Market Watch: Take nothing for granted

The PM’s election complacency is a valuable lesson for our industry when responding to changing customer requirements

Theresa May’s approach to the general election serves as a lesson to all about complacency and not being true to yourself.

When the election was called, the Conservatives had no less than a 24-point lead over the opposition, with Labour expected to be all but wiped out, struggling even to remain as the second party. Fast-forward to today and the lead is down to just five points.

Now, we all know pollsters can be wrong, and indeed the Tories are still expected to win, but this is nevertheless astonishing given the open goal that the PM was thought to have. Her handling of Brexit, the stalling of the economy (latest figures suggest it grew by just 0.2 per cent in the first quarter: much less than expected) and some bizarrely misguided policies in an attempt to please everyone have backfired dramatically.

For Labour leader Jeremy Corbyn this is a dream. By refusing to compromise and embrace the spirit of disillusion with the status quo that has played out globally, he has picked up votes. The fact more youngsters are registering to vote for the first time should also help, with 59 per cent of 18- to 24-year-olds reportedly red.

Whether the election result will be close in the end remains to be seen, but no one can ever assume anything is a done deal.

It is the same in our industry. We cannot afford complacency around the changing face of customer requirements: the type of advice they need and how they want to conduct business. Brokers, lenders and conveyancers need to understand their clients’ journey.

But those who think the panacea is simply an end-to-end, non-advice model with no human interaction are misguided. The rush for everyone to pile into a robo-advice solution has the whiff of a dotcom bubble.

The outcome will no doubt fall somewhere in the middle, with an established mortgage company that embraces technology to do the heavy lifting better than the new tech-first players.

In the markets, three-month Libor is now at 0.3 per cent while swap rates have stagnated.

2-year money is unchanged at 0.55%
3-year money is unchanged at 0.63%
5-year money is unchanged at 0.79%
10-year money is down 0.01% at 1.16%

Although the mortgage market dipped in April, it seems normal service has resumed.

There’s more good news in housebuilding, with the Department of Communities & Local Government confirming a 15 per cent rise in new starts in England for the year to March, hitting their highest figure since the credit crunch, at 162,880.

Product and criteria wise, Barclays comes top of the pops this week with a raft of helpful changes. It no longer needs to know about any pension contributions, automatically taking into account a base level. It is also removing the £75,000 minimum income threshold for using annual bonus in affordability.

Accord has a 1.78 per cent two-year fix to 80 per cent LTV with a free valuation and £250 cashback, plus a two-year fix at 1.14 per cent at 65 per cent LTV. The Post Office too has some new products, including a two-year fix at 1.17 per cent with a £1,495 fee and a free valuation at 60 per cent LTV.

Skipton Building Society has reduced rates on its Help to Buy products by up to 0.19 per cent, which includes a two-year fix at 1.61 per cent to 75 per cent LTV with a £995 fee and free valuation.

In buy-to-let, Coventry has not only confirmed it will lend to portfolio landlords with four or more properties when the PRA changes come in, but has changed its stress testing dependent on a client’s income. For those earning more than £40,000, the interest coverage ratio is 140 per cent; for those earning less, it is 125 per cent. It has also removed its minimum income requirement and minimum time in employment.

Finally, Saffron no longer requires potential ex-pat BTL clients to have any mortgage history in the UK, together with no country restrictions.

Andrew Montlake is director at Coreco

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