Mortgage broker promotes low rate for home buyers
The owner of the property portal, propertyskipper, quietly launched what may be Bermuda’s only mortgage brokerage and has a current promotional offer of an all-in, 5.25 per cent mortgage, fixed for five years.
The man behind the offer is former banker, Peter Goodall, who named the intermediary, Morston Financial. He said he opened the company last year for several reasons.
“We believe we have an incredibly powerful platform in propertyskipper to both promote mortgage rates and to bring more clarity to the mortgage market,” he said.
“We work with financial institutions to promote specific offers or products such as the current promotion of a 5.25 per cent mortgage, fixed for five years.
“It would be part of a 25-30 year mortgage, and after the first five years it would move to the prevailing variable rate, depending on where interest rates are in five years.
“At the end of the five-year mortgage, the customer is free to remortgage or make balloon payments without penalty.
“This is a fantastic product in the current environment where we are likely to see interest rate increases as the global economy recovers from the pandemic.”
While Goodall said it could be reassuring for first-time buyers, he said the product had appealed to a wide demographic.
“Many of our clients recognise now is a good time to secure their mortgage rate. We’ve heard from the Fed, ECB and Bank of England about the inflationary pressures that are resulting and we are likely to see a period of interest rate rises as attempts are made to keep this inflation transitory, rather than permanent.
“Securing your mortgage for five years ensures that whatever happens to interest rates for the next five years, your monthly payments won’t change. This would provide comfort for many purchasers or homeowners looking to remortgage.
“We have received applications from first-time buyers, customers looking to remortgage or extend their property. as well as clients looking to release equity from their property to purchase other assets.”
Morston Financial currently operates only in Bermuda but the firm also offers UK “expat” mortgages to Bermuda residents.
The company has found substantial interest from Bermuda residents looking at buy-to-let investment property in the UK, purchasing of second homes in the UK and also Bermudians looking to purchase property in conjunction with their children who are studying or working in the UK.
Goodall started propertyskipper in Bermuda in 2013 and has grown traffic locally every year since. He launched it in Guernsey in 2016, BVI in 2018 and Jersey in 2019.
He said: “We advertise estate agents property listings – making it convenient for house-hunters to find all the islands’ property for sale or rent in one place.
“In Bermuda, we are the most visited property website with over 70,000 visits per month.”
Goodall’s banking background includes working for ABN Amro in London, and later, HSBC in Bermuda.
“I’ve always wanted to add a mortgage element to propertyskipper,” he said. “It makes sense ultimately for house-hunters to be searching for property and mortgages in the same place. They do, after all, go hand in hand.
“Over the next few months we will be fully integrating our mortgage platform on to propertyskipper allowing users to see live rate examples, monthly mortgage costs of properties they are looking at and quick application and mortgage inquiry capabilities.”
He said: ”We work with lenders primarily on facilitating specific products. At any one time the difference in a variable mortgage rate in Bermuda between the different lenders for an individual may not be largely material.
“But when a lender has a specific product like the 5.25 per cent, fixed for five years, this is a real differentiator and it has, unsurprisingly, attracted a lot of attention.
“We have had a significant number of inquiries on this product. We hope to have some other new products launching in the next few weeks.
Clients have a single point of contact through their initial application, and there have been examples of same-day mortgage offers. Morston seeks to make the process quick and efficient.
Goodall said: “We do not charge clients for our service, the financial institution pays us on completion of your mortgage – it is therefore in our interest to provide you with the very best service that we can.
“Also, we provide transparent mortgage products to the market like the 5.25 per cent, five-year fixed product.
“There are examples of when lenders may not promote a mortgage offer themselves, but use a third-party broker such as ourselves to promote a certain product. Our examples of recent rates are always available on our website.
“I think Bermuda is a very different market to the UK. The banks are often fortunate to have a loyal customer base – people who have banked with the same institution all their lives.
“House buyers may not always consider looking at other options for a mortgage from what their own bank is offering. An active broker that is promoting rates and offers hopefully makes house-hunters look up to see what else might be available on island.
Goodall said that Bermuda and UK mortgage rates were quite different and there are a number of reasons why. Unlike Bermuda, there is a volume of lenders in the UK, not just the established banks.
He said: “There are building societies, private banks, new challenger banks, as well as specialised lenders. In the UK, there is also a secondary mortgage market, which is both large and liquid, allowing lenders to sell off their loan books.
“There are new fintech lenders in the UK being funded by large institutions to originate mortgages in specific segments of the market – the UK property market is significantly more liquid than here in Bermuda and lending has attracted a lot of capital, which in turn puts downward pressure on rates.”
With regard to the cost of a Bermuda home, he said he has identified trends through propertyskipper.
“Like any desirable location,” he said, “ There are large properties with large price tags, but this is the same as other islands – we have $10m-plus properties advertised in Guernsey and $20m-plus properties advertised in BVI and Jersey.
“Bermuda has also not witnessed the same house price inflation as some other markets recently – for example in the year to September 2021, Guernsey saw house prices climb 19 per cent annually.
“Also take London – according to estate agent Foxtons the average price for a three-bedroom property in central London is now £1.7m or around $2.3m – on a square footage basis I imagine you would get more property here. It is also difficult to compare markets where wages, taxes, build costs and liquidity is different and importantly home ownership rules are very different.”
There are increasing suggestions that interest rate movements could come in weeks, as early as March. How does Goodall see that affecting the market?
“Some analysts believe there could be four hikes in interest rates by the Fed this year. Firstly, it’s a great time to lock in your mortgage rate and the five-year fix product at 5.25 per cent does just that, while it’s still available.
“As an intermediary, we will continue to work with lenders to provide competitive products to the market, but I agree, we are likely to see mortgage costs increasing.
“How does it affect mortgage seekers? Most analysts agree that while there may be a number of interest rate increases this year, it is likely to be steady, quarter-point rises rather than sharp increases.
“Mortgage seekers should be aware, particularly on variable rates, that their mortgage costs are likely to increase and to make sure they are comfortable with both the current monthly repayments and also the likely increased repayment levels further down the line.”