• One-year money is up 0.05% at 6.25%
• Two-year money is up 0.08% at 6.24%
• Three-year money is up 0.12% at 6.25%
• Five-year money is up 0.14% at 6.14%
It was great to see the rate of inflation fall, with the Consumer Price Index going to 2.5% last month – down from 2.8% in April. The measure of inflation which is most often used in pay negotiations, the Retail Price Index, fell to 4.3% in May from 4.5% in April.
Despite these falls, most analysts expect the base rate to rise again later this year.
Bank of England governor Mer-vyn King has warned that we should expect higher in-terest rates by the end of the year un-less consumers and firms rein in their spending.
He also warned borrowers – especially those contemplating house purchases – that “it would be unwise to borrow so much that the repayments are affordable only if interest rates remain at their existing levels”.
We are likely to see a lot of lenders repricing and I think service levels will suffer. We can help ourselves by ensuring that all the boxes on applications forms are filled in properly and nothing is left blank.
I was amazed to hear that after a rate pull, 50% of the calls Halifax receives are from brokers trying to find out if their applications have been received. For future reference, if you get a roll number, your application has been received and is sitting there, safe and sound. Sadly, it won’t get processed until the poor Halifax staff finish answering your phone call to tell you it has been received.
Edeus has launched fixed rates for its sub-prime and self-cert ranges. Self-cert fixed rates start at 6.39% for two years up to 85% LTV with a £799 fee and near-prime rates start at 6.49% at 85% LTV with a £799 fee. It’s amazing to think that edeus has achieved the success and volumes it has with just tracker rates. I think it is brave to launch a fixed rate range now, with swaps as volatile as they are.
It was interesting to see Abbey launch its 100% range. Some of the features look good, i.e. the ability to borrow up to £500,000, no higher lending charge and up to 5 x income depending on clients’ credit scores. Initially, this range was due to be launched on June 13 but this was put back to June 15 to cope with the demand which had built up due to publicity in the press.
Halifax repriced its fixed rate range upwards. I was amazed that its 5.34% two-year fixed rate lasted as long as it did (two weeks). It has now been increased to 5.49%, the LTV is still 90% and the fee is £1,499.
The 5.39% rate with a £999 fee has gone up to 5.69% and the 5.74% rate with a £299 fee has gone up to 5.79%.
The two-year remortgage rate of 5.49% up to £750,000 with a £999 fee is still available, al-though I’m not sure how much longer it will survive.
With two-year swaps at 6.25%, a rate of 0.5% below this fixed for two years with a fee of £299 is good value.
Following the announcement that HBOS’ share of net lending was lower than expected, I expect we will see even more competitive rates from HBOS lenders. This is good news for brokers and borrowers.
And well done to Intelligent Finance which launched an offset fixed at 5.64% for one year, then 0.59% above base rate. It is available to 90% LTV and has an arrangement fee of £699 with early repayment charges for two years.
Northern Rock increased its 18-month to five-year flexible fixed rate range by 0.2% and its 10 and 15-year flexible fixed rate ranges by 0.1%.
Jonathan Cornell is technical director at Hamptons Mortgages