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Marketwatch

Interest-only looks like it will only survive as a niche product for the wealthy as the big lenders withdraw from the market and it looks like the small and medium-sized firms will have to follow suit

Andrew Montlake MS blog

It was always good to see that gross mortgage lending was up in October once more which certainly mirrors the experiences of many brokers I speak to that October was a decent month.

It is also nice to see reports that broker numbers are increasing once more, albeit gradually.

More advisers are needed in the industry and any increase is welcome.

As far as interest only is concerned the snowball seems to be picking up speed down the hill.

As the larger lenders pull out of the market, it is almost inevitable that some small medium lenders will be forced to act and we have now seen Coventry Building Society following suit.

Whether this is the ultimate final death throes of mainstream interest only remains to be seen, but it does look increasingly like interest-only is destined to survive only as a niche product or the preserve of the wealthy through the private banking fraternity.

As to who will be next, the bets are on so watch this space.

In the markets, three-month LIBOR is unchanged at 0.52 per cent, whilst swap rates are unchanged in the short-term, but have dropped over the longer term.

  • 1-year money is unchanged at 0.535 per cent
  • 2-year money is unchanged at 0.72 per cent
  • 3-year money is down 0.01 at 0.79 per cent
  • 5-year money is down 0.4 at 1.035 per cent

In product news I noticed Nottingham released a tasty looking product at 2.99 per cent fixed for two years up to 80 per cent LTV amongst others.

It was also good to see Abbey making available more 90 per cent LTV products. Amongst them was a three-year fixed rate product for first-time buyers at 4.79 per cent, available up to 90 per cent with no fees looks tempting.

While it was a shame to see the 1.99 per cent fix go so quickly, Abbey are responding with other cuts at 75 per cent and 80 per cent LTV, with a decent 2.89 per cent two-year fix up to 75 per cent the next seven day sale special.

Well done to Woolwich, the recipients of a lot of criticism over its MAX system in recent days – some fair, but some way over the top – which is now offering direct access to underwriters on buy-to-let applications.

This is extremely helpful indeed and shows that while changing direction of a ship mid-course can be slow, it does not mean they are not listening.

On the subject of Woolwich I was delighted to see David Findlay as the new chairman of the Intermediary Mortgage Lenders Association.

Finlay is insightful, experienced and an all round top bloke who I am sure will excel in the role.

Meanwhile BM Solutions has cut three and five year fixes by 0.2 per cent and tweaking some of their criteria which hopefully should be public knowledge by the time you read this, or I am in a little trouble.

Interest-only and a few criteria issues like let-to-buy aside, we still love the Coventry and it has released a decent four-year fixed rate at 2.99 per cent up to 65 per cent LTV.

Precise has cut its two-year fix to 2.89 per cent up to 75 per cent LTV and its five year fix up to 80 per cent LTV is now an intermediary market leading 3.69 per cent which is damn fine work.

MS 3Dec HV

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