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Marketwatch – May 2012

Europe is back on the news agenda. Greece is struggling to form a government, France has turned left and Spain looks decidedly dodgy again as Spanish bank Bankia is part nationalised.

The public shift against austerity measures has given the UK coalition a bloody nose. With inflation still stubborn and economists standing around with their fingers in the air, it looks like quantitative easing will be abandoned for now as everyone looks around for a plan B.

It was interesting to see that 10-year UK bond yields dropped to a record low of 1.881% – the lowest since at least 1989.

Swaps have dropped, notably over five years, and LIBOR has remained the same. Three-month LIBOR is unchanged at 1.01%.

1-year money is up 0.02% at 1.055%
2-year money is down 0.01 at 1.33%
3-year money is down 0.04 at 1.39%
5-year money is down 0.2 at 1.465%

In the mortgage market it has been business as usual, which means lots of quick rate pulls and brokers bashing their heads against a brick wall.

It is encouraging to see SPF Private Clients and Mortgage Advice Bureau post profits, showing success can occur in any market.

In the good news camp Coventry Intermediaries has launched a lower-priced range of two-year fixed rates and Flexx for term products, while Clydesdale Bank has extended its 90% LTV professional product to clients earning over £75,000. It will also be available to anyone in a traditional profession who earns less.

NatWest has launched a few interest-only products for current account customers and we have been given a list of unique selling points from its BDM.

If you are looking for a lender that accepts up to four applicants’ income, or uses the full basic income from the last P60 for those on maternity leave to name but two, you know where to go.

I’m impressed by Woolwich’s latest marketing campaign arming brokers with information to push remortgage business.

Halifax wins the prize for most product changes – it’s getting hard to keep up. Meanwhile, Abbey has clipped the LTV for first-time buyers on new-build flats, it’s now at 75%.

Furness Building Society has launched two buy-to-let products with low or no fees, starting from 4.99% variable for two years, SVR with a discount of 0.45% and a £499 arrangement fee up to 70% LTV.

Regarding smaller lenders, Saffron Building Society has taken a step back. It still has an appetite to lend but will no longer consider buy-to-let, its first-time buyer product at 95% LTV or lending above 85% LTV. The margin has also moved to 6.99% with a 1% fee.

While smaller lenders can assist in the current market, they alone cannot support all the business larger lenders choose not to do.

Heroes&villains

Hero of the week
Santander for coming into the NewBuy market with decent rates starting at 5.49%. The more support for first-time buyers the better. It’s good to see more mainstream banks backing NewBuy.

Villain of the week
The coalition government. Poor Budget, a dour Queen’s Speech and it looks like it is losing the argument on many a point. Unfortunately there is no viable alternative so we will just have to tolerate it for the time being.

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