Marketwatch

8 March 2010

Swaps increased last week, reversing a few weeks of falls. Three-month LIBOR is still at 0.64%.

1-year money is unchanged at 0.93%
2-year money is up 0.1% at 1.64%
3-year money is up 0.09% at 2.2%
5-year money is up 0.07% at 2.99%

Woolwich has temporarily withdrawn the majority of its 70% LTV deals to manage service levels.

These include the two-year fixed deal at 3.79%, the three-year product at 4.49% and the five-year deal at 5.49%.

It is also withdrawing its lifetime tracker at Bank of England base rate plus 2.79% with no fee and its offset tracker at base rate plus 2.39%.

This is a shame but hardly surprising. These rates have been competitive for a long time and Woolwich’s processing has been pretty good recently. It’s a brave decision to pull them but it’s the right one.

There’s nothing worse than lenders with backlogs. Let’s hope Woolwich can get its service back to normal and these rates can return.

Nationwide has finally followed the rest of the industry and scrapped income multiples in favour of an affordability-based model.

This seems eminently sensible. With an income multiple it was quick and easy to work out how much a borrower could have but it was an extremely blunt tool that treated people in the same way.

In affordability terms, someone earning £50,000 living on their own could support a larger mortgage than someone earning £50,000 with a wife or husband and four children.

The only problem with affordability models is trying to work out how much a borrower can afford. To help with this there is an affordability-based calculator on the Nationwide website.

Abbey for Intermediaries has launched a number of tracker rates at 70% LTV and 80% LTV. The new products include a two-year 70% LTV tracker at 2.49% with a £1,495 fee and a two-year 70% LTV tracker at 2.69% with a £495 fee.

There are also some excellent 80% LTV rates including a two-year tracker at 3.94% with a £995 fee and another two-year tracker at 3.94% with a £1,495 fee.

On Abbey’s key account range there is now a two-year fixed rate for 70% LTV at 3.59% with a £995 fee, and a two-year fixed remortgage rate at 70% LTV for 3.64% with a £995 fee.

Current account customers can also benefit from a 0.1% cut in rates and get a two-year fixed deal at 70% LTV for 3.49% with a £995 fee.
I wish Abbey would be slightly more accommodating with brokers who are sending in supporting documentation.

Many brokers want to send in as much supporting data as they can to speed the processing of their cases, but it is my understanding that if brokers send in extra documentation this is deleted.

This is doubly frustrating if the information is subsequently requested again, thereby causing a delay. If extra supporting information is required this should be requested as soon as possible.

Brokers and clients tend to get cheesed off if they are asked for documentation unnecessarily.

I understand that storing documentation is not free even in digital form, but I’d guess the cost of storages is considerably less than that of chasing additional information later.

It was fascinating to see a recent survey from Fitch Ratings that analysed more than 700,000 UK prime mortgages and came to the conclusion that deals that have gone through the fast-track process do not pose more of a risk than income-verified loans.

Let’s hope the Financial Services Authority takes this into account when it considers its suggestion that all loans should have proof of income.

Scrapping the fast-track process would make mortgages substantially more expensive and slower to process, while the cost would be passed on to borrowers through higher rates and fees.

HEROES OF THE WEEK are all the M Factor performers who entertained guests at the recent Mortgage Strategy Awards ceremony. Who will ever forget BM Solutions’ Phil Rickards’ epic performance as 1980s cultural icon Boy George? Of course, Rickards’ replacement after a few seconds by the real thing was the icing on the cake.

VILLAIN OF THE WEEK is the government, which intends to tell estate agents that ’green’ properties are worth more. Sadly, it is missing the point. It needs to convince lenders these properties are worth more, as at present no surveyor would value a ’green’ property more highly than a ’non-green’ one.