Meanwhile, three-month LIBOR also rocketed as banks became nervous about lending to each other. It now stands at more than 6% and is 1.5% above overnight LIBOR.
Although we have not yet seen a significant number of rate increases I’m sure they are on the way.
There is a healthy level of competition between mainstream lenders on fixed and tracker rates, albeit at lower LTVs.
While a good few lenders can fund deals from their savings books, others will need to pass on increased funding costs to their borrowers so I’d get those applications in now.
The fear that has paralysed the credit markets has led UK banks to put nearly £6bn under the Bank of England mattress rather than lend it to each other for more than a few days, even though this means they earn lower rates of interest from the move.
The BoE announced last Wednesday that £5.9bn had been put into its safe but low interest standing facility since Tuesday night, a sign of the fear in the money markets that has helped to drive up long-term borrowing costs.
This amazing behaviour means the BoE has now taken back most of the additional £25bn of liquidity it pumped into the short-term money markets the previous week.
On the same day the BoE also mopped up another £10bn of surplus overnight cash from the banking system and is likely to lend significantly less in its weekly operation than it has previously.
Its standing facility offers a rate of only 4% – 1% below the remuneration normally offered on reserves held at the bank. This will have a significant impact on mortgage lending.
Northern Rock has a great 75% LTV two-year flexible fixed rate at 5.45% with a £1,995 fee for loans up to £1m. This features free valuations and legals for remortgages.
It’s great to see such a good rate at such a high LTV although it’s weird to think that 75% LTV is seen as high at the moment.
I hope the deal is still available by the time you read this as NR has already sent out a withdrawal watch.
Cheltenham and Gloucester’s excellent products are bringing in large volumes of business and phone calls from clients.
C&G sent out a service update letting us know that work is being processed within 72 hours of receipt and BDMs will get daily updates on turnaround times.
It has requested that brokers register for its text messaging service as this will save a lot of time.
I guess the more of us who use this feature the better but I don’t think it will work for brokers who have case managers looking after their deals.
Abbey has made some changes to its range. It is introducing new 85% LTV three and five-year fixed rate deals and a new large loan three-year fixed rate product for loans up to £2.5m. I don’t know how competitive they will be as they aren’t out yet.
The environment for packagers is getting tougher. Solent Mortgage Services has gone into administration but it was great to see it pledge to pay all outstanding proc fees.
And I’m sure Personal Touch Packaging will thrive under the Savills Private Finance umbrella – both companies are well respected in the industry.
Bank of Ireland made some huge changes to its remortgage ranges and withdrew them all in one go. At least this made it easier to work out what had changed.