View more on these topics

Editor’s note: Lenders – time to look at criteria

Paul-Thomas-700.jpg

There have been many times during the past year and a half when experts have predicted the bottom of the market for mortgage rates.

Before last summer, a host of lenders launched five-year fixed rates below 2 per cent because a number of them were behind on their lending targets. This was despite five-year swap rates then being over 25 basis points higher than they are now.

Presently, the lowest five-year fix comes from First Direct, priced at 2.09 per cent up to 60 per cent LTV, followed by HSBC at 2.18 per cent.

But the conditions are in place to enable the return of the sub-2 per cent five-year fix. Not only are five-year swaps at their lowest level in more than two years but the chance of an increase to base rate this year looks slimmer than it was just a few weeks ago.

In fact, some traders reportedly believe there is a 25 per cent chance of the Bank of England cutting the benchmark rate, which is already at a record-low 0.5 per cent.

Add in the fact that competition is strong across the mortgage market and all of the ingredients are in place for rates to fall even further.

However, with the Bank giving out mixed signals as to when the base rate will at last increase, it can be argued that mega-cheap loans will do little to stir borrowers into refinancing.

It has become somewhat of a cliché but lenders would be wise to consider criteria changes in order to scoop up more business.

Smaller lenders have led the way in this respect over the past few years, but it would be a game-changer if one or two of the bigger lenders made some sensible changes to their self-employed and lending-into-retirement criteria.

We could be on the cusp of a mini rate war, but it would be more helpful if lenders were to decide to make criteria the new battleground.

Recommended

Santander-700x450.jpg

Santander to introduce two-tiered B2L affordability tests

Santander is introducing a new two-tier buy-to-let affordability calculation as the Government’s tax shake up is expected to increase costs for landlords. From 21 February, the affordability rate for loans up to and including 60 per cent LTV will remain at 5 per cent. For loans over 60 per cent LTV, the existing 5 per […]

FCA-FSA-Building-700x450.jpg

FCA hit by 491 complaints in 2015

The Financial Conduct Authority received 491 complaints in the year to November 2015. The flow of complaints against the regulator was even all year, with 246 made between December 2014 and 31 May 2015, and 245 between 1 June and 30 November 2015. The FCA’s latest data bulletin says the regulator did not investigate 47 […]

Bob Young Fleet 2014

Fleet reveals first of a series of criteria changes

Fleet Mortgages has announced the first of a series of criteria changes that it will be rolling out of the coming months. It has made tweaks to its new-build, recent conversions and houses of multiple occupation criteria. Fleet now offers loans up to 70 per cent LTV – previously 60 per cent – and up […]

Equity-release-house-home-700.jpg

ERC urges FCA to ease affordability rules

The Equity Release Council is urging the Financial Conduct Authority to consider easing mortgage affordability rules to help consumers make interest repayments before swapping to a roll-up deal. Changes to the Mortgage Conduct of Business rules following the Mortgage Market Review mean that lifetime mortgage contracts which permit consumers to pay interest for a period […]

Guide

Guide: day-to-day tasks ​— can your system manage?

This guide from Johnson Fleming will take you through the required communication and also give ideas for additional actions that will ensure your auto-enrolment project is a success. As well as highlighting what is required from a system to ensure it is up to the tasks, an overview of the following is also provided: data validation; data categorisation; employee communication; opt-in process; opt-out process; produce contribution schedule; contribution reconciliation process; upload of member data to pension provider; upload contribution to pension provider; manage salary sacrifice process; enrolment process; re-enrolment process; and management of increased employee queries.

Newsletter

News and expert analysis straight to your inbox

Sign up