorate

returned a No outcome following the vote for

independence.

At the time of resignation, Mr Salmond

said: “I am immensely proud of the campaign

which Yes Scotland fought and of the 1.6 million

voters who rallied to that cause by backing an

independent Scotland.”

The new SNP leader thanked Mr Salmond for

his support over the past 20 years.

The UK‟s GDP for Q3 stood

at 0.7%.

The Office for National Statistics has released

the second GDP estimate, which remains

unchanged after last month‟s preliminary figures

were published.

Output experienced positive growth in all four of

the main sectors, with construction and services

seeing a 0.8% rise. Manufacturing grew at a

slower pace at 0.4%.