Market Watch: MCD rules are more significant than you think


MCD rules will affect brokers in bigger ways than just KFI changes – the term ‘independent’ may no longer be valid

It seems the majority of lenders are locked in MCD hell at the moment as they get ready for a transition that, for most of us, seems to be a whole lot of fuss about nothing. Or is it?

It must be a pain in the proverbial backside for lenders. They face yet more regulatory costs changing systems to deal with KFI+ or Esis and adding questions to determine whether a buy-to-let is consumer or business. Then there are the rather ridiculous foreign currency rules too.

But while some have been very good at trying to educate brokers about the changes, they have tended to concentrate on these issues rather than on what effect the directive will have on brokers themselves.

One example of important information being missed is the fact that brokers may not be able to use the term ‘independent’ come MCD Day.

It is worth spending time checking out the changes properly. The Association of Mortgage Intermediaries has a wealth of information and, if you are not a member already, now is a good time to join.

Meanwhile, it was good to see gross mortgage lending estimated at £19.9bn in December, around 23 per cent higher than a year previously. This means 2015 saw an estimated £220.3bn of lending, which was a solid performance. We should at least achieve the same this year, despite some negative noises. Be positive.

Elsewhere, the self-cert saga continued with the FCA issuing a pretty strong warning to consumers that they would be on their own if anything went wrong. itself came back with a carefully worded rebuttal. It will be interesting to see whether it can continue to operate under the rather vague wording of the MCD.

We also have a new FCA head in the form of the Bank of England’s Andrew Bailey. We all wish him well and hope there will be some good engagement with the intermediary community.

In the markets, three-month Libor is still 0.59 per cent while swap rates have bounced up a touch from the last few falls.

2-year money is up 0.01% at 0.86%
3-year money is up 0.03% at 1.01%
5-year money is up 0.03% at 1.26%
10-year money is up 0.03% at 1.69%

Help to Buy London has been getting more attention with Precise the latest lender to announce it will provide products supporting the initiative, with rates similar to its current H2B range. Earlier, Leeds Building Society confirmed its product range, which includes a two-year fix at 1.79 per cent with a £799 fee and a five-year fix at 2.45 per cent with a £199 fee.

Nationwide has a new equity share product range that includes Help to Buy, with two-year fixes starting at 1.89 per cent and five-year fixes from 2.64 per cent.

Meanwhile, Santander has a new 60 per cent LTV two-year tracker at 1.39 per cent with a £995 fee, while on the buy-to-let side it has reduced 75 per cent LTV two-year fixes, now available from 2.49 per cent with a 1.5 per cent fee and 2.69 per cent with a £1,995 fee.

Clydesdale Bank has increased its maximum loan size from £350,000 to £500,000 on 85 per cent and 90 per cent LTV loans, as well as on some 75 per cent LTV buy-to-let products. It has also reduced a selection of rates.

Coventry Building Society has a new 90 per cent LTV five-year fix at 3.15 per cent with a £999 fee, while Platform has relaunched its product range with reductions up to 0.3 per cent on its buy-to-let range.

Elsewhere, Virgin Money has released a stamp duty cashback buy-to-let product (which we may see more of) at a rate of 2.94 per cent fixed for two years up to 75 per cent LTV. The cashback is £1,500 and the fee is £1,995. It has also removed the £99 application fee across all buy-to-let products for a limited period.

For those of you who use Barclays Wealth International, it has reduced its AUM requirement on buy-to-lets from £100,000 to £25,000 or currency equivalent. Its maximum LTV is still 65 per cent.

And for those of you in Scotland, RICS Scotland will no longer include a rental figure in its Generic Mortgage Valuation Report, so BM Solutions will commission its own.