As Theresa May and Mark Carney clash over policy, rentals look set to outstrip sales as seller confidence returns
Last week the spotlight was on Prime Minister Theresa May’s and Bank of England governor Mark Carney’s argument over monetary policy. May has had enough of the side-effects of a low interest rate, quantitative easing world but Carney says he will not be intimidated by a bunch of politicians when the Bank is meant to be independent.
Meanwhile, inflation has shot back up to 1 per cent, with Carney at pains to state he is willing to tolerate a higher level and an overshoot of the 2 per cent target if it means encouraging economic growth. At the same time, Government borrowing costs have risen to their highest level since the referendum, with gilt yields above 1.22 per cent, up from around 0.5 per cent two months ago.
It was also interesting to see property rentals are set to outstrip sales next year for the first time since the 1930s, according to Countrywide, which tells you a thing or two about the housing market.
With house prices increasing again (according to Rightmove at least) it seems seller confidence is returning after the initial Brexit-induced dip. In fact, there have been reports British consumers were at their most confident for five years in September, although, for once, the upbeat mood was not shared in London, where fears around issues like “passporting” have filtered through.
As we go further along the hard Brexit line, it looks more and more like the UK has shot itself in the foot, short term at least.
On another note, I read with interest that Bank of China and HSBC are among those looking at adopting a blockchain for mortgage valuation systems. It will be used in Hong Kong to provide quick property valuations. According to the FT: “Blockchain can be used to create a decentralised network of banks and surveyors through which the latest valuations can be listed, verified and shared – in a matter of seconds.” The tech revolution is upon us.
In the markets, three-month Libor has increased a touch to 0.41 per cent while Swap rates have steadied.
- 2-year money is unchanged at 0.56%
- 3-year money is up 0.02% at 0.61%
- 5-year money is up 0.02% at 0.71%
- 10-year money is up 0.0.01% at 1.02%
So, to the dear old mortgage market. Barclays continues to steal a march by announcing it will now offer free valuations on purchases up to £2m, which is jolly nice. This can save clients a lot of money. Will valuation fees soon be a thing of the past?
Nationwide has some new two-year fixed products at 1.34 per cent to 60 per cent loan-to-value with no fee and a £500 cashback for first-time buyers, and 1.74 per cent to 85 per cent LTV. They also offer a free valuation.
Tesco Bank has launched new, lower rates on two-, three- and five-year fixes and, having used its system, it is nice and slick.
Clydesdale Bank has released four new products in its professional range with no arrangement fee and free valuation on purchase and remortgages, with pricing at 1.99 per cent to 85 per cent LTV on a two-year fix and from 2.49 per cent at 90 per cent LTV. Five-year rates start at 2.69 per cent to 85 per cent LTV.
It will also now lend to applicants with Tier 1 or Tier 2 visas, as long as they are working for a blue-chip organisation, earning more than £75,000 and have spent two years in the UK.
Newcastle Building Society has tweaked its buy-to-let rental coverage (as will every other player that has not already over the next couple of months). For those on a short-term product the rate is 145 per cent at 5.5 per cent, but for those on a five-year fix or more the rate is 145 per cent at 4 per cent.
TSB is also making some changes and will now limit the amount of mortgaged properties in the background to 11. Rental income can no longer be keyed as self-employed income or included within the £25,000 minimum income requirement. It has also removed its mortgage account fee from all its products, which is a great move. I never really understood the point of this fee.Well done.
Finally, the FCA has identified an estimated 750,000 borrowers that went into arrears could be in line for compensation as they were effectively charged twice by firms that have automatically included the balances in mortgage payments. It is consulting on the matter and is to create guidance.
Andrew Montlake is director at Coreco Group