The Redfern Review proposes what we have long called for: an independent housing commission. But will anyone listen?
Just over a week has passed since the stupefying US election result and, strangely, life continues as normal.
As we head towards the close of another year, and Christmas songs are already being played in shops, I sense a growing level of ‘2016 fatigue’. Surely next year cannot be as shocking? But the spectre of Le Pen and Brexit negotiations suggests otherwise.
We have a busy few weeks ahead as the traditional push commences of homemovers seeking to be in by Christmas, and lenders rush to hit annual targets and set up their pipeline for 2017.
There has been much talk about the new powers handed to the Bank of England to intervene if it sees issues starting to arise in the buy-to-let sector. This all comes on top of the raft of changes already due next year and leaves the buy-to-let market a minefield for many.
The changes on underwriting professional landlords with four or more properties all seem pretty grey. It will be interesting to see how lenders interpret them and whether the extra work leads to any pulling out or raising prices.
Meanwhile, £18m in government funding is being made available to speed up construction of 800,000 new homes. It seems a tall order given the lamentable levels of the past, especially if there is a shortage of construction workers, builders and materials.
The housing minister recently stated we were building 170,000 homes a year, which means the one million target set for 2020 by David Cameron will not be hit.
This brings us to the Redfern Review, published last week, which recommended what many of us in the industry have sought for ages: cross-party, long-term housing targets and policies.
It also said: “An independent housing commission, aimed at boosting homeownership levels over the long term, would monitor price trends and recommend policy adjustments.”
Did we really need a review to tell us that? However, at least it is out there now. Let’s see if anyone takes a blind bit of notice.
In the markets, three-month Libor remains at 0.4 per cent and swap rates have been teased upwards.
- 2-year money is up 0.06% at 0.68%
- 3-year money is up 0.10% at 0.79%
- 5-year money is up 0.14% at 0.99%
- 10-year money is up 0.17% at 1.38%
Having seen swap rates rise steadily since August, could we finally be witnessing the bottom of the interest rate cycle?
Barclays has some limited-time Great Escape products available for remortgages, including a two-year fix at 1.84 per cent at 75 per cent loan-to-value and, at 50 per cent LTV, a two-year tracker at 1.69 per cent, and a five-year fix at 2.15 per cent.
Coventry Building Society has a five-year fix at 1.84 per cent to 50 per cent LTV with a £999 fee. At 90 per cent LTV it has a similar product priced at 3.05 per cent with no fee.
Meanwhile, Metro Bank has moved to allow borrowers to rent out their home for up to 90 days a year through Airbnb without needing prior approval. This is very forward thinking and shows it is in touch with the ‘sharing economy’. Other lenders need to address this, especially for buy-to-let.
Metro Bank also has a new title suffix – Mx – for borrowers who do not identify with a specific gender.
Elsewhere, NatWest has a snazzy new intermediary website, while Clydesdale Bank has launched some exclusive new-build products. The three-year fixes are priced at 2.49 per cent to 80 per cent LTV and 2.59 per cent to 85 per cent LTV with no fees and free valuations. Mortgage offers are valid for 180 days.
In buy-to-let, BM Solutions has released details of its new approach to rental stress tests, which look pretty innovative. For basic-rate taxpayers, the current 125 per cent cover will remain, but for others it will be assessed individually. An online calculator will show how this works. The lender has also extended its maximum age to 80, with applicants having to apply by age 75.
Finally, keep an eye on clauses creeping into lenders’ offer conditions: in particular, the so-called MAC clause.
Andrew Montlake is director of Coreco Group