Marketwatch 05/10/2009

5 October 2009

Jonathan Cornell Head of Communications First Action Finance

Swaps had a mixed week. One-year money increased a little whereas longer-term swaps fell sharply. Three-month LIBOR also fell by 0.02% to 0.54%.

1-year money is up 0.03% at 0.87%
2-year money is down 0.07% at 1.83%
3-year money is down 0.12% at 2.52%
5-year money is down 0.16% at 3.24%

Well done to The Mortgage Works which has reduced some buy-to-let fixed and tracker rates. There are now low-fee options for some of its fixed rates as well as a new 30-month fixed rate.

It also has a let-to-buy range for first-time landlords and its rental calculation has changed. For fixed rates the calculation is 125% of the pay rate or 4.99%, whichever is higher.

For trackers the rental calculation is 125% of the pay rate plus 0.5% or 4.99%, whichever is higher.

At first glance I was pleased to see the Financial Services Authority launching measures for firms that have sold payment protection insurance that will require them to reopen 185,000 rejected complaints and reassess them against the new guidelines.

But it looks like the timescale is tight for broker firms particularly with regard to retrospective action. There's a fine line between trying to ensure consumers who have complained have been treated fairly and placing an unrealistic burden on companies.

Royal Bank of Scotland Intermediary Partners has launched some shared exclusives for networks which are different from the products sold in its branches in an effort to get around selling deals that are undercut by its branches.

RBSIP wants to support brokers as much as possible so it is admirable to see it trying to find ways to do so.

The 2.99% two-year fixed rate product Lloyds TSB branches are selling is interesting. In fact, it appears outstanding until you notice the 2.5% fee.

But even when you add this to the product the pay rate per year becomes 4.25%, which is probably market-leading for a no-fee two-year fixed rate.

One major newspaper seems to have got hold of an internal memo which suggests the product may not be available for everyone and that it is just a useful conversation-starter.

I'm not sure why this is newsworthy. If there was one product which was suitable for everyone we'd all be out of a job.

And anyway, almost every company with multiple products tries to market its cheapest to generate interest.

The British Bankers' Association has published an interesting report in an attempt to educate borrowers on the cost of mortgage funding.

It argues that the cost of funding for mortgages is not linked to LIBOR but to the savings rates paid by banks.

It suggests that banks are paying savers 2% to 3% more than the Bank of England base rate for savings.

If you look at best buys for savings products there are rates that start at 3% for instant access accounts but I'm sure if you look at current rates being paid to savers they are substantially lower. Indeed, many savers aren't getting any interest at all.

Most savers don't churn their accounts every couple of months to find a better rate and the best rates are only available on newer accounts.

I'd love to know the average rate being paid for our nation's savings book. My guess is less than 2% and possibly even lower than 1%.

I was surprised to see Halifax deciding to stop borrowers taking out further advances within six months of completion.

Apparently this is to bring it in line with other lenders in the group but it seems unfair on those borrowers who took out mortgages a few months ago.

They do not know the rules have changed and they won't until they decide they need a further advance.