The unexpected fall in inflation has kicked any rate rise into the long grass – so let’s fend off the usual seasonal slowdown by finding the hottest deals for customers
There was much anticipation over the latest inflation figures that were released last week, with many expecting a further hike that would put even more pressure on policy makers within the Bank of England to consider raising rates.
What came to pass, however, was an unexpected fall in the inflation rate to 2.6 per cent, instantly easing this pressure.
This was mainly due to a decrease in fuel costs and it is the first fall in inflation since October 2016. It means that any chance of a rate rise this year has probably been kicked into the long grass. However, many still view this as a temporary blip, which could mean we will all be debating the ‘Will they, won’t they?’ question around rate rises sometime soon.
The newly formed UK Finance (incorporating the CML) has released its first set of figures for gross mortgage lending, which shows that lending is up by 9 per cent on May and up by 3 per cent on last June, with gross mortgage lending for the second quarter of 2017 totalling £60.3bn.
Whilst this looks positive on the surface, it is compared to a low period last year and means there is still some way to go as we enter a traditionally slow summer period.
Things are not contracting but there is more to do and, with a lot of potential remortgage and product transfer business to come in September and October, it will be interesting to see how much of a spike occurs in the actual figures.
What we do not need is any more interference in the market by regulators or the PRA. An awful lot of people require our help and professional advice.
Meanwhile, house price growth is slowing, albeit still increasing despite some negative comments out there.
In the markets, three-month Libor is down at 0.29 per cent while swap rates have tumbled further.
2-year money is down 0.05% at 0.61%
3-year money is down 0.07% at 0.70%
5-year money is down 0.07% at 0.88%
10-year money is down 0.06% at 1.27%
The Summer Sizzler season is upon us and Metro Bank is out of the blocks with its new five-year fixed rate of 1.69 per cent, available up to 65 per cent LTV with a £999 fee.
Given the latest inflation news and a fall in swap rates, no doubt more lenders will follow, especially over the quieter summer period.
NatWest has changed its contractor policy and will now calculate income as average weekly contract income multiplied by 46. There are some conditions around this, such as over a 12-month period (incorporating the date of application) the borrower has received or will receive sufficient income from one or more contracts, and has received a minimum of six months’ income from one or more contracts immediately preceding the date of application.
Santander has a new ‘Switch Early’ policy available to brokers, which means some customers will be able to switch up to around four months early without penalty. This is good news for those moving to a lower rate.
Barclays is extending the maximum LTV on residential remortgages where additional borrowing is required, up to 85 per cent.
Halifax has reduced two- and five-year 85-90 per cent LTV fixed rates by 0.3 per cent, and lowered its affordable housing shared equity/shared ownership two- year 80-90 per cent LTV fixed rates by the same amount. It has also reduced a selection of rates at 90-95 per cent LTV.
Furness Building Society has a new 1.49 per cent two-year fixed rate up to 80 per cent LTV, while also launching an advance stage payment product for self-builders in conjunction with Buildloan.
Ipswich Building Society has brought back five-year fixes, including a 90 per cent LTV version at 2.82 per cent and a 3.25 per cent buy-to-let product to 75 per cent LTV.
Market Harborough, meanwhile, has a new expat residential product starting at 2.99 per cent for a variable discounted rate for three years, or a 3.5 per cent rate fixed for three years. These are available up to 75 per cent LTV. It has slightly different rates for those paid in other currencies and is a very useful lender to check out.
Skipton Building Society has reduced its Help to Buy products by up to 0.69 per cent, but increased rates on its new-build range.
In the BTL world, Coventry has made positive changes on transitional BTL affordability with a reference rate of 5 per cent being applied. For those with incomes below £40,000 this is stressed at 125 per cent, while for those earning more it is at 140 per cent.
Santander also has a new BTL affordability rate for five-year fixes based on a rate of 4.5 per cent, which is a great move.
Both of these help to reduce the problem of mortgage prisoners in the BTL market, which is becoming more acute.
Bank of Ireland has a couple of new products including a 60 per cent LTV two-year fix at 1.43 per cent with a £1,495 product fee and a free valuation, as well as a 75 per cent LTV five-year fixed rate at 2.88 per cent with a £995 product fee, £250 cashback and a free valuation.
New Street has some new five-year fixes starting from 2.74 per cent with rental cover from 125 per cent at 5 per cent.
Finally, the lovely Interbay has entered the residential and commercial bridging market with some great products from 0.44 per cent.
Santander and Coventry – for their BTL calculation changes. We don’t need more mortgage prisoners in any area of the market.
Lack of flexibility on affordability from some lenders over certain cases. Some good clients are being denied sound products.
Andrew Montlake is a director at Coreco