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Market Watch 31 March 2008

Swaps surged last week so needless to say, we’ll see the lenders that didn’t reprice the week before doing so. Meanwhile, some lenders that have already repriced will probably do so again. Three-month Libor is still hovering around the 6% mark.

  • One-year money is up 0.15% at 5.61%
  • Two-year money is up 0.24% at 5.27%
  • Three-year money is up 0.24% at 5.20%
  • Five-year money is up 0.16% at 5.14%

It was great to see Abbey giving a day’s notice for its latest rate withdrawal. The email was sent to brokers at 4pm and applications had to be in by 10pm the next day. Setting a deadline so late in the evening was helpful, making it a lot easier to key applications. At 5pm, everyone is online at the same time.

It was also good to see Bank of England governor Mervyn King offering to pump more cash into the money markets in an att-empt to prop up the credit system.

He has warned MPs that the liquidity crisis is having a bigger effect on the economy than originally thought.

But King predicts that house prices will remain stable over the next few years.

Cheltenham & Gloucester made a number of changes to its buy-to-let range. The maximum LTV was reduced to 80% and the rental calculation rate was increased from 6.5% to 7.25%.

But the email was sent at 4.50pm, with applications needing to be keyed by midnight. By doing this on the day before Good Friday, it ensured no brokers would be able to get hold of their clients.

The email stated: “We acknowledge this is a short notice period but it is essential to our service standards that we control business volumes.”

The frequency of rate pulls and the short notice being given for them is so bad that it has made it into the national press. A lot of brokers have been complaining that lenders are not treating customers fairly.

This is an interesting argument but I’m not sure it stands up because lenders will point out that if they leave their products in the market for longer they will be swamped with applications and lose money. I doubt that TCF can be extended to companies losing money. Lenders will say they are entitled to withdraw rates when they want and are simply taking commercial decisions.

Also, since they are all doing this at the same time, I guess they feel it is unlikely they will be singled out as not treating their customers fairly. These are strange times – nobody has experienced such relentless repricing and frequent rate withdrawals before.

Brokers should explain the current lending climate to clients when they recommend rates. ‘If you snooze, you lose’ is a line that springs to mind, and brokers should point out that borrowers who waited to see if interest rates would fall must be kicking themselves.

Well done to HBOS’ Nigel Stockton who has expanded his empire now that Philip Grant is moving up the ladder to head HBOS Corporate.

Stockton will now be responsible for all the mortgage brands and Colleys. I’m not sure if this is what’s called a hospital pass, but good luck to him.

The Mortgage Works made some big changes to its specialist ranges.

The maximum LTV is now 75% on all TMW self-cert products.

First-time buyers are no longer accepted, the maximum loan is £350,000 and net disposable income is calculated at the base rate plus 2.49% – ouch.

On buy-to-let, TMW’s maximum LTV is now 75% on all products. It has withdrawn its excellent non-status rental income scheme, first-time landlords are no longer accepted, its buy-to-let point-of-sale offer scheme is no longer available and the maximum loan per property is now £350,000. The lender has also withdrawn its 100% LTV products.


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