If the US is about to raise interest rates, its divergence from the EU’s latest action will have interesting ramifications
The next couple of weeks in our industry perhaps will be some of the most important in recent years. As the EU announces a further slight rate cut and an extension of quantitative easing, we await the latest US jobs figures and a possible increase in interest rates there. This policy divergence will have some interesting ramifications.
The press, however, is full of the effects of the buy-to-let changes. It is clearly a confusing time for landlords but are rumours of the death of buy-to-let exaggerated?
We are already seeing more enquiries from landlords wanting to purchase property before the stamp duty changes come into effect and many are actively looking at the possibility of doing so in a limited company vehicle. I suspect more lenders will develop limited company propositions over the coming months. Larger landlords are likely to continue in much the same way as they have done while those holding one or two properties will reconsider whether they wish to carry on growing their portfolios.
There is still a question mark over how let-to-buys will be interpreted and this will have to be clarified in the consultation. Could it be insisted that, to escape the additional tax, one must sell one’s existing home?
Meanwhile, Barclays upped its rental calculation from 125 per cent to 135 per cent in anticipation of the fact that Bank of England governor Mark Carney wants to go further in giving the FPC powers over the rental interest coverage ratio “to protect landlords from future interest rate rises or falls in income”. This will have a big effect, especially in London, but maybe that is the point.
In the markets, three-month Libor is unchanged at 0.57 per cent while swap rates have eased a little further.
- 2-year money is unchanged at 0.96%
- 3-year money is down 0.02% at 1.12%
- 5-year money is down 0.04% at 1.39%
- 10-year money is down 0.04% at 1.81%%
Virgin Money has cut some residential rates by up to 0.36 per cent and has a two-year fix at 90 per cent LTV at 2.99 per cent with no fee, and a three-year fix at 85 per cent LTV at the same rate. Its five-year fix at 90 per cent LTV is now 3.29 per cent with a £995 fee. It is also withdrawing its limited-time offer of £750 cashbacks across its buy-to-let range and increasing selected two-, three- and five-year rates a touch.
Meanwhile, Saffron BS has a three-year fix for first-timers priced at 3.97 per cent up to 95 per cent LTV. There is no arrangement fee and it is available up to £500,000.
TSB has changed a load of rates, Halifax has increased some on its product transfers and further advances by 0.2 per cent, and BM Solutions has done the same.