View more on these topics

Market Watch: Mortgages should not be commoditised


Santander plans to extend its ‘30-minute’ remortgage service to movers and first-time buyers – but where is the advice?

Last week we saw some better-than-expected UK GDP growth: up 0.5 per cent since the EU referendum. Of course, it is still early days. With politicians on all sides doing their best to confuse, scare and generally talk a lot of hot air, things can always change as the debacle rumbles on.

Brexit aside, I cannot ignore the fact Santander is planning to extend its ‘30-minute’ remortgage service to homemovers and first-time buyers by the end of the year.

Although lenders have the right to do what they feel they need to, I worry about the advice element in all of this and whether the consumer is getting the right outcome. A first-time buyer going online to obtain the biggest loan they are ever going to take out, via an effective panel of one and all in 30 minutes? Sounds like a really bad idea to me.

I am biased, of course, but I passionately believe that mortgages should not be commoditised. They are special cases that need careful handling and, most of all, advice. It still amazes me how little people really know and understand about products, fees, risks and processes, or what a mortgage broker does, for that matter.

This is not just about Santander. I have always respected the people who work there, from the BDMs all the way up. And let’s not forget how it supported brokers when other lenders were lagging behind.

Indeed, it is not the only player looking at this idea. But we need to work together and be responsible as an industry to educate the public and protect them from poor decisions and bad advice.

Yes, speed is important and there are many ways the industry needs to be overhauled with the use of technology. But scrimping on advice is not part of that. The tech revolution should mean we have more time to spend on the customer: on the soft facts and on the advice part. Let’s use it to enhance the advice process, not to limit it.

In the markets, three-month Libor is still around the 0.41 per cent level, while swap rates have risen like a sponge cake to mark the end of The Great British Bake Off as we know it.

  • 2-year money is up 0.05% at 0.61%
  • 3-year money is up 0.06% at 0.67%
  • 5-year money is up 0.07% at 0.78%
  • 10-year money is up 0.07% at 1.09%

In the mortgage world, NatWest has made a plethora of rate changes by up to 0.79 per cent. It has rates available from 1.32 per cent on a two-year fixed basis and 1.987 per cent on a five-year fixed basis to 60 per cent loan-to-value. Ninety per cent LTV rates are available from 2.35 per cent fixed for two years.


Accord has also cut some rates and has a 75 per cent LTV two-year fix at 1.38 per cent with a £995 fee. There is also £250 cashback and a free valuation for purchases.

Ipswich has a new 90 per cent LTV product at 2.29 per cent fixed for two years, while Clydesdale Bank has some new products and has removed pricing differentials between its interest-only and capital repayment products.

Elsewhere, Harrods Bank has slashed some of its fees: its foreign income mortgage loading is reduced from 0.25 per cent of loan to a fixed £500 per case, while all residential tracker rate products now carry a flat 1.25 per cent arrangement fee. For larger loans, this is a reduction of 0.5 per cent.

Fleet Mortgages has some new products and a new buy-to-let pay rate on its lifetime tracker, priced at 3.99 per cent for personal applications or 4.19 per cent for limited companies. The rental calculation is 125 per cent at the respective pay rates and the fee is 1 per cent or 1.5 per cent respectively.

Finally, Family Building Society has released a new product with its Retirement Lifestyle Booster for those who need to supplement their pension income. It pays a regular fixed sum every month for up to 10 years. In return, clients make a payment each month to cover the ‘average’ interest due. At the end of 10 years, assuming all payments due have been made, the amount owing is what has been borrowed.


Andrew Montlake is director at the Coreco Group



Capital requirements and base rate cut hit lenders, PRA admits

Lenders are suffering having taken a hit from both capital requirements and record low interest rates, according to the new head of the PRA. Speaking at the City Banquet at Mansion House on Wednesday night, Sam Woods said that “many banks have simply not yet adapted to the new prudential constraints or the lower-rate environment” […]

Accord expands contractor mortgage pilot

Accord has expanded its pilot of a more flexible lending policy for contractor mortgage applicants. Under the policy the lender will consider contractors with a 12-month trading history even if there is a gap of up to eight weeks between contracts. In addition applicants must earn an annual income of over £75,000 or a daily rate of £400. […]

Pensions - thumbnail

Auto-enrolment — don’t leave it too late…

With auto-enrolment (AE) well under way for the UK’s largest businesses, over the next three years an additional 800,000 smaller employers (with less than 60 employees) will start their journey to comply with the legislation. AE mandates all eligible employees and their respective employers to make regular pension contributions into a qualifying pension scheme. To learn more about the legislation read our brief Jelf AEase — simple steps to AE compliance guide.


Case study: administration — implementing a management log

Our client is a leading video game and publishing company best known for its console role-playing game franchises. The client provides a number of benefits, at varying levels and cost that attract a P11d liability. With the absence of a management log to track data for benefit movements, enormous administrative and therefore cost implications were occurring each year just to comply with P11d reporting requirements.


News and expert analysis straight to your inbox

Sign up