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Swaps increased pretty significantly, with longer-term swaps showing the largest rises. Three and five-year swaps are now up more than 0.25% above the all-time lows posted a couple of weeks ago.
If we continue to see such significant hikes it won’t be long before lenders start to increase their fixed rates. Three-month LIBOR is unchanged at 0.96%. This is the first week in a long time that it has not gone up.
1-year money is up 0.01% at 1%
2-year money is up 0.09% at 1.39%
3-year money is up 0.15% at 1.55%
5-year money is up 0.21% at 1.96%
Chelsea Building Society has entered the offset market, but sadly its offering is just limited to branch distribution. With savings rates so low it’s surprising the offset market isn’t bigger than it is. I wonder whether it is broker or borrower apathy keeping it at current levels.
It seems positive that we have seen two lenders launching securitisations in the past week with the Royal Bank of Scotland and Clydesdale announcing almost £4.5bn worth of securitisations. The stronger the securitisation market the easier it is for lenders to fund mortgages.
There seems to be a lot of news about buy-to-let at the moment. It looks like the Council of Mortgage Lenders is sure the European Union will not bring about regulation for buy-to-let.
Ever since Mortgage Day there has been a lot of debate on whether or not buy-to-let should be regulated. Initially I was a strong supporter of regulation as I could not see why, if you buy 28 Apple Tree Avenue to live in then your mortgage is regulated but if you buy 29 Apple Tree Avenue to let out the loan isn’t regulated.
But the lack of statutory regulation in buy-to-let does not seem to have caused consumer detriment. Fears the bad apples in the industry that could not get regulated would work in the buy-to-let sector have not become reality.
Most broker firms treat buy-to-let business as if it was regulated and I am sure from a broker point of view regulation would not be prohibitively expensive. But it would probably be costly for lenders, hence the CML’s delight.
A smile did cross my face when I saw Capital Economics has predicted that house prices will fall by 10% by 2013. It was not because house prices falling is a laughing matter, but let’s just say that Capital Economics has form in predicting house price crashes.
While it can claim to have been correct that prices did fall, it started calling the crash about four or five years early. House values are still comfortably above where they were when Capital Economics started preaching doom and gloom.
Even if they fall another 10% I am sure they will still be higher than at the time of the original prediction.
Heroes & Villains
Hero of the week
is Castle Trust, which aims to launch in December. It will be offering an interesting product that will help some borrowers take out a lower LTV loan than they would otherwise have been able to.
Villain of the week
is Moody’s, which has downgraded a number of lenders. Sadly ratings agencies have no credibility left, having behaved as badly as the worst firms during the credit boom. It will be a long time before anyone trusts them again.
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