Market Watch: Hammond is a man for all seasons


Housing got a big mention in the Autumn Statement but it remains to be seen whether the allocated funds are sufficient

New Chancellor Philip Hammond had the chance to show off his wares last week with his first Autumn Statement. Which turned out to be his last. The Autumn Statement will be replaced by the actual Budget, while the spring Budget will now be a lower-key Spring Statement.

It does make sense, with more serious changes to be announced well in advance of the new tax year. Under George Osborne, the Autumn Statement had pretty much become Budget Day 2, which seemed a little crazy.

Anyway, there were no real surprises, much of it being confirmation of pre-announced items.

Despite GDP growth of 2.1 per cent making the UK the fastest-growing major economy this year, there was a relatively downbeat forecast of the situation next year. It is reckoned the Brexit palaver has cost us 2.4 per cent in terms of lost growth.

There was a lot of talk about increasing investment and infrastructure, with housing getting a big mention. We have a £2.3bn housing infrastructure fund to help provide 100,000 new homes in high-demand areas, and £1.4bn for delivering 40,000 extra affordable homes.

Whether this is enough remains to be seen.

Those most nursing a hangover are lettings agents, which have seen fees for tenants banned. The issue is around how transparent these charges are, and why, when a landlord engages an agent, the tenant should bear any of these sometimes rather dubious costs.

This is good news. There is no reason to charge tenants on top of rent. The question now is whether agents will put these charges on landlords, forcing them to increase rents further. Experience in Scotland suggests not.

In the markets, three-month Libor is still at 0.4 per cent while swap rates have eased a touch.

  • 2-year money is down 0.03% at 0.65%
  • 3-year money is down 0.04% at 0.75%
  • 5-year money is down 0.04% at 0.95%
  • 10-year money is down 0.06% at 1.32%

Back to the daily grind and the biggest news is from Halifax, which gets an honourable ‘Hero’ mention for finally rejoining the interest-only picture. It has three new repayment plan types: bonus, cash and sale of mortgaged property. To qualify, a sole applicant must have a minimum income of £100,000 or combined income of £150,000. Sale of property is available to 50 per cent LTV and there must be a minimum equity of £200,000.

heroesNatWest is also in our good books for releasing two 95 per cent LTV products to help fill the void from the departing Help to Buy Guarantee Scheme. The rates are a two-year fix at 3.69 per cent and a five-year fix at 4.59 per cent, with no product fee.

In other news, customers of Accord can now run their offset accounts online, which is a positive step, while Santander has simplified the evidence it needs to support bonus, commission and overtime primary income paid monthly or more frequently.

Elsewhere, Newcastle has extended its buy-to-let distribution to all of its key partners and increased its maximum age to 80 for residential mortgages.

Harrods Bank has reduced its maximum LTVs on buy-to-let products to 60 per cent and will not consider applicants with four or more properties. No doubt this is the first direct response to the PRA’s upcoming changes on how to underwrite professional landlords. Harrods has also raised its maximum LTV on residential loans to 75 per cent between £1m and £2.5m on a repayment basis.

TMW has cut some rates and has new five-year fixes from 2.74 per cent with a £1,995 fee. It is also piloting its buy-to-let deals direct to consumers for the first time.

Finally, I was interested to read the Imla report that MMR rules are causing problems for borrowers, with 70 per cent of lenders and 67 per cent of brokers citing as their top issue the restricted access to the level of mortgage that consumers want. Stability is needed but we must be mindful that some decent borrowers are falling by the wayside.

Andrew Montlake is director at Coreco