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Marketwatch – March 2012

Mortgage rates were at the forefront of the news last week following several lenders upping not just their product pricing but also, controversially, SVRs.

But against this backdrop, swaps fell overall, albeit only by a touch, and LIBOR also dropped again.

Three-month LIBOR is down at 1.04%.

1-year money is down 0.07% at 0.92%

2-year money is down 0.04% at 1.20%

3-year money is down 0.04% at 1.26% 5-year money is down 0.02% at 1.53%

So with both swaps and LIBOR falling, what was the result? Mainly much wailing and gnashing of teeth from those who enjoy denouncing those pesky banks for taking everyone for another ride while the chief executives sit on a pile of cash lighting fat cigars with £50 notes.

This view was perpetuated by the news that no sooner had the ink dried on the announcement from Halifax that it was increasing the SVR cap for some borrowers, than it had trumped that announcement by hiking the SVR itself to 3.99%.

While this reaction may be understandable from a weary public faced with a pittance in savings rates, businesses refused credit and the impression that it is hard to get a mortgage, us brokers understand the mechanics better.

On the face of it, Halifax should be made villain of the week for this move alone. But let’s think again.

Halifax has just come into line with other lenders and 3.99% is still on the competitive side compared with other SVRs. It should also be remembered that Halifax has not stopped lending, in fact far from it.

So unpopular as it may be I am not going to take the easy route and brand it a villain on the basis that a little repositioning, though uncomfortable, was probably necessary, and the product transfer fees have helped.

I also hope this move alone will not lead to other lenders following suit.

On to other news then and it was good to see Woolwich reacting positively to Halifax’s actions by cutting the tracker rate and the fee of its track and fix deal to base rate plus 2.79% and a £999 fee.

It also released a decent large loan product up to £2m at 2.99% with a flat fee of £2,499.

NatWest Intermediary Solutions has reintroduced some 18-month tracker rate products starting at 3.29% with a £999 fee, which again is something a little different.

Skipton Building Society has launched some decent buy-to-let products available from 3.99% but crucially with flat fees rather than percentage fees – a popular move in London, but less so elsewhere in the country. But either way the rates are good.

Meanwhile, Clydesdale Bank has increased the rates on its fixes by around 0.2%, while Abbey has boosted the rates on its higher LTV products.

Heroes & Villains

Hero of the week
Is Woolwich. It made a good PR move in reducing the tracker rate on its track and fix deal. It also launched a large loan product, sorted out issues with buy-to-let and relaunched with good rates.

Villain of the week
All those lenders that seem to be procrastinating over the NewBuy Guarantee scheme. Whether or not you believe it will do much, it is a step in the right direction. Hopefully last-minute haggling on pricing can be overcome.

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4

SVR increases add to borrowers’ woes

Despite base rate remaining at 0.5% for three years Bank of Ireland yesterday became the second lender in less than a week to announce an SVR increase.

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