As house prices fall for the second month in a row, and by the most since 2012, is this just a blip or a long-term trend?
The French elections garnered a lot of attention last week when, for the first time, the results meant that neither of the two mainstream parties were represented. It seems that ‘degagisme’ – loosely translated as a will to clear out and start afresh – is alive and well in Europe.
It was also something of a triumph for pollsters who, having got the past few major events so very wrong, accurately predicted this outcome.
While everyone now throws their weight behind Emmanuel Macron, the fact that anti-EU, anti-just-about-everything Marine Le Pen did so well is worrying.
UK Prime Minister Theresa May will be hoping there are no such surprises in June.
In the housing market, a recent report from Nationwide found that prices fell by 0.4 per cent last month. This is the second month in a row there has been a drop, with the average cost of a UK home sitting at £207,699. The latest fall also happens to be the biggest monthly one since 2012.
Without a doubt, the prospect of Brexit, higher inflation and a cutback in consumer spending has had an effect. GDP has also taken a hit, dropping more than expected to 0.3 per cent. This is the worst level seen for a year and not what the Government wants in an election campaign.
That said, it has been interesting to hear some point out that, with unemployment and mortgage rates so low, perhaps this is more of a blip than a long-term trend. This would be especially true if the general election were to herald a strong new government.
In the markets, three-month Libor is down a smidge at 0.33 per cent while swap rates have limped upwards slightly.
2-year money is unchanged at 0.56%
3-year money is up 0.01% at 0.63%
5-year money is up 0.04% at 0.79%
10-year money is up 0.06% at 1.13%
To the product world and Santander has launched some first-time buyer exclusives that come with no product fee, a free standard valuation and £250 cashback on completion.
Rates start at 1.59 per cent for a two-year fix at 60 per cent loan-to-value, 2.29 per cent for a 75 per cent LTV five-year fix and 2.59 per cent for an 85 per cent LTV five-year fix. Some other rates have dropped by 0.3 per cent too.
Meanwhile, Kensington has cut over 70 per cent of its residential rates, with reductions of up to 0.55 per cent. Rates are now available from 2.69 per cent, with large loans above £500,000 from 2.34 per cent.
Nationwide has also made some product improvements and now offers some of its lowest rates to date. Two-year fixes start from 1.19 per cent at 60 per cent LTV or 1.84 per cent for a five-year fix. At 90 per cent LTV, borrowers can get a two-year fix at just 2.19 per cent with a £999 fee or a five-year fix at 2.99 per cent.
In the buy-to-let market, meanwhile, it is all going crazy as a whole host of lenders make changes and reduce rates to entice in more business.
First, well done to Paragon, which is the latest to announce its product retention plans, paying 0.25 per cent “in recognition of the work intermediaries do to deliver good outcomes for existing buy-to-let customers”.
Santander has a new range of BTL remortgage products, starting from 2.29 per cent for a two-year fix with no product fee, a free valuation and £250 cashback. Its five-year fix at this level is 2.45 per cent with a £1,999 fee.
Skipton Building Society has lowered its rental stress test for BTL products fixed for five years or more. It is now at 145 per cent of the mortgage interest at 5 per cent.
Accord has also cut some BTL rates and now offers a 2.25 per cent two-year fixed-rate remortgage product at 75 per cent LTV, with a £950 fee and the obligatory freebies.
It has made changes to its rental calculations too, taking into account whether a property is freehold or leasehold, or if the customer is remortgaging with no further borrowing or on a five-year fix. The stress rates range from 135 per cent at 5 per cent to 145 per cent at 5.5 per cent.
Andrew Montlake is director at Coreco