Leicester City’s Premier League win has been surpassed as the most unexpected and unbelievable event this year…
A tweet I read last week made me laugh. It went along the lines of: “My friend has just woken up from a year spent in a coma and asked what was going on. I started with the relatively believable event of Leicester City winning the Premier League.”
So what has this past week brought us?
First off, we have a new government, with Theresa May now fully in charge and naughty George Osborne ditched as chancellor and replaced by Philip Hammond.
Most surprising of all was the rebound of Boris Johnson as foreign secretary. Cue loads of jokes about gaffes and the like. To be fair, he has a charm about him and was ruthlessly good at promoting London while mayor. No doubt the “bloody difficult woman” will keep him on a tight leash.
Next, we had Bank of England governor Mark Carney’s big moment. There was an 80 per cent chance the Bank rate would be cut to another all-time low, especially as the man himself had indicated it would be so. Well, we have heard that before, haven’t we? And true to form, the ‘unreliable boyfriend’ kept things as they were.
While this may flummox the public yet again, it was always the case that August was a more likely time to take action having garnered more economic data following the Brexit decision.
There was a risk that if Carney acted too early it could potentially dilute a more powerful weapon to use in the future should the need arise.
So a rate cut is nailed on for August, then? Well, a lot can change by then and some stabilising effects of a new, focused government may calm things down. Nothing is ever a foregone conclusion in this game.
Meanwhile, the latest RICS report made for more sober reading, noting that buyer enquiries had fallen for the third month running and reached their lowest since 2008. The supply of properties also fell, as did agreed sales. But while medium-term price expectations have slipped, this remains positive, with rent expectations firm.
Hopefully, we will now enter a period of greater stability. The onus will be on Prime Minister May to show she has some firm, workable plans.
In the markets, three-month Libor has fallen level with the Bank rate at 0.5 per cent, while swap rates have stabilised finally.
- 2-year money is unchanged at 0.51%
- 3-year money is up 0.02% at 0.55%
- 5-year money is up 0.04% at 0.63%
- 10-year money is down 0.01% at 0.88%
Matters in the product world have been relatively calm in comparison.
Tesco Bank has made its 95 per cent LTV products available to intermediaries at 3.74 per cent fixed for two years and at 4.29 per cent for five years. It has also reduced some five-year fixes, which appear from 2.19 per cent, and has removed booking fees on all products.
Leeds Building Society has also reduced some fixed rates and is especially competitive at higher LTVs. At 80 per cent LTV it has a 2.39 per cent five-year fixed, with a version at 85 per cent LTV priced at 2.55 per cent.
Elsewhere, Platform has relaunched its product range with fixed rates reduced by up to 0.2 per cent, while West Bromwich Building Society is cutting rates on its five-year fixes by up to 0.55 per cent.
Furness Building Society has released some new products for loans between £300,000 and £500,000 to 70 per cent LTV from 1.4 per cent discounted for two years with a £1,499 fee.
Finally, well done to Precise, which has launched its retention programme to pay procuration fees of 0.25 per cent to brokers.
This is another welcome development from an important lender. The tide really is pulling more players down this route to at least start to recognise correctly the hard work done by brokers on product transfers.
I am never going to get bored with this subject, you know…
Andrew Montlake is director of Coreco Group