Market Watch: We have to get the SVR message out

With three MPC members having voted for a rate rise, we must urge borrowers on SVRs to review their situation now

In the benign interest rate environment we have grown used to, the results of the latest Bank of England Monetary Policy Committee meeting came as a bit of a surprise, with a 5:3 vote to keep rates unchanged again.

The fact three of the members are now advocating an earlier-than-expected rise suggests inflationary pressures may be more pronounced than initially thought.

This brings us closer to a potential increase and, while we have experienced similar situations that have not come to pass, our industry must get the message out to urge the thousands of borrowers sitting on variable rates to review their situation while levels remain low.

On top of this, inflation stands at 2.9 per cent and is expected to bust the 3 per cent level. With average earnings rising by just 1.7 per cent (excluding bonuses) in the year to 30 April, this represents a big squeeze on living standards.

All of this is clearly not good news for the beleaguered prime minister, struggling to hold on to power sufficiently to get a Queen’s Speech delivered, let alone enter Brexit negotiations straight away. So much for starting those discussions in a position of strength and confidence.

A soft Brexit looks a much more certain prospect, with rights of Europeans already living and paying taxes in the UK surely being confirmed. Let battle commence.

In other news, we have a new housing minister. The man in the hot seat is Alok Sharma, who I am sure we will all welcome. Considering we have seen six such ministers since 2010, we hope he stays long enough to actually be able to do something there. That said, the position is still not a full Cabinet post, so you wonder how seriously this government takes the whole housing issue.

In the markets, three-month Libor is stable at 0.29 per cent while swap rates have fallen a tad further.

2-year money is down 0.03% at 0.47%
3-year money is down 0.04% at 0.53%
5-year money is down 0.04% at 0.69%
10-year money is down 0.02% at 1.07%

In our wonderful market, Virgin Money has a new broker-exclusive two-year fixed rate of 1.19 per cent for remortgage customers, with a maximum 50 per cent loan-to-value, minimum loan size of £300,000 and a £1,995 fee. Its five-year fix at 65 per cent LTV is 1.82 per cent with a £995 fee.

Coventry Building Society is now paying £500 cashback on fixed-rate products on all purchase completions, including for first-time buyers.

Leeds Building Society has reduced rates by up to 0.45 per cent across its interest-only range, while Clydesdale Bank has some remortgage specials, including a 2.39 per cent two-year fix to 90 per cent LTV and a five-year product at 2.89 per cent.

Halifax has introduced its online product transfer system, which looks really slick and boasts an intuitive system and simplified process. This should really help with the massive spike of roll-offs expected over the coming months. The lender has also made product changes and reduced two-year rates up to 90 per cent LTV by 0.3 per cent, as well as made a host of other reductions across its range.

In the high-net-worth market, Adam & Company has reduced its two-year fix to 1.89 per cent and its 10-year fix to 2.79 per cent. For large loans and HNW clients it is definitely worth checking out.

In buy-to-let, Foundation Home Loans has a product range with two-year fixes from 2.89 per cent and five-year deals from 3.29 per cent. It has also simplified its first-time landlord criteria.

Paragon has some limited edition five-year fixes at 3.65 per cent with a 0.5 per cent fee to 75 per cent LTV and 3.75 per cent for HMOs, while Metro Bank now accepts consumer buy-to-let applications.

Finally, there has been a lot of debate around the fact second charge loans have not taken off as expected. Those involved need to sit down with brokers to understand clients’ real requests and issues with the fees and rates that still exist. This will never be a massive mainstream market but there is an important place for it if pitched and priced correctly.

Andrew Montlake is director at Coreco


Borrowers need choice on free legals: Bob Hunt

There are arguments for and against free legals but better communication would help clients make an informed choice The letters page of this publication is not often the scene of mass agreement on an issue. But the recent adviser views proffered on the use of free legals and the performance of certain conveyancing firms provided […]


Opinion piece: Never assume you know it all

Brokers must future-proof themselves by providing a holistic proposition and using technology to update and improve it Uncertainty has become the watchword for much of the global political and economic outlook over the past 12 months. Yet, despite a lack of certainty about the impact of events such as Brexit, last year was a strong […]


Interest rates predicted to rise in early 2020s

On 2 August 2018, the Bank Of England raised interest rates from 0.5 per cent to 0.75 per cent. The previous base rate rise was in November 2017, from 0.25 per cent to 0.5 per cent, which was the first raise for more than a decade. Mark Carney, governor of the Bank of England, said in August […]

Canada Life annual IHT survey results

75% of wealthy unaware of new residence nil rate band IHT allowance Just 4% were aware the new allowance will be up to £175,000 per individual Lack of awareness of IHT rules means families risk paying a bigger bill than they need 83% think the current inheritance tax rules are far too complex A remarkable […]

Pensions - thumbnail

Auto-enrolment — don’t leave it too late…

With auto-enrolment (AE) well under way for the UK’s largest businesses, over the next three years an additional 800,000 smaller employers (with less than 60 employees) will start their journey to comply with the legislation. AE mandates all eligible employees and their respective employers to make regular pension contributions into a qualifying pension scheme. To learn more about the legislation read our brief Jelf AEase — simple steps to AE compliance guide.


News and expert analysis straight to your inbox

Sign up

Why register with Mortgage Strategy?

Mortgage Strategy continues to be the market-leading B2B mortgage publication in the UK, and provides trusted, independent insight with the aim of helping, promoting and analysing the latest developments for mortgage professionals.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Mortgage Strategy Events
Be the first to hear about our industry leading conferences, awards, webinars and more.

Research and insight
Take part in and see the results of Mortgage Strategy's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now