So it is midsummer and for those of you reading this on the beach sipping a brightly coloured cocktail with an overlarge umbrella and some as yet undiscovered fruit on the side, er, why are you reading about mortgages?
We are in a rare period in the history of mortgages. There has already been some cutting of pricing in a ‘summer sizzler’ style and the start of September is promising to be a competitive scrum from lenders looking to meet their year-end targets. All are aware the next Bank of England move is definitely upwards and almost certain to be within the next few months.
There are other pressures on lenders in the pipeline, such as potential changes from the Bank on the multiple of core capital they can lend. Currently it is at 33 times or a 3 per cent ratio but it may change to 25 times or 4 per cent. It could be the last chance borrowers have to obtain rates so low for a generation.
So it is interesting that Moody’s has downgraded its outlook for UK banking from stable to negative due to regulatory changes. Also, HSBC is blaming the fact that its profits were down 13 per cent on regulatory pressures. And Halifax has added fuel to the house price fire in its latest report which shows UK prices in July were 10.2 per cent, the biggest annual change since September 2007. The three-monthly change was up 3.6 per cent.
In the markets this week three-month Libor has increased to 0.560 per cent, while swap rates have nonchalantly reversed recent gains.
1-year money is down 0.02 at 0.825%
2-year money is down 0.04 at 1.32%
3-year money is down 0.05 at 1.67%
5-year money is down 0.05 at 2.115%
Santander has introduced a key account exclusive at 75 per cent LTV which is fixed for two years at 2.55 per cent with a £995 fee. It is also reducing two-year fixes at 80 per cent and 90 per cent LTV and its five-year fix at 80 per cent.
Accord has released a new range of two-year fixes at 70 per cent LTV starting from 2.16 per cent with a range of incentives, while Skipton has refreshed its offering, including some seven-year fixes ranging from 3.99 per cent at 60 per cent LTV to 5.39 per cent at 90 per cent LTV with no fees to boot.
Since 5 August, Halifax has been applying the 4.5 times income cap on all Help To Buy mortgage guarantee applications. You will now be able to amend the application in line with the loan-to-income caps in place, (including four times above £500,000).
On LTI caps, the FCA has issued guidance for lenders on how to calculate this. It is worth a read though too detailed to go into here.
Clydesdale Bank is reducing some rates. Leeds is improving its buy-to-let range with two-year fixes now from 2.79 per cent at 60 per cent LTV and 3.09 per cent at 70 per cent LTV with £999 in fees. Mortgage Trust has some new limited quota products at 80 per cent LTV.