Three-month LIBOR is now down to 1.62%.
1-year money is down 0.17% at 1.49%
2-year money is down 0.18% at 2.01%
3-year money is down 0.17% at 2.40%
5-year money is down 0.12% at 2.96%
There seems to be significant coverage in the national press about encouraging customers to take out fixed rates now, as these are not going to get any cheaper.
While this makes good common sense we need to be very careful not to make these kinds of predictions, as who knows what’s ahead.
But we also need to be very cautious about trackers. While some trackers have very low pay rates because the base rate is so low, no-one expects that the base rate will stay at 0.5% forever.
In time, once we are through the misery of this recession, it will start to move back up.
If in the long term it returns to 5% there will be plenty of borrowers paying rates of 7% to 8% – so when you are discussing affordability don’t forget to take this into account.
A good few lenders such as Cheltenham & Gloucester do offer products where borrowers can switch from a tracker to a fixed rate if they need to but I think once the fixed rates start to go up borrowers will need to act quickly.
So again, this is something to be wary of as a broker to prevent us from being blamed for not ensuring people get the lowest rate (which we won’t know until it’s too late anyway).
It was very sad to see that GE Money Home Lending has withdrawn its First National D2U product range from the market and cut its distribution from 150 brokers and packagers to 16 to 18. By contrast, it did admit that once market conditions improved it would look to re-enter the market.
Royal Bank of Scotland Intermediary Partners has launched a five-year 90% LTV fixed rate. The offering to the whole market is 6.69% with a £299 fee. Sadly the loan is capped at £150,000.
This rate now compares reasonably well with what else is out there in the market. There is also a new NatWest two-year buy-to-let fixed rate at 5.95% that is available to 75% LTV with a £1,599 fee.
I would hazard a guess that the buy-to-let remortgage market isn’t that busy at the moment as most landlords will be choosing to sit on the reversionary rates rather than remortgaging.
RBSIP has announced its programme of intermediary forums. I found last year’s event interesting and useful, so if you have the chance to attend one in your area it’s well worth going along. Listening to a market update from Grenville Turner, group chief executive officer of Countrywide, is worth the trip alone. You can also claim continuing professional development for it.
Nationwide has made a number of changes to its range. It has reduced all its 60% LTV fixed rates. The lowest two-year fixed rate is now at 3.78% at 60% LTV with a £995 fee. The 60% LTV five-year fixed rate is now 4.78%.
The 85% LTV fixed rates compare pretty well with most of the competition. The lowest two-year tracker is now at 3.33% at 60% LTV with a £995 fee.
It would be great if Nationwide launched a 90% range. I realise this would be risky but properly underwritten this LTV sector needs more competition as the few lenders in the market, which are now mainly government owned, don’t have any competition.
C&G has introduced a new range of three-year all-weather trackers especially for those borrowers buying a new home.
The lowest of these is a 3.29% rate with a £995 fee that is obviously pitched at those clients with a 40% deposit, so I doubt there will be very many first-time buyers in this category.