View more on these topics

Drop lock will calm borrowers’ nerves

DAVID FINLAY, INTERMEDIARY BUSINESS DIRECTOR, WOOLWICH
DAVID FINLAY, INTERMEDIARY BUSINESS DIRECTOR, WOOLWICH

The cornerstone of any economic recovery is confidence, which is why it’s worrying to see the quarterly consumer confidence survey from the British Retail Consortium showing its first fall since April 2009.

It’s difficult to know the depth of such a survey but when trying to build consumer certainty any negative news can be damaging.

Confidence is also inevitably linked to interest rates. These have been a bone of contention for some time, with speculation persisting about potential rises.

These rumours appeared to have been quashed when Ernst &Young recently suggested that the Bank of England will keep the base rate at 0.5% until 2014, but this is by no means a certainty.

Monetary Policy Committee member Andrew Sentance recently voted to raise the base rate to 0.75% because of inflation not meeting the government’s 2% target.

While this stance has not been adopted by other members of the committee, it may plant a seed of doubt.

To try and bring some peace of mind and confidence to the market we have introduced a drop lock facility for all new tracker and offset borrowers.

This takes the risk out of entering into a low tracker rate by providing the ability to switch to a fixed deal at any point without incurring an early repayment charge. Importantly, we believe this gives borrowers a sense of security when interest rate uncertainly is in the air.

Recommended

ANDREW MONTLAKE: THIS REDUCES CLIENTS’ CHOICE

Industry saddened to see brand axed as A&L merges into Abbey

Santander’s decision to merge its Alliance & Leicester business with its Abbey brand has disappointed brokers. From October 15 all broker business will come under a single Abbey brand. Alan Mathewson, managing director of intermediary distribution and Santander Private Banking (UK), says the decision was taken to allow the bank to align its offering and […]

JAMES WATSON, SALES AND MARKETING DIRECTOR, PAYMENTSHIELD

New cover products can fill the PPI gap

Lloyds Banking Group’s withdrawal from the sale of payment protection insurance suggests it will not be able to generate adequate profits from the product if the Competition Commission insists on a point-of-sale ban, as is widely expected. In making this move Lloyds group joins lenders such as HSBC and the Royal Bank of Scotland, which […]

Newsletter

News and expert analysis straight to your inbox

Sign up