Swaps continued to edge lower but all in all it was a pretty slow week for rates changes.
- One-year money is down 0.03% at 4.46%
- Two-year money is down 0.01% at 4.39%
- Three-year money is down 0.01% at 4.39%
- Five-year money is down 0.03% at 4.40%
The Woolwich wins hero of the week for launching its client retention strategy. If we help our clients remain with The Woolwich we will be paid 0.2% or 200, whichever is the higher, for cases above 50,000 and a set 100 for cases under 50,000. It’s great to see a major lender launching something like this. Let’s hope more follow. I recall having a great meeting with the head of retention of one lender but when I tried to follow up on this, I found he had left the company.
While we are on the subject of retention, villain of the week is whoever decided that if a client who completed on their residential mortgage before M-Day then decided to remain with their lender on a retention product, their new mortgage will be non-regulated even if an intermediary was involved. It’s a shame these existing clients will not receive the benefits of protection.
Halifax took a long look at its current range but fortunately left it intact. It has launched a couple of ex-pat products but a three-year fixed at 5.44% and a three-year tracker at 5.49% won’t set the world on fire.
Mortgage Trust launched the rate of the week – a 4.55% buy-to-let fixed rate fixed until January 31, 2009 with a 1.5% fee. It is available to 85%. Mortgage Trust also has a 4.89% fixed until January 31, 2008 with a 599 fee. There is a lower rate with an overhang but as I am not keen on overhangs I will let you look it up yourself. The rental calculations are 125% of the pay rates.
Congratulations to Alliance & Leicester which has a new way to calculate how much it will lend. It has moved away from income multiples and will now use affordability. I have seen the model this is based on and in the vast majority of cases our clients will be able to borrow more than before. The problem with lending on affordability is trying to work out roughly how much a client can borrow. To make life easy, A&L has built an online affordability calculator. You have to answer 10 simple questions to get an accurate maximum.
Derbyshire has launched a buy-to-let lifetime tracker at 5.09%. It is available to 80% with a 1.5% fee. I hope this one survives longer than the last.
TMW has decided that if a client takes out a five-year fixed buy-to-let loan, the rental calculation is at 115% of the pay rate. This makes life easier but I am still disappointed by its new valuation panel – and I know I’m not the only one.
Bank of Ireland has brought out a good looking two-year discounted rate at 4.34% and two and three-year fixed rates at 4.35%. It has also launched a three-year buy-to-let fixed rate at 4.99% with a 1% arrangement fee, available to 85%.
If you’ve not heard of it yet please read up on and support the open standards project. Open standards have existed in the IFA industry for some time and Origo is keen to bring them to mortgages. I’m one of life’s sceptics and always look for the catch. Well, there isn’t one. Open standards would mean each lender using the same sort of IT platform, meaning no more re-keying online applications and no more hours spent trying to fathom the intricacies of a lender’s quirky system. If you fancy an easier life, lobby the lenders to embrace open standards through the Association of Mortgage Intermediaries.
Three-month LIBOR is unchanged at 4.59%. The base rate is now 4.50% so the market sees little chance of change in the next three months.
Twelve-month LIBOR is down 0.06% at 4.48%, indicating the City thinks there will not be further decreases in base rate in the next 12 months.
Jonathan Cornell is technical director at Hamptons International Mortgages
Hero of the week is The Woolwich for its client retention policy. If we help our clients remain with it we will be paid 0.2% or 200, whichever is the higher, for cases above 50,000.Villain of week is whoever dreamt up leaving customers whose mortgages completed before M-Day and then decided to stay with their lenders for a retention period unprotected by regulation.