Market Watch: Disruption is everywhere

With transaction levels flat and demand subdued, will any party push a housing agenda during the election campaign?

We laughed during the Scottish referendum, cried throughout the Brexit vote, and now, just when we thought it was safe to walk past our local polling station, that little booth where we put our crosses is back. And this time it’s personal.

Yes, Prime Minister Theresa May – who someone recently described as a “pound-shop Thatcher” – has given us another few weeks of politicians avoiding questions, making up statistics and promising things they have no intention of delivering. At least election fever will be mercifully brief.

It is actually a wise move by the PM. The result should give us more security, and a new, strong and proper opposition should, hopefully, emerge from the inevitable fallout of Labour’s travails. The question is: will that opposition in fact be a resurgent Liberal Democrat party?

I do not believe the election will cause another ‘wait and see’ moment for clients. With everyone expecting a comfortable Tory win, the stability that will ensue should be good for the economy, with property prices more likely to rise and a general feeling of goodwill. The International Monetary Fund has already raised its economic growth forecast for the UK in 2017 to 2 per cent. I would rather buy now than afterwards.

For the time being, though, the housing market still seems to be stuttering. The Royal Institution of Chartered Surveyors reports that the number of properties on estate agents’ books is at its lowest since records began in 1978. With transaction levels flat and demand subdued, it will be interesting to see if any party pushes a housing agenda during the coming campaign, especially as stamp duty is a major cause of stagnation.

In the markets, three-month Libor is still at 0.34 per cent while swap rates have been pretty static.

2-year money is unchanged at 0.56%
3-year money is down 0.01% at 0.62%
5-year money is down 0.02% at 0.75%
10-year money is down 0.05% at 1.07%

In the product world, while Atom Bank’s lowest rate was gone in a flash, the good news is it seems to have been more than a flexing of the power of disruption. It has, in fact, proved a bit of a tonic for the mortgage industry. Not only does Atom still have a range of amazing rates but the publicity garnered from the act is good for us all.

Talk of a new ‘mortgage rate war’ always has an effect, and now is a great time for those who have been sitting on their hands to review their options. We have to build on this and ensure the public knows the market is open and competitive, and those who think they cannot get a mortgage may be mistaken.

It seems to have spurred others into action. Just look at Yorkshire Building Society’s discounted rate at 0.89 per cent to 65 per cent LTV. The only crying shame is that brokers do not get access.

Meanwhile, Virgin Money has reduced rates on three- and five-year products, with its five-year fix at 65 per cent LTV coming in at 1.84 per cent with a £995 fee.

Skipton Building Society has new two-year fixed intermediary-only products priced at 1.7 per cent to 70 per cent LTV and 2.18 per cent to 85 per cent LTV, while Accord has doubled its cashback offer to £500 on all cashback products.

Clydesdale Bank has increased its large-loan LTV limits and will now lend 80 per cent up to £2m, allowing 75 per cent to be on an interest-only basis. NatWest, meanwhile, has raised its maximum remortgage loan to £2m and extended its remortgage offer validity to six months.

Elsewhere, Precise has its own ‘price disruptor’ product, with a buy-to-let five-year fix at 2.99 per cent to 75 per cent LTV with a 2 per cent fee. The rental income is assessed at the pay rate.

Well done to Tesco Bank for confirming it will offer retention products and fees for brokers. However, it is a shame that Harrods will offload its banking arm. This is a big, historic move.

Finally, it was interesting to see the FCA announce it will investigate lenders with interest-only mortgage books to ensure customers are being treated fairly. What this actually means remains to be seen.

Andrew Montlake is director at Coreco