Marketwatch

30 August 2010

Abbey’s credit policy clampdown effectively shuts the door on professional landlords wanting residential loans. And it’s sad Nigel Stockton is leaving Lloyds group - our loss is Countrywide’s gain

JONATHAN CORNELL HEAD OF COMMUNICATIONS FIRST ACTION FINANCE

Medium to long-term swaps fell last week. Since the end of July two-year swaps are down by 0.16%, three-year swaps are down by 0.28% and five-year swaps are down by an incredible 0.42%. Three-month LIBOR is down slightly at 0.72%

1-year money is up 0.01% at 0.82%
2-year money is down 0.01% at 1.23%
3-year money is down 0.05% at 1.49%
5-year money is down 0.10% at 2.%

After some nice changes to its let-to-buy policy a few weeks ago, Abbey has clamped down on its credit policy. It will no longer accept applications from clients with five or more existing secured commitments where their total balance exceeds £150,000.
If the customer has less than five existing secured commitments, the £150,000 limit does not apply. I guess it doesn’t want residential loans from professional landlords.

Abbey has also tightened its interest-only policy. If any part of the loan is on an interest-only basis, Abbey has changed the maximum LTV to 75%. It’s not as draconian as Lloyds Banking Group but another blow to borrowers seeking such loans.

It was a shame that Northern Rock experienced such woes over its admirable plan to offer application fees of just £99. It seems financial journalists have it in for the lender and are keen to bash it.

Northern Rock is a major intermediary lender and while it is not perfect, since we all own a stake in it we should want it to succeed. The better its performance, the more money the Treasury will recoup when it is sold. The more money the Treasury has the less it will need to tax us.

I was amazed to see that only a third of new mortgages don’t have life cover. That means brokers are getting much better at cross-selling.

The figure for previous years must have been much lower - so it’s a great opportunity for brokers who stay in contact with their clients.

Interestingly, figures from John Charcol showed that 40% of its business was from remortgages. I thought the purchase figure would be much higher.

June data from the Council of Mortgage Lenders showed that two-thirds of overall business was in purchases. I think as the purchase market slows with people nervous about the economy, we will see the percentage of remortgages rise.

It’s sad to see Nigel Stockton leaving Lloyds Banking Group for Countrywide. Stockton has always been a huge supporter of brokers and a good friend to many in the industry. I am sure he will deliver immense value there. Our loss is Countrywide’s gain.

Well done to Accord Mortgages which has reduced the rates on all fixed semi-exclusive products and the majority of trackers by between 0.05% to 0.40%.

Also the minimum loan on selected semi-exclusive products will be reduced from £750,000 to £200,000 and on some products with no fees it will increase to £200,000.

heroes&villains

Hero of the week

is Aldermore which has not only cut a number of its rates but also increased its maximum loan sizes to 75% and 80% - these are £600,000 and £400,000 respectively. This is all good news for both us and customers.