The word on the street is that banks have been told to prepare for a cut in interest rates in the event of a Brexit
Ah, the Bank of England. It seems like just yesterday we were all nervously anticipating the first rise in interest rates and now all the talk, once again, is of cutting rates – maybe even by the summer.
This comes after a slew of weak activity and generally dodgy figures for the UK economy, with falls in manufacturing, construction and services. Meanwhile, oil-price issues are still there and even good old Greece is bidding for the headlines again.
Even if rates do not fall, it seems pretty clear any hike may not be seen until next year, with some even predicting we will not see an increase to 0.75 per cent until September 2019.
Then there is Brexit, with Bank of England governor Mark Carney once more at pains to spell out the problems we could face if the Leave camp is victorious. Indeed, in the Bank’s recent inflation report Carney left no one in any doubt there would be job losses, falling house prices and lower living standards. The word on the street is that banks have been told to prepare for an interest rate cut if Brexit does occur, to ensure their balance sheets could cope.
Elsewhere, although demand for homes has reportedly dipped slightly for the first time in more than a year, the Royal Institution of Chartered Surveyors nevertheless expects prices to rise over the next five years. Meanwhile, LSL reports that the average London home has now broken the £600,000 barrier, almost doubling in price since 2009.
In the markets, three-month Libor is at 0.59 per cent and swap rates have slipped a bit further.
- 2-year money is down 0.03% at 0.78%
- 3-year money is down 0.03% at 0.86%
- 5-year money is down 0.02% at 1.02%
- 10-year money is down 0.01% at 1.45%
In the product world, no sooner had Halifax upped its age limits than Nationwide made its own headline-grabbing move by upping its to 85. On closer inspection this is only for existing customers up to a maximum loan size of £150,000, which is an opportunity missed. I wonder how someone wanting a loan of £160,000 feels? Nonetheless, it is a welcome move.
The building society has also made some good cuts to its higher-LTV rates and has a two-year fix available from 2.89 per cent at 90 per cent LTV and from 3.99 per cent at 95 per cent LTV.
Meanwhile, Skipton BS has reduced rates by up to 0.34 percentage points on its 90 per cent LTV new-build products and simplified its Help to Buy range.
Furness BS is pushing forward to become more noticed and is doing a good job. It will now do holiday lets nationwide and has increased its maximum LTV from 60 per cent to 75 per cent. The rates are available from 3.35 per cent for a two-year discount with a £995 fee and no penalties at 60 per cent LTV.
Some big moves in the buy-to-let sector have been led by Kent Reliance, which last week became the latest lender to make substantial cuts to its range and bring its specialist deals under the same roof as its standard products.
You can now get the same rate in personal, limited company name or LLP, available from 3.79 per cent discounted with no penalties and a 1.5 per cent fee to 75 per cent LTV. The lender has also reintroduced five-year fixes with the rental at pay rate, which starts at 4.19 per cent with a 2 per cent fee. It still offers loans up to 85 per cent LTV. It has also introduced a large-loan range with the same rates but cheaper fees for those looking to borrow above £1m.
Elsewhere, Aldermore has buy-to-let products for two, three or five years all priced at 3.93 per cent up to 80 per cent LTV with a 1.5 per cent fee, and the same in personal or limited company. The rental calculation is based on 3.98 per cent.
Mansfield BS also has a new range of buy-to-let mortgages, including a regulated product that allows the property to be let to a close relative and a product that enables repairs and improvements to be included in the loan.
Finally, I was interested to see the FCA has opened its ‘sandbox’ for financial services technology firms. This means successful applicants can test out their wares on consumers with “loosened regulations” for three to six months. Let innovation commence!