Don’t lose your head – this is not a Lehman moment but an opportunity for brokers to provide well-needed sound advice
Where the hell do I start this week, then? This is the biggest political shambles in the history of shambles, and by Jove we have had a few.
On the one hand we have a Prime Minister who risked the future of the country on a nonsensical quest to head off a minority party that was never going to get more than five seats. Then we have a leader of the Opposition who was meant to be campaigning to remain but gave every indication he would rather leave.
To cap it off, it seems that the architect of the whole debacle – Boris “we will take on Europe together” Johnson – never really wanted to leave in the first place. However, his apparent plan to become Prime Minister and the hero who negotiated a new deal with those nasty EU people has been kippered by his so-called backer, forcing him to withdraw from the whole battle at the first sign of a skirmish. Blackadder and the officers on the Front in World War One come to mind.
Well done BoJo: you single-handedly caused a crisis then ambled off into the sunset muttering like Hugh Grant in Notting Hill with our AAA credit rating.
Meanwhile, no one wants to be the one to invoke Article 50, so it might never happen. What is more, we have learned both sides did lie. There is no £350m saving, no emergency Budget, no more money for the NHS, and immigration may even rise as a result.
Scotland, with the only leader with any guts at all, is asking for another referendum, many of those who voted leave confess they did not really mean to, and the economy is going a little crazy. Sterling has weakened considerably and foreign investors are poised to buy into the London housing market because they have suddenly found things an awful lot cheaper.
In Europe itself, it seems that the president of the European Commission Jean-Claude Juncker wants us to go but German Chancellor Angela Merkel really does not. The Dutch, among others, are also toying with the idea of joining the exodus.
All of that said, now is the time for calm heads. The world will not end; this is not a Lehman’s moment. Banks are very well capitalised and want to keep lending, and rates will fall. Everyone buying a house still needs to buy a house and there is still not quite enough property to go around, so prices will hold. Take note valuers.
There are bags of opportunity for brokers at times like these. People need calm, sensible and professional advice. Remortgages are flying around and buy-to-let investors and buyers are still there. Brokers who know how to keep in contact with their client bank and roll up their sleeves will prosper. So let us not talk everything down. We will be fine.
In the markets this week, three-month Libor has slipped to 0.56 per cent, while swap rates have capitulated like England’s overpaid footballers.
2-year money is down 0.23% at 0.58%
3-year money is down 0.30% at 0.58%
5-year money is down 0.36% at 0.67 %
10-year money is down 0.27% at 1.04%
In the mortgage world, Fleet has upped rates and cut loan-to-values, while other lenders, such as Santander, have continued with planned rate cuts. It was interesting to see Santander increasing tracker products, though. Perhaps it suspects a base rate cut is coming.
Clydesdale has delivered the goods on interest-only, allowing part and part up to 80 per cent LTV with the interest-only element up to 75 per cent LTV. The £300,000 equity requirement will now be based on the equity position at the end of the mortgage term. Rates range from 2.09 per cent to 80 per cent LTV.
Elsewhere, TSB will now lend to age 70 without proof of income into retirement, while on the buy-to-let side it has increased rental coverage to 145 per cent at 5 per cent to 65 per cent LTV and to 145 per cent at 5.5 per cent above that.
Meanwhile, Skipton is offering day-one valuations and Halifax has improved its website.
Finally, well done to the Association of Mortgage Intermediaries for a significant win on FCA fees that will mean firms not having to pay an extra £200 per year for an activity they are already carrying out.
Andrew Montlake is director at Coreco