Market Watch

Swap rates were up across the board last week.
  • One-year money is up 0.10% at 4.74%
  • Two-year money is up 0.09% at 4.73%
  • Three-year money is up 0.08% at 4.74%
  • Five-year money is up 0.07% at 4.71%

It’s great to see Portman giving brokers access to a two-year fixed rate. For most of the year its intermediary offering has been quite restricted. Its new broker two-year fix is 4.44%. It’s a shame that the direct offering is 4.30%, leaving brokers in a dilemma over best advice. Is our service worth the client paying an extra 0.32% over two years?

Alliance & Leicester has kept its fixed rates at the same level. It has extended the end dates but has increased the reversionary rate from either 0.75% or 0.95% over base to 0.99% over base. The APRs on its products will increase with this.

Cheltenham & Gloucester finally increased its fixed rates. The premium two-year fix is now 4.69% and the premium three-year fix is now 4.89%. It’s good to see C&G putting the arrangement fees for each rate in the product box of its rates guide. Hopefully soon it will put the early repayment charges there too, so we don’t have to look on another page for these. It has also launched a buy-to-let range. There are two lending criteria options – personal income plus 50% of expected rental income, or solely expected rental income if this is at least 125% of the monthly interest-only payment.

It’s worth checking out West Bromwich’s buy-to-let criteria. It now bases the rental calculation on 125% of the lowest fixed rate, which is currently 4.69%, rather than the actual pay rate, as long as there is no more than a 1% difference. This means you can select a discount deal with no tie-ins, free legals and free valuation at 5.54% pay rate but work the rental on the fixed rate of 4.69%.

Well done Lambeth, which reviewed the proc fee on its excellent two-year base rate tracker at 4.25% and decided to treat this the same as its core range rather than paying a reduced proc fee.

Abbey will stop accepting paper applications from January 1 2006 unless the case is an agreed exception which cannot be submitted online, i.e. guarantor cases, buy-to-let cases which have been declined as an AIP, and cases with more than two applicants. Don’t forget, Abbey lets us go into an online application and make changes such as new property details, rather than submit a new application. It has also removed the 3,500 proc fee cap on its large loans.

Hero of the week is Royal Bank of Scotland Group for cleverly aligning its mortgage brands. Until now NatWest and RBS products, criteria and service have looked similar. On February 14 First Active will become the remortgage brand, RBS will become the purchase brand, NatWest will be the specialist brand and The One account will remain as the group’s flexible mortgage brand. Brokers will be able to choose to have a telephone or a field- based BDM. All applications will be sent to the same address and a call centre will be able to give updates on all the group’s cases, no matter which brand. This makes great sense.

Villains of the week are the circumstances that led The Mortgage Works to stop accepting buy-to-let new-build business. It’s a shame but I understand its concerns over property values, which are hard to confirm with rental guarantees, discounts and cashbacks. This was a brave decision by TMW.

As expected, the Bank of England Monetary Policy Committee kept base rate on hold at 4.50%. The MPC will wait until it sees the Christmas retail figures before it considers whether base rate should change. Three-month LIBOR is up 0.02% at 4.63% so the market sees little chance of change in the next three months. But 12-month LIBOR is up 0.09%at 4.71% indicating the City thinks there might be a 0.25% rise in the base rate in the next 12 months.