Market Watch: Lots of head-scratching after FCA’s competition paper


The FCA paper has led to head-scratching by brokers, who would appreciate a period of stability to get on with their jobs

A few things are going on at the moment but I want to avoid any more Brexit talk for now because there is too much made-up nonsense going around. Whatever happens, people will still need mortgages and we will survive, so let’s just get on with the job in hand.

Two things have caught my eye: the release of the FCA paper on competition in the mortgage sector and Ami chairman Pat Bunton’s excellent article on mortgage prisoners.

The FCA paper has led to a whole load of head-scratching by intermediaries. After the MMR and the MCD, it would be nice to have a period of stability where we can all just get on with our jobs, rather than having to deal with any more unsettling nonsense.

Meanwhile, in a move hastened by consumer champion Martin Lewis, the Chancellor wrote to lenders urging them to help mortgage prisoners. Bravo to Lewis for pushing this. He has always been a good campaigner for brokers and proper advice.

Things are starting to improve but lenders are still able to pick and choose who they want to help and who they want to languish on their variable rates. How can this be treating customers fairly? Lenders are storing up issues for when rates eventually move if this is not addressed.

Transitional rules have been largely ignored, especially where new remortgage customers are concerned, and even those porting must endure a battle. Many consumers are getting a raw deal.

In his article, Bunton also makes an interesting point about the £80bn–£100bn unreported part of the product transfer market.

If you have not read it already, I urge you to take a look.

Elsewhere, with all the furious debate at the moment about retention rates and proc fees,

I have checked my rather dubious records and it seems Halifax has been offering product transfers with proc fees for nigh on 10 years. For brokers, that means at least two sets of proc fee for those who have found it best advice for applicants to stay with them.

This is a model of how lenders should act. Halifax has also made the process easier by providing online access to clients’ existing mortgage details.

In the markets, three-month Libor is at 0.59 per cent while swap rates have poked their head up a touch.

2-year money is up 0.04% at 0.82%
3-year money is up 0.03% at 0.89%
5-year money is up 0.03% at 1.05%
10-year money is up 0.01% at 1.46%


Virgin Money has some new Legal & General exclusives, including a ‘freedom to fix’ tracker available at 1.49 per cent with a £1,495 fee and a five-year fixed rate at 2.19 per cent to 70 per cent LTV with the same fee.

Harrods Bank has a nice new intermediary website, while Skipton has reduced rates on a selection of two- and five-year fixed products. TSB has also cut a swathe of rates.

Barclays has cut some rates and introduced a new five-year fix at 2.19 per cent and a two-year fix at 1.39 per cent to 60 per cent LTV.

Barclays is also the latest lender to tweak its buy-to-let stress rates, moving from 135 per cent at 5.79 per cent to 145 per cent at 5.5 per cent. This is only a minor change and, on a rental income of £2,000 a month, the difference is a borrowing reduction of £6,102.

Foundation Home Loans has also announced a change, from 125 per cent to 145 per cent, while limited company applications remain at 125 per cent. It is no surprise another lender has opted to increase its buy-to-let stress tests as it begins to worry that tax changes over the next few years will diminish landlords’ profits. However, it would be a shame to see all lenders follow suit and run for cover, especially while the PRA review is ongoing.

Ipswich has a fabulous semi-exclusive buy-to-let deal with rent calculated at 125 per cent of pay rate. The rates start at 3.19 per cent on a two-year discount or 3.69 per cent on a two-year fix. It also has a residential two-year fixed rate to 90 per cent LTV at 2.69 per cent.

Meanwhile, Santander has made its buy-to-let transfers available on the online mortgage transfer service, which is useful, and Kensington has cut some buy-to-let rates by up to 0.25 per cent and reduced fees from £1,999 to £999.

Andrew Montlake is director at Coreco