Market Watch: Lenders need to do more to cater for all borrowers

Despite the big increase in remortgages, there is much more work to do to ensure all borrowers are catered for, not just the nice easy ones 


Only a couple of weeks ago everyone thought a rate rise was just around the corner. Then dear old China ruined it for us all. Devaluing its currency and cutting interest rates has caused panic to surge across the globe. With talk of lower oil and commodity prices as a result, deflation is back on the agenda – at least temporarily.

So interest rate rises both here and across the pond appear to have been put back again. In turn, this will keep mortgage rates lower for longer and we may see further falls in swap rates, certainly short term.

All this after the British Bankers’ Association revealed the remortgage market showed a 29 per cent year-on-year increase in approvals: the highest in four years. The penny finally seems to be dropping with borrowers that, although a rise may still be a little way off, low rates will not last forever. 

But despite this increase in remortgage numbers, there is much more work to be done by lenders to ensure all borrowers are catered for, not just the nice easy ones.

In the markets, three-month Libor is still at 0.59 per cent while short-term swap rates have eased off further, with longer-term swaps increasing a little. 

2-year money is down 0.02 at 1.04%

3-year money is down 0.02 at 1.26%

5-year money is up 0.05 at 1.64%

10-year money is up 0.09 at 2.03%

So what of products? Barclays has been busy cutting rates, firing an opening salvo in the rate war to come. It has also introduced new products, including a 1.53 per cent two-year fix up to 60 per cent LTV with a £999 fee. At 75 per cent the two-year rate is 1.78 per cent and at 90 per cent it is 2.99 per cent.

NatWest has upped some of its products with its two-year fix at 60 per cent rising to 1.59 per cent. Platform has also raised some 85 per cent and 90 per cent LTV rates, while reducing rates slightly on its buy-to-let products. Virgin Money has raised rates on its 95 per cent LTV deals, now from 4.59 per cent.

Elsewhere, Kensington has introduced some interesting criteria tweaks to its self-employed range, offering something for those who are newly self-employed. It will consider clients who have a record in their industry but have not yet completed their first year’s trading up to 85 per cent LTV. This includes limited company directors who have incorporated their sole trader business, contractors moving from PAYE to day rate and employees promoted to partners.

Accord has new buy-to-let products, with two- and five-year fixes with no fees and two-year remortgage tracker deals, while Precise has slashed rates on its residential second charge range by up to 180bps. Seconds really is a growing market, especially with many unable or unwilling to remortgage off low rates.

Finally, it is good to see David Findlay readying a new brand, New Street Mortgages, under Kensington Mortgages.