Last month we saw Abbey reprice its mainstream fixed rates twice in a week. Swap rates seem to have gone up by so much in such a short space of time that we are about to go through the psychological barrier of 6% with many prime rates.
For a long time, unless a rate started with a 4, then it was not good value. Those days are now long gone, unless there is a super-sized fee attached. Most prime rates are already starting to begin with a 6 rather than a 5, with Cheltenham & Gloucester the first to raise its prime rates this month.
It was great to see edeus launch its fixed self-certification and sub-prime ranges. It is amazing that it was doing the volumes it was without any fixed rates. Now that it has secured additional funding I am sure we will shortly see a fixed buy-to-let range as well.
Buy-to-let continues to generate incredible competition. Now BM Solutions has relaxed its rental calculation to pay rate on many rates. There are such tempters as Bank of England base rate less 0.50% for two years with a refund of valuation up to 490, up to 85% loan to value with a 1,499 fee and rental calculation at 125% of the pay rate. There is also a rate which used to be capped that has been relaunched without the cap. BBR less 0.76% for two years, up to 85% LTV with a 2.5% fee and rental calculated at 100% of the pay rate.
The good news about BM Solutions is that it can handle whatever business volumes we throw at it, unlike many other lenders where the wheels come off when they have good products and we end up waiting five weeks for an offer.
While there is not quite the same level of competition in the 100% LTV market, there is certainly a lot more competition than there was a few months ago. We have now seen industry giants like Abbey step into the ring and BM Solutions has made the changes that were necessary to make its offering the best in the industry. With great products, healthy procuration fees and the best mass market service in the industry, it is good news for brokers and first-time buyers.
It has been another exciting month in packager land. Kevin Paterson joins Enterprise to strengthen its senior management team. Kevin did a great job at Park Row. He is well connected and respected within the broker community and I am sure he will make a sizeable contribution to Enterprise, helping it continue to develop relationships with prime brokers that need help placing their sub-prime business.
Brian Pitt joins The Finance Centre, to bring to TFC the experience it needs in moving its technology-based, hub-and-spoke concept forward. Brian has done many things in the industry, especially at Future Mortgages and Beacon Homeloans, and is extremely well known so this looks like a good move by TFC.
The rumour mill has been working overtime on what John Prust might be up to and the latest conjecture is an expectation that he will be launching a new adverse lender in September alongside his old Southern Pacific Mortgeges Limited colleagues Bill Cherry and Stuart Aitkin.
The backers behind this move are thought to be Abbey and Merrill Lynch. This could be the largest new entrant to the UK adverse market for some time.
John was said to be dismayed at Lehman’s choice of going direct to brokers, so I would expect the new lender to be focused on packaged distribution. It will be interesting to see what its proposition in such a tight market is.