We must all be more prepared for deadlines like MCD – brokers blaming lenders and lenders blaming brokers is not helpful
I have started reading a book about worry and how to combat it. I mention this because, given events of the past couple of weeks, quite a few brokers out there should probably read it – along with another one on frustration and anger management.
Let’s face it, we all knew this would be a fraught time with both the MCD and the stamp duty deadline coming in quick succession. But the worrying thing is that, despite everyone expecting it, there seemed to be many lenders, solicitors and, yes, brokers who were less prepared than they could have been.
As brokers, we must acknowledge the need to manage expectations accordingly.
Perhaps that last-minute application to beat the stamp duty deadline could have been avoided but, with the deadline also falling around Easter – compounding things with staff holidays – lenders too could have played their part better.
More than a few of you have told me that the past few weeks have not been enjoyable and that, in future, we all need to be more prepared to handle these deadlines. Brokers blaming lenders and lenders blaming brokers is not where we all need to be.
But according to my ‘worry’ book we should compartmentalise our days and accept that the past is behind us, in order to live in the moment and be safe in the knowledge that this particular deadline has passed.
Meanwhile, the buy-to-let hammering continues with the publication of the PRA’s proposals for lenders on how they should underwrite these types of mortgage. While there is no set of defined rules for maximum LTVs, lenders must now apply a stress-test rate of at least 2 per cent above current rates in the first five years of the loan, with a minimum rate of 5.5 per cent, a figure that many lenders have already started to work towards.
Landlords also face more invasive questions around their personal income and costs, and how tax changes will affect them, while portfolio landlords (now defined as those with more than four properties) will be subjected to more precise underwriting taking into account the full portfolio, geographical concentrations and their overall experience, as well as looking at the merits of new lending to them. It will be interesting to see how all of this is interpreted in the final plans.
In the markets this week, three-month Libor is stuck at 0.59 per cent while swap rates have trickled down like the tears of a landlord faced with an additional 3 per cent stamp duty bill.
■ 2-year money is down 0.03% at 0.83%
■ 3-year money is down 0.04% at 0.86%
■ 5-year money is down 0.06% at 1.01%
■ 10-year money is down 0.05% at 1.43%
In the more mundane world of products, Virgin Money has reduced rates on two-year fixes, which now start at 1.69 per cent, while its three-year fix to 65 per cent LTV is reduced to 1.99 per cent. It has also knocked 0.11 per cent off three- and five-year buy-to-let rates to 75 per cent LTV.
TSB has added to its shared-ownership and shared-equity products, including a two-year fix at 2.19 per cent and a five-year fix at 2.94 per cent to 90 per cent LTV, as well as joining the Help to Buy London scheme. It has also opened its Help to Buy offerings to brokers in Wales and Scotland.
Clydesdale has reduced rates on some higher-LTV products between 80 per cent and 95 per cent, while 75 per cent LTV five-year fixes have also reduced to start at 2.69 per cent.
Halifax has magically transformed its four-year product transfer and further-advance products into five-year arrangements and will ask for an accompanying bank statement from the gift or showing the funds in place.
Market Harborough will look at self-employed expats on a buy-to-let basis and has a five-year fix at 4.75 per cent up to 70 per cent LTV with a 1 per cent fee. Rental cover is 125 per cent of pay rate.
Those nice people at Precise will source the memorandum and articles for limited company applications themselves, and have a six-year fixed product suite with affordability based on the pay rate.
I am off for a rest and chapter three on how to stop worrying…
Andrew Montlake is a director of Coreco