Three-month LIBOR is now 1.49%
1-year money is up 0.08% at 1.59%
2-year money is up 0.13% at 2.28%
3-year money is up 0.16% at 2.73%
5-year money is up 0.12% at 3.26%
Anyone expecting any meaningful support for the sector from the Budget would have been disappointed. There still aren’t any details about the scheme for the Treasury to guarantee mortgage-backed securities.
The amounts pledged for HomeBuy Direct and to restart stalled housing projects are fairly meaningless in the scheme of things. One area of the Budget that will affect the mortgage market is the higher taxation levels for high earners, which will mean these people will take home less.
If I was responsible for the credit policy at a lender I would be taking a good hard look at affordability models for large loans and tightening the screws further. Less take-home pay means they will have less money to service their mortgages. I recommend applications for large loans are sent in as soon as possible.
I am skeptical about the growth figures in the Budget. It says this year GDP is going to fall by 3.5%, next year it will grow by 1.25% and the following year will be back up to 3.5% growth.
The International Monetary Fund thinks it will fall by 4.1% this year and by 0.4% next year. Only this time last year, the chancellor thought the economy would grow at 2.75% and last November this was slashed to a fall between 0.75% and 1.25%. Good forecasting eh?
It was good to see Alliance & Leicester launch a pair of excellent broker products. There is a two-year fixed remortgage product at 3.79% for loans up to 75% LTV with a £995 fee and free valuation and conveyancing. There is also a two-year fixed rate for purchases at 75% with a pay rate of 3.99% and no fee and a free valuation. Both of these are available to £550,000.
Regrettably, it seems Moody’s downgrading of a number of building societies, including Nationwide, could impact how it works with the Bank of England via its Special Liquidity Scheme. Fortunately, the Bank will make its own assessment of the value of the assets they are using as collateral.
This is an overreaction to the demise of Dunfermline. It is hard to take anything ratings agencies say seriously after their appalling errors in rating sub-prime assets.
When I first saw the headlines about Halifax’s Council Tax cashback I was disappointed as it sounded gimmicky. But it is good to see borrowers can choose to take their cashback in a number of ways and am sure brokers will help them choose the most advantageous one.
It is good to see the government has managed to get its Homeowner Mortgage Support Scheme off the ground even if the only lenders that are supporting the scheme are the ones owned by the government.
All the building societies have indicated a willingness to help but would rather do so in a more practical way, as the 200-page scheme is far too complex and expensive to implement. Sadly, it has taken since December to get the scheme off the ground.
For those like me, who for most of last summer were calling for the Monetary Policy Committee to cut interest rates quicker, there is a chance to do this for real.
The MPC is searching for a new external member. There’s a salary of £128,600 (not bad for two days a month) and a three-year term. I am sure members of Mortgage Strategy’s Shadow MPC will be allowed to apply. Anyone interested should go to www.hm-treasury. gov.uk/mpcmember.htm.
The minutes of the MPC meeting show that the vote to keep the base rate on hold at 0.5% was a unanimous one. Any other decision would have been daft. The MPC also said it would go ahead with plans to expand the amount of money in the system by £75bn. This should hopefully help banks lend more.