The PM is pulling no punches. ‘May-ism’ is taking shape, and it seems not quite what people thought it would be
It has been the usual fun and games with political party conference season in full swing, although every year leaves me asking the question: why does anyone actually bother to attend these events?
There has been a lot of talk around a ‘hard Brexit’ and it seems we have started to employ some pretty strange negotiating tactics over something that will fundamentally affect our future – especially in the financial world.
Sterling has fallen to a three-decade low and the FTSE has shot past 7,000 after Prime Minister Theresa May’s announcement that the button would be pressed around February: a Valentine’s Day gift for Europe, no doubt.
For someone who campaigned to Remain, May is pulling no punches. ‘May-ism’ is starting to take shape, and it seems not quite what people thought it would be.
The prime minister has also called on the Bank of England to end the low interest-rate era and Chancellor Philip Hammond has announced that the Help to Buy guarantee scheme will finish at the end of this year. Hopefully lenders will still feel confident to offer much needed 95 per cent loan-to-value products; I get the impression they will.
In other news, there is to be another Ukip leader following Diane James’ resignation.
She did not last quite as long as Sam Allardyce. Hold on – Big Sam for Ukip? It all makes sense…
In the markets, three-month Libor is still at 0.38 per cent while swap rates have actually increased a touch.
2-year money is up 0.02% at 0.44%
3-year money is up 0.03% at 0.44%
5-year money is up 0.04% at 0.49%
10-year money is up 0.06% at 0.76%
Last week in mortgage land we saw a veritable feast. Those nice people at Virgin Money have cut rates again by up to 0.6 per cent across residential and buy-to-let. Its three-year residential fix at 70 per cent LTV is at 1.79 per cent, while its two-year fixed buy-to-let product is at 2.09 per cent to 70 per cent LTV and its five-year fix at 3.24 per cent.
Halifax has simplified its income verification requirements for employed applicants and may only need the basic income verified now. However, in the affordability calculation it now seems it will not take into account things like adoption or bursary income.
Nationwide has also simplified some requirements, moving from six to three months’ bank statements to show maintenance payments.
Hopefully we are finally seeing a wider move to provide less paper documentation, as most things can now be assessed using technology. I have had enough of endless reams of paper.
Accord has axed its £130 processing fee from its products, which is a great move, and Skipton Building Society has cut its buy-to-let rates by up to 0.55 per cent.
Kensington has reduced rates on its residential products, with Premier loans now available from 2.99 per cent for loans above £500,000. Its standard range sees cuts by up to 0.7 per cent.
It was good to see Vida Homeloans, the much anticipated new lender brand from Belmont Green, announce some of its pilot range, which looks like it will tick a lot of boxes for intermediaries. The self-employed, expats, contractors, limited company buy-to-lets and a rental top-up income option are just some of the things on a mortgage broker’s Christmas list. Damn. Have I just referred to Christmas already?
Barclays Wealth has made its offering more consistent with its other segments and aligned its buy-to-let policies. For example, it will also take personal income into account for rental shortfalls and has raised loan terms to 25 years.
It was interesting to see a report from Nottingham Building Society saying that 12 per cent of self-employed borrowers had been rejected for mortgages. This shows that, while things are getting better, there is more work to be done. Or it shows that too many self-employed people do not go to a broker who may be able to assess their requirements and put them with the right lender. Probably a bit of both.
Finally, the Prudential Regulation Authority has announced its buy-to-let recommendations, and the stress tests we all expected will come into play on 1 January. The other proposals will be implemented by 30 September.
Andrew Montlake is director at Coreco