Marketwatch 20/04/2009

Swap rates fell for the first time in several weeks and three-month LIBOR has edged down to 1.53%.

1-year money is down 0.04% at 1.51%
2-year money is down 0.05% at 2.15%
3-year money is down 0.07% at 2.57%
5-year money is down 0.09% at 3.14%

It is encouraging to see an increasing number of green shoots stories making the front pages of the national press. Only a few months ago any positive stories would have either appeared on page 20 or not have been mentioned.

The great thing about a green shoots story is that it can become a self-fulfilling prophecy.

Despite my fear that the property market will not fundamentally improve until lenders lend meaningful amounts at sensible rates, if consumers see good news stories they tend to feel positive and are more likely to buy houses.

The greater the demand for property, the quicker house prices will stop falling. In time, this should allow lenders to loosen the purse strings on rates and LTVs.

But lenders will also be keeping an eye on rising unemployment as this will have a big effect on consumers’ ability to service their mortgages as well as whether house prices go up or down.

It seems that Northern Rock is re-underwriting loans where clients have made overpayments and are now trying to draw the funds back. This seems to fly in the face of fairness as it is a huge change to make after completion.

The facility encourages consumers to save during good times in preparation for bad times. Preventing those who have put money away from drawing it back is hardly treating customers fairly.

After all, isn’t the Financial Services Authority telling banks they will need to put away capital during good times so it can be used in bad? If Northern Rock prevents borrowers from doing the same thing, what message is being sent?

While we may not like it, HSBC’s 90% LTV rates are good for the industry. HSBC has cleverly linked these rates to its bank accounts and I’m sure this will help it win premium banking clients.

Let’s hope other lenders follow these rates. Other high street lenders are only offering five-year fixed rates to borrowers coming from brokers. I’m sure brokers’ clients would be happy to change banks to get competitive rates.

Northern Rock has cut its intermediary two-year fixed rate to 3.59%. It is available up to 60% LTV with a £1,995 fee and comes with freebies for remortgages.

Halifax and Bank of Scotland seem to have slipped in new underwriting criteria whereby self-employed applicants have to provide full income verification documentation for cases above £250,000 or 60% LTV.

This clause was added to the bottom of rate update emails. I would have thought such an important criteria change would have been announced separately.

Both lenders have introduced some rates. Halifax’s three-year trackers start at 3.49% for loans up to 60% LTV with a £999 fee.

Bank of Scotland has launched some three-year fixed rates. For loans up to 60% LTV the rate is 4.69% and for those up to 75% LTV it is 5.19%. There is also a three-year tracker rate at 4.59% up to 60% LTV. All have fees of £999.

And Intelligent Finance has sneaked back into the lending arena with some decent rates, most of which are up to £500,000. The highlight is a 3.75% term tracker at 60% LTV with a fee of £995.

It’s good to see Intelligent Finance back in play. With savings rates as derisory as they are, offsetting has never looked better value.

Woolwich is increasing its three, four and five-year fixed rates by between 0.3% and 0.4%, blaming increases in swap rates. But it’s good to see it reducing its two-year fixed rates to 3.69% at 60% LTV and 4.09% at 70% LTV.

It is also bringing in some 70% LTV switch and save deals and I understand improvements are to be made to its offset proposition.