Marketwatch 13/07/2009
Share
1-year money is down 0.18% at 1.18%
2-year money is down 0.28% at 2.02%
3-year money is down 0.27% at 2.71%
5-year money is down 0.21% at 3.46%
I wonder what will happen to shorter term fixed rates as a result of these falls.
In the past couple of months we have seen swaps surge. Now they have settled back slightly lenders have at least stopped increasing their rates, but fixes have gone up significantly more than swaps.
With the margins lenders are earning on their five-year fixed rates typically standing at more than 5.25% even at the lowest LTVs and above 7% for higher LTV deals, perhaps this is a good time to buy bank shares. Three-month LIBOR has also dropped significantly - it's now down to 1.11%.
The speed at which some households are paying off their mortgages has risen substantially. Recent figures from the Bank of England show borrowers repaid some £8.1bn in the first three months of the year, taking the total to £23bn in 12 months.
While it's good to see borrowers being financially responsible in these tough times, it would be better for the economy if they spent some of their money on the high street.
The latest survey of house prices from Halifax shows prices fell by 0.5% in June compared with the 2.5% increase recorded in May. This means the annual rate of decline eased from 16.3% to 15% last month.
Well done to the lenders that have invested in their online application systems - those with the best systems also seem to have the best service. A decent online application system should tell brokers precisely what supporting information is needed for each case.
Last week might have been a painfully slow week for rate changes but at least it gave us a chance to get our breath back after the hectic changes we have seen in the past month or so. In fact, it was hard to find any rates that had changed.
Royal Bank of Scotland Intermediary Partners has launched a series of shared equity products.
It must be shifting some pretty huge volumes of these deals. The core two-year fixed rate starts at 5.79% for loans up to 80% LTV and comes with a £999 fee.
One of the most significant changes to have taken place in the sector is that about 90% of all mortgage lending is now being done by eight or so lenders. We know from painful experience that this has manifested itself in delayed offer times.
That's why I was interested to learn that Checkmate Mortgages is in the process of making its new super-duper £10m online mortgage processing system available to bigger lenders as a parallel online processing tool.
Instead of taking 25 days to get an answer as it does with many lenders - and in some cases more - Checkmate's system gets the job done in 25 minutes including full identity, fraud and credit checks.
I hope some big lenders will take up this service because borrowers are suffering and brokers are getting the blame, of course.
Despite house price indices going up and down I guess most home owners have seen the value of their property decline in the past six months.
One way for high net worth borrowers to offset this is to use managed currency mortgages whereby a currency manager moves the mortgage from one currency into another to reduce the debt.
One such firm, 3D Mortgage Management, has had a pretty good year so far, having achieved a 5% reduction in the value of its clients' debts.
