All the talk of the past couple of weeks has been around interest rates. Although the Bank of England’s Monetary Policy Committee voted no change by nine votes to zero, the rhetoric has changed with a pretty bullish assessment of the likely path ahead.
The money now is on a rate rise in May, with much discussion over whether there will be more than one this year. This assumes increases will continue at the 0.25 per cent level but, of course, we could see a bigger than anticipated move all in one go.
We are also assuming that this hard talk is not a re-emergence of Bank of England governor Mark Carney’s famous forward guidance policy, which will be looked back on as being pretty successful in changing the relative direction of markets without actually doing anything.
Such talk has also come from the Bank’s chief economist Andy Haldane, who says wages are expected to rise despite the fact GDP growth was unexpectedly revised down for the last quarter of 2017.
As a betting man, a quarter point interest rate rise in May looks likely.
Of course, there is still the Brexit effect to contend with. That said, Brexit weariness is starting to kick in, and the possibility of a soft option looks more and more likely, so this is something most people are just trying to get on with now.
I repeat my view that the hard Brexit the Brexiteers voted for will never happen. If nothing else, it is just too damn hard to achieve.
This month also sees the end of the Term Funding Scheme, which is bound to have some effect on lenders being able to offer the lowest rates possible, especially in the face of rising swap rates.
In the markets three-month, Libor has increased to 0.56 per cent, while swap rates have continued their increase, with two-year money now above 1 per cent once more for the first time in around two years.
- 2-year money is up 0.13% at 1.02%
- 3-year money is up 0.16% at 1.18%
- 5-year money is up 0.18% at 1.39%
- 10-year money is up 0.19% at 1.65%
In the product world, we have seen lenders such as Halifax, Scottish Widows, BM Solutions, Nationwide and Accord among others all put a selection of rates up. Some, like Barclays and HSBC, are holding fire for now, but it will not be long until they join the throng.
There was good news in official figures suggesting the number of first-time buyers had hit their highest level in 10 years, with some 365,000 buying their first home last year. UK Finance data also showed that the average first-timer was aged 30, with an income of £41,000.
Meanwhile, it was interesting to see the first online mortgage broker finally end its consumer-facing operation.
Burrow, formally Dwell, said it had done so because the cost of acquiring each customer outweighed the revenue they could generate. A business model where you get customers solely by spending money on advertising is really expensive to continue and make any kind of return for investors.
Others that have struggled with an online-only model now have a mortgage broker as the central part of their offering. Burrow will not be the only one to have to reinvent itself.
It also seems to have struggled to win the trust of lenders. Why would lenders want to share APIs with a broker new to the industry and with no history of knowledge about their offering or compliance requirements, when there are those they have dealt with for years who they know and trust?
While things are definitely changing in our field – and faster than many think – a traditional, experienced brokerage which adds technology on top looks set to be at the forefront of the industry.
I have also been following the increasing amount of press coverage around the second charge market, especially the debate around fees, rates and charges. Underwriting has also been in the spotlight, with Shawbrook apologising for some of its customer outcomes and tightening its criteria.
There are some great lenders and brokers in this sector, and it is really important we get together on this and make adult decisions about the way forward.
We must make sure that what is on offer is fair, transparent and easier to understand for all consumers and customers.
Finally, it was great to see all round industry good guy Martin Reynolds voted as the new chair of the Association of Mortgage Intermediaries.
With Gareth Herbert of the Mortgage Advice Bureau joining David Copland in the deputy chair role, this is a strong team to help take both Ami and the industry through the next set of changes and challenges facing the mortgage world. It is imperative we all get behind them.
Andrew Montlake is director at Coreco
You know what really grinds my gears?
I have mentioned before the amount of misleading stuff written where digital is concerned, but one comment on a new digital broker’s website comes to the fore. It reads: “‘Before (company name), there was no singular place to go for full guidance – unless you’re looking for a transaction-only relationship with a lender or broker – in which case you’re forced to settle from a limited range of mortgage options.”
At best, this shows a distinct lack of understanding on the mortgage market and how brokers have worked for years. At worst, it is a deliberate slur on all good brokers who work hard to look after their clients, revisiting them time and again to make sure they always get the best option. Many of our clients have been with us for years because we are interested in relationships.
Please have some respect for the market you are entering and the hard-working, caring people who work within it.