Blimey – January is being anything but quiet. Before the EU pulled the trigger on quantitative easing, our Danish cousins cut their main interest rate twice in a week as they, like the Swiss before them, tried to dampen interest in their currency. Their deposit rate is now -0.35 per cent.
And it is not just Europe; in Canada there was an unexpected cut of 0.25 per cent to 0.75 per cent.
But the biggest news was the massive programme of QE introduced by ECB boss ‘Super’ Mario Draghi, to the tune of €60bn per month until September 2016 or beyond. That is a cool trillion or so. It sent the euro tumbling.
Whether this is too little, too late remains to be seen, but the ramifications have led to our own MPC members becoming unanimous again that rates should not rise, and they have probably ruled out any change this year. In fact, what price on a surprise cut this year?
Meanwhile, the CML has released its final-quarter lending estimates showing that, overall, 2014 was a step in the right direction, hitting around £205bn, which is a 17 per cent rise on 2013. This is despite the fact that the MMR slowed the pace down and demand has waned recently.
Most promising was the return of first-time buyers to the market, who should be joined by a growing number of remortgagers as the battle among lenders intensifies.
All of this should help the market get to £215bn in 2015 although, if real strides are to be made, lenders need to ease some of their harsher criteria to allow more borrowers access to funds.
In the markets this week, three-month Libor is the merest of tads higher at 0.563 per cent, while swap rates have steadied a touch.
2-year money is up 0.04 at 0.87%
3-year money is up 0.06 at 1.03%
5-year money is up 0.09 at 1.32%
On the product front, Woolwich has introduced some fabulous new remortgage rates with two-year fixes from 1.49 per cent and five-years from 2.39 per cent for just two weeks. But this seems to have masked the fact that, in the same release, it announced it has capped income multiples across the board at 4.5 times. This is a big move. So much for the MMR moving us away from income multiples to affordability, eh?
Saying that, I remember when 3.5 times was a bonus, plus Mig, Miras, double Miras…
Elsewhere, Virgin Money is on fire with intermediary-exclusive products from 1.55 per cent for two-year fixes and 2.35 per cent for five-year fixes up to 65 per cent LTV with a £1,495 fee. It has also cut buy-to-let rates by around 0.2 per cent.
Nationwide has been busy with five-year fixes from 2.44 per cent and 10 years from an amazing 2.94 per cent. Existing borrowers get 0.1 per cent off this.
Finally, a big hello to TSB. It has carefully handled its launch with some great products.