On the anniversary of the EU referendum, our chances of a good Brexit look slim and battle lines are drawn at the BoE
Cast your mind back to a year ago when the Brexit vote was taking place: everyone was confident of Remain’s success, and we could put the whole nonsense behind us.
Few could have predicted the position today, with shock election results across the world and Brexit negotiations starting with the weakest UK government in years.
The chances of the UK getting anything it wants are slim at best. However, this may be a blessing in disguise as some Leavers begin to experience buyer’s remorse.
Prime Minister Theresa May has already rowed back from a ‘hard’ Brexit; I still do not know why she ever espoused it. A ‘soft’ Brexit now seems more likely, and rights for EU workers who have been in the UK look set be recognised.
I remain unconvinced that Brexit will actually happen, but the uncertainty caused by the palaver is not helping anyone.
Meanwhile the long, hot, testy summer has seen battle lines drawn at the Bank of England too. Just after the latest MPC meeting, where three members voted for a rate rise, governor Mark Carney came back with his own version of forward guidance, saying the time was not right for hikes just yet, especially before Brexit. Cue the Bank’s chief economist, Andy Haldane, who said he planned to vote for a rate rise “relatively soon”.
Take that how you like but rate increases seem closer. The CML has also suggested that product prices may be at their nadir.
In the markets, three-month Libor is stable at 0.29 per cent while swap rates have increased by a smidge.
2-year money is up 0.03% at 0.50%
3-year money is up 0.03% at 0.56%
5-year money is up 0.01% at 0.40%
10-year money is down 0.01% at 1.06%
On to products, and Bank of Ireland has a reduced range with two-year fixes at 60 per cent LTV from 1.13 per cent with a £995 fee, and five-year fixes from 1.85 per cent also with a £995 fee, with a free standard valuation on both.
BoI has also widened its First Start range, including a 75 per cent LTV two-year fix at 1.56 per cent with a £1,495 fee, free valuation and £250 cashback.
Leeds Building Society has launched some products, with 10-year fixes from 2.49 per cent at 65 per cent LTV with a £999 fee, and new large-loan deals starting from 1.5 per cent to 75 per cent LTV with a fee of £1,999.
Meanwhile, Shawbrook Bank has released a residential interest-only mortgage for the over-55s, which will allow them to stay in their home for an additional 15 years.
Metro Bank has reduced some rates and has a five-year fix from 1.74 per cent to 65 per cent LTV, rising to 2.69 per cent at 90 per cent LTV. Nationwide has also made reductions to rates.
Scottish Widows has increased its minimum loan amount from £50,000 to £150,000 for all residential remortgage applications.
In buy-to-let land, the CML has cut its 2017 forecast for the market to £35bn, falling further to £33bn in 2018, which is unsurprising given all the changes.
Well done to The Mortgage Works, which seems to be the first to provide details around its portfolio lending options. It defines portfolio landlords as borrowers with four or more distinct, mortgaged BTL rental properties.
For such landlords, an interest cover ratio of 145 per cent applies, regardless of tax status. Minimum ICR for houses in multiple occupation stays at 170 per cent, with no changes to LTV limits, maximum loan sizes, minimum income criteria or stress rates.
Kent Reliance is back up to speed and has cut its BTL five-year fixes back down to 3.79 per cent with a 2 per cent fee up to 75 per cent LTV. The rates are the same for specialist BTLs and, for loans over £1m, fees are 1.75 per cent.
Precise has two-year tracker rates from 3.19 per cent with no fee, and five-year rates from 3.39 per cent with a 2 per cent fee and assessment based on the pay rate. Where limited companies are concerned, it now has no limit on number of shareholders under the age of 25, subject to their being a director’s dependant.
Finally, Ami has sent a note to members on cyber security. This is something we all need to read, digest and take seriously to protect ourselves and consumers.
The Mortgage Works – for providing some clarity on portfolio landlords.
The increase in those trying to scam, hack and get into your data – we need to be vigilant.
Andrew Montlake is director at Coreco