All talk of interest rate rises has shrunk to a whisper as economic uncertainty returns, while the FCA is set to clamp down on bank lending via personal loans
It’s been 100 years since the First World War’s Battle of Passchendaele and, given some of the issues going on with Brexit and the eurozone today, we would all do well to remember how pointless conflict can be.
As Brexit negotiations rumble on, it is no surprise to see that many have softened their approach to the whole thing, with the chancellor in a starring role in proposing some pretty sensible transitional arrangements.
Meanwhile, all talk of interest rate rises has shrunk to the merest of whispers as the economic fog of uncertainty returns to blight Blighty. Second-quarter figures show growth of just 0.3 per cent, which, although better than Q1’s 0.2 per cent, is nothing to write home about and shows a big loss of momentum this year.
This is all being passed on to weaker consumer growth and we have also seen mortgage lending for home purchases fall again last month, making the sixth month in a row. This is still 6 per cent up on last year but shows a 9 per cent fall since the start of the year.
It was good to see moves by the Government to ban leaseholds on new-build houses in England, which could also see ground rents on flats cut to zero, after the outrage over unfair contracts that, in some cases, leave buyers with big bills and properties that are difficult to sell on.
This has all been another scandal involving builders that have not covered themselves with glory.
Meanwhile, the FCA is moving on with plans to crack down on bank lending via personal loans, car loans and credit cards, and lending to vulnerable customers, so watch this space on what this will mean in practice.
In the markets, three-month Libor is still at 0.29 per cent while swap rates have stabilised again after their recent tumble.
2-year money is down 0.02 per cent at 0.59 per cent
3-year money is down 0.01 per cent at 0.69 per cent
5-year money is unchanged at 0.88 per cent
10-year money is unchanged at 1.27 per cent
In the mortgage market, although the summer holidays are upon us there have been a few movers and shakers.
Virgin Money has made a welcome move into custom-build lending in partnership with BuildLoan. Custom build offers plots of land with outline planning permission and services already installed where customers can determine the design and layout of their new home.
The new custom-build products are a three-year tracker at 80 per cent LTV at 4.79 per cent with a £1,995 product fee, and an 85 per cent LTV version available at 4.99 per cent. They also allow customers to transfer to a new product, with no early repayment charge, at a time that suits them following completion on their new home. Additionally, Virgin Money does not pass on the charge for indemnity insurance.
Virgin is also offering a new range of shared-ownership mortgages currently being piloted through specialist intermediaries.
In mainstream products, it has cut its two-year fix at 90 per cent LTV to 2.13 per cent, with a £995 fee and £300 cashback for purchase, or £500 cashback for first-time buyers. Its two-year fixed-fee saver option at 95 per cent LTV is cut to 4.04 per cent.
Coventry BS has made its five-year fixes more competitive; they are now available from 1.79 per cent at 50 per cent LTV with a £999 fee. It also has a five-year Flexx Fix priced at 2.19 per cent to 75 per cent LTV with a £499 fee.
Tesco Bank has cut a selection of rates and now has a couple of five-year fixed rates with no fees, priced at 1.88 per cent to 60 per cent LTV and 2.18 per cent to 80 per cent LTV.
Scottish Widows has cut rates by 0.16 per cent on its 50 per cent LTV products and is cutting two-year fixed product transfer rates above £350,000 of borrowing by 0.15 per cent.
Meanwhile, Nationwide has reintroduced some three-year fixed-rate products from 1.64 per cent at 60 per cent LTV and 4.49 per cent at 95 per cent LTV, both with fees of £999.
In the buy-to-let world, Virgin Money has reduced some fixed-rate products and now has a two-year fix at 1.64 per cent with a £995 fee and a five-year fix at 2.24 per cent with a £1,995 fee, both at 60 per cent LTV. At 75 per cent LTV, the five-year fix is reduced to 2.83 per cent and all products come with £500 cashback.
Kent Reliance has a new submission platform that promises to make submitting portfolio landlord business quicker and easier. It will allow you to upload property details directly, either manually or via Excel, and the lender can streamline stress testing and interest coverage ratio assessments to provide a swift response to loan applications.
Accord has been busy and added not one but 14 three- and five-year mortgages, all with cashback of up to £750. These include rates at 65 per cent LTV of 2.74 per cent for a three-year fix with a £450 fee, and a 2.24 per cent version with a £1,995 fee. At 60 per cent LTV it has a five-year fix at 2.51 per cent with £550 cashback on completion, with a free standard valuation and a £950 fee.
Accord has also outlined its portfolio landlord rules, stating that, while there will be no changes to general criteria, it will assess the financial strength and competency of a portfolio landlord by taking into consideration their experience in the BTL market, their full property portfolio and any outstanding mortgages, along with their assets and liabilities.
Existing rental calculations will apply for new borrowing. All background properties must collectively meet a minimum rental calculation of 135 per cent interest coverage ratio at a stressed rate of 5 per cent.
Meanwhile, Fleet Mortgages has launched its lowest two-year fix, at 2.59 per cent with a 1 per cent fee for loans up to £200,000. Above this amount it has 3.09 per cent to 75 per cent LTV with a rental calculation at 125 per cent of 5 per cent.
Elsewhere, Castle Trust has decided to increase its standard arrangement fee from 2 per cent to 2.25 per cent.
Heroes and Villains
Virgin Money – for its custom-build and shared-ownership moves, as well as other product changes.
Free legals providers that claim poor service levels are being exacerbated by brokers’ calls. Seriously?
Andrew Montlake is a director at Coreco