It’s good to see more products on the market but it means little if they are not competitive - after all, it doesn’t make any difference if lenders have 300 products each if they are all rubbish
Swaps didn’t move a lot last week – a bit up and a bit down, but not enough to make much difference..
1-year money is unchanged at 0.93%
2-year money is unchanged at 1.74%
3-year money is up 0.01% at 2.35%
5-year money is up 0.01% at 3.12%
Three-month LIBOR remains unchanged at 0.61%
In last week’s column I suggested that SVR increases might not necessarily be a bad thing as such a trend might prompt some borrowers to consider remortgaging.
Of course, the remortgage market has been as dead as a dodo for a long time.
I know that plenty of brokers are excited about being able to do something for their existing customers, many of whom have been built up over a long period through hard work, rather than having to rely on purchases.
But we should remember that there is a limit to funding, with maybe £155bn available this year in gross lending – not much up on the £143bn seen in 2009.
I hear rumours that some lenders are looking hard at their general terms and conditions as well as their offer letters and Key Facts Illustrations to figure out if it’s possible to invoke exceptional circumstances clauses.
Building societies are struggling to compete for savings. Norwich and Peterborough Building Society last week increased its SVR by 0.5% and I am sure others will follow suit.
I suspect banks, especially Lloyds Banking Group and the Royal Bank of Scotland, will keep their SVRs where they are until the Bank of England base rate goes up.
I imagine Mortgage Express would dearly love to increase its SVR but its deals are linked to the base rate.
Despite the removal of early repayment charges I doubt many landlords want to remortgage away from the bargain rates they are paying at the moment.
I imagine the only loans being repaid are by those selling their properties or making lump sum reductions due to interest savings.
It’s a terrible shame that the launch of NatWest Intermediary Solutions means that borrowers with First Active, RBS and The One Account will need to go direct to RBS to port their loans.
It appears that NatWest clients can carry on unaffected. RBS Intermediary Partners has not been popular with brokers for some time because of dual pricing and this won’t cheer them up much.
The Mortgage Works has launched a stepped tracker product. Normally these kinds of rates start cheap and then get more expensive as you get into the term.
But TMW has done it the other way round. Its deal is base rate plus 4.14% for year one, then down to base plus 2.14% in year two. There is a 3.5% fee and the product available to 60% LTV.
I’ve never been a big fan of stepped products because no matter how well you explain them to clients they always seem surprised by the rise and ring up their brokers to remonstrate.
Maybe with these products they will call to say thank you. I’m sure most landlords will just be worried about the average rate over two years and that’s obviously 3.14%.
It’s also good to see that selected let-to-buy products are now available up to 70% LTV.
And it’s encouraging to see Mortgage Brain report a 26% increase in the number of products but let’s not forget the period which it is being compared with was the Christmas break.
While it’s good to see more products, numbers are meaningless compared with competitiveness. I mean, who cares if every lender has 300 rubbish products?
Figures from Moneyfacts also show that availability of mortgages is on the up. The number of deals on the market has jumped in the past month but more importantly the trend of lenders relaxing their criteria has continued.
The number of deals on offer is up 20% compared with the start of the year.
HERO OF THE WEEK is Platform Home Loans for its base rate pledge and also its support of the broker market. It won’t increase its tracker rates until the base rate goes above 1%. And it’s also cut a number of rates for the networks it deals with. Two-year fixed rates start from 3.59% and two-year trackers from 2.69%. Let’s hope it widens its distribution to more partners.
VILLAIN OF THE WEEK is the government. The Council of Mortgage Lenders last week revealed that there will be a £300bn funding gap when current government support schemes expire. The government must do more to support the mortgage market and allow non-bank lenders to access these funds as well.