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Marketwatch 02/02/09

Swaps rose for the first week in months and last Wednesday three-month LIBOR edged up from 2.16% to 2.17%. This is the first increase in LIBOR for a long time. Whether these are signs that fixed rates are about to increase or not I don’t know, but I think there’s still potential for fixed deals to be reduced.

Woolwich has brought back offset and tracker rates to its broker range. It’s great to see Woolwich staying in the broker market. I was nervous that Barclays might withdraw, leaving us with even fewer options.

It has changed its proposition so that brokers need to book funds. This should allow it to manage its funds accurately, enabling it to price cheaper products if it knows it’s not going to get inundated with applications.

But it’s not all rosy. Just take a look at the Royal Bank of Scotland and Halifax, whose direct products still seem to knock spots off those available to brokers.

I was stunned when NatWest offered me a two-year fixed rate at 3.39% up to 75% LTV with a fee of only £559.

Elsewhere, it’s fun to see Prime Minister Gordon Brown trying to blame the whole world for the credit crunch without accepting any responsibility himself. This nasty economic event has ruined his first term and forced him to abandon any pretence of prudence.

I seriously doubt former RBS boss Sir Fred ‘The Shred’ Goodwin will be on Brown’s Christmas card list for a while unless he is a generous donor. Brown blames Sir Fred for everything, so it’s odd that he supported his knighthood.

It was good to see Alliance & Leicester continue to reduce rates in its range. The two-year fixed deal via Legal & General is now down to 3.59%. The fee is still £1,499, the maximum loan is still £250,000 up to 60% LTV but it comes with remortgage freebies.

Cheltenham & Gloucester has trimmed its mainstream mortgage range by removing the £495 product fee range.

And Northern Rock has cut its fixed rates. Its core two-year fixed rate at 65% LTV with £995 fee is now down to 4.19%, at 75% LTV it is 4.59% and at 85% LTV it is 6.49%.

The five-year fixed rate at 65% LTV is 4.79% with a £995 fee, the 75% LTV deal is at 5.19% and the 85% LTV rate is 6.69%.

With its product guide slimmed down to a dainty 12 pages, I wish it would just list the rates rather than show graphs on how much faster clients can repay their mortgages if they overpay. Brokers already know this.

I was interested to get an email from Abbey advising us of its intermediary retention helpline which we can call to get retention details for our clients.

Sadly, the email does not mention anything about a proc fee for helping clients do this so I don’t think we are being paid, which seems unfair. But at least we will be able to help clients find out what’s available to them.

It’s staggering to see the differences between some of the fixed rates at higher LTVs. C&G is offering a five-year fixed rate at 6.09% with a £995 fee up to 90% LTV and the Halifax rate for five-year fixed rates up to 90% LTV is 7.49% with a £999 fee.

I’m surprised to hear Halifax is doing plenty of business on this rate. It’s mainly for first-time buyers buying new-build properties where developers keep an equity stake. Halifax is lending 100% of the purchased part where the share is no greater than 75% of the purchase price.

RBS is going to provide mortgages for those buying property through the HomeBuy Direct scheme. This is good news but it’s hardly surprising given RBS’ need to support schemes launched by the government. If it didn’t I’m sure certain people would be ushered into darkened rooms, never to reappear.

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