Trump still wants his wall, ‘Project Fear’ is back, RBS has been fined again – but mortgage lending is at a nine-month high
Last week there were boos and hisses as the new US president signed a raft of executive orders to show he was serious about his “America first” protectionist agenda, building a wall around Mexico and giving everyone the right to bear arms.
Our High Court decided that Brexit must be debated in Parliament before anything was actually done, with the SNP ready to table endless amendments to delay the whole thing, and to demand a second referendum for Scotland.
RBS put aside £3.1bn to cover US mortgage fines, and there is some concern as a number of big financial institutions look like honouring their ‘Project Fear’ predictions in moving workers out of the UK. The big question around Project Fear may not be whether it was right or wrong, but simply a question of timing.
On a positive note, not only did the UK economy grow by 0.6 per cent in the fourth quarter of 2016 – slightly better than most economists had predicted – but mortgage lending has risen to a nine-month high. The Council of Mortgage Lenders says borrowing in December reached £20.4bn, which takes the 2016 total to £246bn, a post-2008 high.
And if inflation is set to increase to over 3 per cent shortly – the pound has strengthened a touch, rates are still low and consumer borrowing is getting higher and higher – so what? In the words of Bob Marley: “Everything’s gonna be alright.”
In the markets, three-month Libor is still at 0.36 per cent while swap rates have increased again.
2-year money is up 0.04% at 0.68%
3-year money is up 0.06% at 0.79%
5-year money is up 0.08% at 1.00%
10-year money is up 0.11% at 1.42%
Although swap rates have been increasing, the competitive pressure between lenders is proving a force to be reckoned with as rate cuts continue in both the residential and BTL space.
HSBC has cut some rates by up to 0.3 per cent and has an 85 per cent LTV two-year fix at 1.44 per cent with a £999 fee. Its five-year fix to 60 per cent LTV is now at 1.79 per cent.
Metro Bank has radically reduced its five-year fix to 1.84 per cent at 65 per cent LTV, with other rates also falling. At 85 per cent LTV the rate is 2.34 per cent.
Virgin Money has new Marathon Exclusive products, with a rate of 2.15 per cent for a five-year fix to 65 per cent LTV with no fees. At 90 per cent LTV the rate is 2.89 per cent with a £262 fee. However, these products are available only to 2017 Virgin Money London Marathon runners.
Ipswich Building Society has new products aimed at self-employed, specialist borrowers with only one year’s accounts. Rates are available from 2.74 per cent for a two-year discount or 2.99 per cent for a two-year fix up to 75 per cent LTV.
Aldermore now accepts one year’s accounts up to 85 per cent LTV as long as the company has traded for two years; it will also look at retained profits for affordability. Newcastle BS too has products for those with one year’s accounts.
Leeds BS has two-year fixes to 80 per cent LTV at 1.7 per cent and to 85 per cent LTV at 1.8 per cent, both with £999 fees.
Precise has reduced tiers and rates across its residential products, with two-year fixes cut by up to 0.55 per cent. It is also offering its Tier 1 range up to £2m.
In the BTL world, Barclays has its lowest rates ever, including a two-year fix at 2.09 per cent and a five-year fix at 2.99 per cent, both to 75 per cent LTV. Its 10-year fix is at 2.99 per cent to 65 per cent LTV.
Accord has cut BTL rates by up to 0.2 per cent and has a new two-year fix at 1.99 per cent, with a £1,995 fee up to 65 per cent LTV.
New Street has a set of products with rates from 1.59 per cent for a 65 per cent LTV two-year discount, while The Mortgage Works has new products with no fees, such as a 65 per cent LTV two-year fix at 2.84 per cent and a five-year fix to 75 per cent LTV at 3.54 per cent.
Finally, it was wonderful to see Rob Jupp and wife Claire on the box last week in ITV’s The Cruise. A brilliant performance all around, although the sight of Mr Jupp on a massage table kept me awake for a while…
Andrew Montlake is director at Coreco Group