As the London mayor has a revelation about the housing crisis, the PM predicts rising mortgage costs under Brexit
The ‘Stop the press!’ headline of the week must go to new London mayor Sadiq Khan, who, after pledging to build 50,000 homes a year in London, has admitted that “solving the housing crisis won’t be easy”. Really, Sherlock?
Meanwhile, the countdown to the EU referendum continues and prime minister David Cameron says the cost of an average mortgage could rise by nearly £1,000 a year if we leave. To be fair, that is a likely outcome for new mortgages as the cost of funds increases due to tightening credit conditions – although it would probably be accompanied by a Bank of England rate cut, which would benefit some existing borrowers.
The nonsense that has been spewed out as politicians guess what will happen has become very hard to take. The best thing I have read on the subject is Martin Lewis’s excellent synopsis.
Vote with your head, heart and conscience for what you believe will be best for the UK. Most importantly, though – vote.
Elsewhere, L&G expects a mortgage market of around £240bn this year, with brokers accounting for about £170bn – a 71 per cent share. We all know most borrowers these days prefer to deal with a broker and, even though technology is on its way, there is no reason to believe this will change any time soon. Even with technology, people will still want and, more importantly, need the type of advice only an intermediary can provide.
In the markets, three-month Libor is a touch lower at 0.58 per cent while swap rates have fallen once again.
2-year money is down 0.06% at 0.74%
3-year money is down 0.10% at 0.79%
5-year money is down 0.12% at 0.93 %
10-year money is down 0.14% at 1.30%
In the product world, Virgin Money has improved its five-year fix at 65 per cent LTV to 2.19 per cent. Help to Buy rates have also improved but it has withdrawn its 90 per cent Marathon Runner Exclusive and increased some rates between 80 per cent and 95 per cent LTV.
Clydesdale Bank has raised its maximum mortgage term to 40 years on a repayment basis, while Barclays has a shiny new website.
Newcastle Building Society has new products for the self-employed who have been trading for less than two years. They can get two-year fixes to 60 per cent LTV at 2.49 per cent or 75 per cent LTV at 2.89 per cent. The lender has also released a three-year fix at 1.99 per cent up to 80 per cent LTV with a £999 fee.
In the buy-to-let world, landlords have won the latest round of their legal battle with West Brom over the tracker rate rise that hit them a few years back. West Brom cited “special circumstances” that meant it could increase a Bank base tracker without a rise in the Bank base, but Lord Justice Hamblen rightly ruled that a base rate tracker is, well, a base rate tracker.
Santander has improved its buy-to-let range with a new remortgage special available at 2.49 per cent fixed for two years up to 75 per cent LTV. There is a 1 per cent fee. It has also sliced and diced other products by up to 0.15 per cent and removed the £495 booking fee on some two-year fixes.
Axis Bank has released a buy-to-let variable rate at 3.69 per cent with no early repayment charges. Available up to 75 per cent LTV with a 1 per cent fee, it offers landlords much-needed flexibility as all the recent changes start to take effect. It is also available to ex-pats and limited companies.
Furness Building Society now accepts consumer buy-to-let mortgages and has a two-year discount mortgage at 60 per cent LTV with a pay rate of 2.85 per cent or at 75 per cent LTV and 3.14 per cent. Both have no ERCs.
Hinckley & Rugby has some new buy-to-let criteria, which allow 135 per cent rental coverage at pay rate (from 2.45 per cent), stress tested by 2 per cent. It can, however, take into account spare disposable income to make up for any shortfall.
Precise has cut its bridging finance rates by up to 0.3 per cent, with second charge from 0.9 per cent and heavy refurbishment from 0.75 per cent a month.
Finally, I saw an article that said landlords and letting agents were increasingly looking on social media sites to get “personality reports”. Perhaps lenders will start underwriting socially. I am thankful social media was not around when I was younger.
Andrew Montlake is director at Coreco