Market Watch: The crawl of the invertebrates

With uncertainty around politics and the Budget, the best way to prepare for the future is to ensure that buyers understand finance

I know what you are thinking: How did we get to May already? Is summer already over? Is British politics really in the state it is? And how the hell can there be so many IT issues?

At this rate, the march of the robots will be more like the drunken crawl of the invertebrates.

In all seriousness, on TSB’s recent technology issues, I am truly sorry to see it happen to such a great bunch of people who have been so excited about the promise of a new system, and have kept brokers up to date on their progress, asking the right questions all the way through. Some of these IT boffins that waltz into big organisations and charge the earth to create these systems have a lot to answer for.

As for the poor customers just trying to get on with their lives, I hope it is all sorted by the time you read this. They are certainly not sitting there singing: “we’re in the money”.

We have a duty to help spread the word for the next generation of buyers

Meanwhile, the smooth running of British politics (ha) has earned us another person looking after housing, with Sajid Javid moving up to home secretary and James Brokenshire taking over his role. We wish him well. I cannot dwell on politics any further as it makes me angry and I will end up shouting at my own writing.

It has been interesting to hear the latest comments from Bank of England governor Mark Carney on the timing of interest rate rises, with the chances of a May increase now receding somewhat after he said recent economic data has “muddied the waters”.

Inflation has fallen more than expected to 2.5 per cent and retail sales have also suffered. This does not mean a rate rise will not happen at all, though. Indeed, it still looks like we will get one this year, possibly just pushed back to August or the final quarter. The language Carney uses in his May speech will be interesting.

On housing more specifically, some fascinating statistics have surfaced over the past few days, including the fact a total of 69,000 first-time buyers have claimed stamp duty tax relief since it was first waived, according to HM Revenue & Customs.

Across the country, the average first-time buyer has saved £2,300 on the purchase of their property, with those in London saving £4,300.

Financial literacy

Of course, this is very helpful for many but, where education is concerned, there is still so much more to be done. According to another recent survey, 25 per cent of new buyers believed stamp duty was paid by the vendors, while two-thirds of first time buyers thought the estate agent or surveyor did all the legal searches.

Financial literacy and education is something we all need to get passionate about. We have a duty to help spread the word for the next generation of buyers.

In the markets, three-month Libor has moved a touch up again to 0.76 per cent, while swap rates have also eased up in solidarity.

2-year money is up 0.01% at 1.13%
3-year money is up 0.03% at 1.26%
5-year money is up 0.07% at 1.43%
10-year money is up 0.16% at 1.67%

Product wise, there has been the usual plethora of rate rises but there are still some good offerings out there. Clydesdale’s five-year fixed at 1.89 per cent is good to see from a lender that has some sensible underwriting and has always looked to support brokers’ trickier cases.

Accord has been busy cutting rates on its product transfer offerings and TMW has extended its offer validity to six months on remortgages.

Halifax has added a £1,000 cashback to its products, which will help consumers, while Santander has tweaked the number of properties applicants can own from four to five.

Barclays now has an enhanced residential affordability calculator including maximum loan amounts and minimum terms, and now accepts some address verifications printed from the internet. On the buy-to-let side, it has a new suite of portfolio landlord products, including a 1.99 per cent two-year fix and a 2.69 per cent five-year fix with £1,950 fee.

In the bridging world, Precise continues to do great things, offering its lowest ever bridging rates starting at 0.49 per cent to 50 per cent loan-to-value or 0.59 per cent to 70 per cent LTV. Impressive stuff.

And some good news for the industry on a broader scale. Further highlighting the excellent work of the Association of Mortgage Intermediaries, the FCA has listened to arguments set out on Financial Services Compensation Scheme bills, with brokers no longer having to pay for the misselling of personal pensions and investment business. There will also be a 25 per cent provider contribution to costs.

As Ami says: “This has been a two-year journey to achieve a fairer outcome for all mortgage brokers and it will have a significant impact on the fees levied from 2019.”

Finally, a headline no one wanted to see. According to boffins at Swansea University, everyone’s favourite plant and the scourge of mortgage applications everywhere, Japanese Knotweed, cannot be eradicated. Not. Ever.

Apparently, they tried pretty much everything (well, the 19 main methods usually used) and no matter what they do, it just keeps coming back. Cue evil laugh and dramatic music as the camera pans away….

Andrew Montlake is director at Coreco

What really grinds my gears?

I have read more than a few reports on the state of financial literacy in the UK. One suggested one-in-five people are financially illiterate, while others, such as the excellent L&G report commissioned last year, show just how much consumers misunderstand the mortgage market and who does what.

The industry has got a better at shouting about what we do. Many of us are now on social media extolling the virtues of our hard work. The online world also gives people access to information and helpful guides from good brokers and lenders.

But this is just the tip of the iceberg. We have to target people earlier. We have to educate in partnerships with schools and colleges; continue to lobby the powers that be for proper financial education courses that prepare people for real life, to deal with debt and understand concepts such mortgages and pensions.

We are starting, but we all need to do more.

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Andrew Montlake-Coreco

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  • Emily Grant 14th May 2018 at 8:49 pm

    Your comments regarding Japanese knotweed are slightly misleading. The study shows 19 methods using HERBICIDE will not eradicate knotweed and as such it is seen as a valid ‘control’ method. It is still very much possible to eradicate the plant using physical excavation methods when carried out by a suitably qualified expert.