Interest rate swaps
Swap rates continued to increase last week which means that in the past three months they have gone up by roughly 0.66%.
One-year money is up 0.10% to 5.26%
Two-year money is up 0.11% to 5.45%
Three-year money is up 0.12% to 5.55%
Five-year money is up 0.13% to 5.61%
Although lenders continued to reprice their fixed rates upwards, fewer did so than in previous weeks.
Lenders to have repriced fixed rates include West Bromwich, Nationwide and Halifax. But it is good to see that Halifax still has its two-year fixed at 4.99%.
There have been various rumblings about the Halifax's 10% paydown facility. It is a very strong selling point, and if it is removed the society will lose a lot of business from the intermediary market.
Northern Rock's two-year fixed at 4.99%, having lasted for three weeks, has now been pulled and replaced by a 5.19%.
Last week the Co-Operative Bank increased its SVR by a whopping 0.45%, but even at 5.79% it is still much lower than most. However, if I had a discounted rate with it I would be disappointed to say the least.
Meanwhile, BM Solutions launched a new portfolio of rates including its large loans product to the whole market. And West Brom launched a buy-to-let product with a fees-free remortgage feature, giving the ability to use surplus disposable income if the rental coverage is insufficient. A number of lenders have started to do this and I expect more to join them in the near future as base rate increases make rental coverage even harder to achieve. This should help first-time or fledgling landlords to get the loans they need but will not help portfolio landlords.
Irish Permanent has launched a couple of buy-to-let trackers with attractive rates, with the rental coverage calculated at the pay rate but at limited loan to values.
Villain of the week has got to be Luke March's speechwriter at last week's mortgage awards at Quaglino's. Those who were there will know what I mean.
Rate of the week is jointly held by two Co-Op products, a two-year fixed at 4.79% and a two-year tracker base less 0.07%, both with no penalties and both with fees-free remortgage packages.
Three-month LIBOR is up 0.06% at 4.69%. The current base rate is 4.25%, so this means the City is expecting either a 0.25% or a 0.50% increase in the next three months.
12-month LIBOR is up 0.08% at 5.27% indicating a 1% increase in the next year.
Figures from Hometrack show that rising demand for property is helping house prices extend the recent series of strong rises. Average prices rose 0.6% in May, taking the total increase for the year up to 3.2%. Completed transactions rose 2.7%, buyer numbers climbed 2% and fewer homes failed to reach their asking prices.
Also in the news, a Bank of England report shows that consumers are on track to owe £1 trillion this summer, with debts currently rising by £1m every four minutes.
In total, consumers now owe £984.81bn, just short of the £1 trillion milestone expected in the summer. According to National Savings and Investments, first-time buyers are taking nearly four years on average to save for a house deposit – a year longer than a decade ago. People now take an average of three years and nine months to save a 5% deposit. This situation is due to earnings failing to keep pace with house price rises, the group says.
And the question on everyone's lips is will they or won't they? I say it is likely that when the MPC meets this week it will increase the base rate by 0.25%.