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Market Watch: Time for enlightened self-interest

As the self-employed hit the political spotlight, an Aldermore report says three in five of them deem housebuying impossible

Ah, to be a new chancellor. Thinking all is fine with the world after your first Budget, just to walk into a hell-storm over the one big change made. Even your boss, who knew what was coming, does not back you and within a few days you are forced into a humiliating U-turn.

You have to feel a little bit sorry for Philip Hammond, surely? No? Oh well…

It is a shame that, given the open goal that was presented to him, Labour leader Jeremy Corbyn did not take much advantage. But that says more about the poor state of the Opposition.

The push-me-pull-you politics continued over the Brexit bill, which went back and forth between Commons and Lords before finally getting the royal thumbs-up from Her Majesty.

This gives Prime Minister Theresa May the clearance to finally invoke Article 50 and let the negotiating mayhem begin. It now looks very much like the only Brexit is a hard Brexit, but things can change.

Across the pond, our US cousins have continued their programme of rate rises and predicted a further two increases this year as their economy and inflation grow.

The question now comes back to whether Bank of England governor Mark Carney will follow suit. Swap rates have crept up slightly in the past couple of weeks but I think it will be some time yet before he is convinced to do so. That said, we must continue to make consumers aware of the fact the low-rate environment will not last forever.

In the markets, three-month Libor is down a tad at 0.34 per cent while swap rates have risen a touch more.

2-year money is up 0.03% at 0.62%
3-year money is up 0.05% at 0.72%
5-year money is up 0.07% at 0.91%
10-year money is up 0.08% at 1.30%

The debate around whether a record of rental payments should be considered as evidence of affordability for mortgages has garnered enough support to be discussed in Parliament. Surely those who have proved themselves in this way are a better credit risk than someone who has never budgeted to meet rental payments.

Meanwhile, it was interesting to read a report from Aldermore that found three in five self-employed people believed housebuying was impossible. We need to address this as an industry, at the very least better communicating the options they have available.

In the product world, Virgin Money has reduced a handful of rates, including a five-year fix at 1.87 per cent to 65 per cent loan-to-value. Its buy-to-let five-year fixed at 60 per cent LTV is reduced to 2.44 per cent with a rental calculation of 145 per cent at 4.74 per cent. Yorkshire Building Society has launched a 0.99 per cent two-year fixed rate but only for direct customers.

In other news, Market Harborough has a new older-borrower remortgage product available to age 80 at application, with affordability assessed on pension income. Rates start at 2.25 per cent for a five-year discount or 2.5 per cent for a two-year fix. It also has a new ex-pat remortgage range from 2.99 per cent.

Shawbrook Bank too has released a product for the over-55s on an interest-only basis. This allows them to remain in their homes for a further 15 years, or until they reach the age of 85, borrowing up to 50 per cent of the value of the property. However, the rate is 6 per cent on a five-year fixed basis.

Meanwhile, BM Solutions has cut its buy-to-let stress rate where five-year fixes are concerned, which is a good move. It will now use 5.25 per cent rather than 5.5 per cent.

Ipswich Building Society has returned to the buy-to-let market with rates from 3.39 per cent for a two-year fix.

Finally, Kent Reliance will now accept modern methods of construction, which is good to see. Examples include volumetric construction, pods and site-based MMC. I am sure you know what they mean!

Andrew Montlake is director at Coreco

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