I suspect markets, and therefore mortgage rates, will remain stable because any Brexit deal should now be much softer
Prime Minister Theresa May’s unnecessary gamble – like that of her predecessor – means she may well be hung, drawn and quartered.
Remember, this all started because David Cameron thought Ukip was a threat and panicked. Since then, there has been a litany of bad decisions by the Conservatives.
The EU referendum and determination of May to follow a ‘hard Brexit’ course begat last Friday’s result. This was the revenge of the Remainers, of the young and disillusioned faced with a poor, misjudged manifesto offering nothing new.
Indeed, the electorate seem to have thrown out the idea of a hard Brexit but, with negotiations due to start in a matter of days, it is unclear who will lead them. Will they be delayed? Will they ever happen? Surely a weak May, who could not even take on Jeremy Corbyn on TV, will be eaten alive.
It could be Boris Johnson who leads, although early indications are that May seems determined to hold on in the short term, looking to the Democratic Unionist Party for support. Whatever happens, she cannot fight another election.
The biggest issue with this result is the extra uncertainty it brings at a time when it is the last thing we need. It could lead to a period where people are reluctant to make decisions, which could further slow the housing market.
That said, I suspect markets, and therefore mortgage rates, will remain pretty stable, holding firm on the basis any Brexit deal should now be much softer. Lenders will be keen to push a business-as-usual approach, especially if enquiries take another dip.
It would be interesting to know if landlords were among those who wanted to take revenge on the May regime because of its negative policies. That said, it is hard to judge whether a Labour- or Tory-led coalition would make things worse. Although things like rent caps may come back into play, the possibility of further taxation changes was present on both sides.
The PRS is of vital importance to the UK housing market and taking things too far may cause the landlord sell-off authorities have been trying to avoid.
In the markets, three-month Libor is down a touch more at 0.29 per cent while swap rates have fallen like May’s fortunes.
2-year money is down 0.02% at 0.50%
3-year money is down 0.03% at 0.57%
5-year money is down 0.03% at 0.73%
10-year money is down 0.03% at 1.09%
In the rest of the market, highlights include Tesco Bank’s market-leading five-year fix priced at 1.68 per cent to 60 per cent loan-to-value with a £995 product fee.
Skipton has enhanced its interest-only policy and removed the maximum loan cap of £500,000. The main residence can be used as the repayment vehicle when a minimum of £400,000 of equity exists and no more than 50 per cent LTV; 80 per cent LTV for part-and-part.
Meanwhile, Accord has increased its loan-to-income cap above £500,000 from four to five times income. It is also adding a £250 cashback incentive to selected buy-to-let products and making a variety of rate changes.
Scottish Widows has reduced rates for loans over £1m and Halifax is now enabling certain borrowers looking to port their mortgage who fail affordability to do so anyway.
Vida Home Loans has a new range with its lowest rates. Available to 70 per cent LTV, it includes rates of 2.69 per cent for residential business and 3.14 per cent for BTL mortgages.
Newcastle Intermediaries has cut the minimum income requirement for joint BTL properties from £40,000 to £30,000.
Finally, there has been an interesting discussion on LinkedIn about whether brokers should send round-robin emails to lenders asking if they will do cases. As brokers, we have to show more knowledge and understanding of lenders’ criteria than that. Surely the FCA would expect that of us?
I often have to do a ‘phone-around’ on a tricky case; sending one email to all lenders hardly constitutes research. That said, lenders also need to understand how hard it is to consistently remember every piece of ever-changing criteria from 100 or so players, especially when it seems some do not even know their own.
Andrew Montlake is director at Coreco