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2012 Mortgage Market Watch 4


This week we find ourselves in the shadow of, rather unsurprisingly, GDP figures that show the economy has shrunk by 0.2% in the last quarter and, predictably, another debacle over the Greek issue.

Whilst we may be heading for our first double-dip recession since 1975, there are enough voices out there who believe it will be shallow and short, (which is how my wife describes me!)

Whilst house sales fell by 1% last year to one of the lowest totals on record, interestingly mortgage lending looks to have hit the £140bn level according to the CML, higher than many predicted. If January is anything to go by then we could eclipse that this year although I appreciate being in the London “bubble” is by no means an accurate guide to the rest of the country.

The main problem for most brokers I have spoken to is trying to predict with any great certainty one month to another. Seasonality and past trends seem to have been consigned to history for the moment.

Against this backdrop, Swaps have risen slightly every day in the past week until yesterday, whilst LIBOR is stubbornly still.

Three-month LIBOR is unchanged at 1.09%.

1-year money is up 0.02% at 1.005%
2-year money is up 0.03% at 1.26%
3-year money is up 0.06% at 1.32%
5-year money is up 0.12% at 1.605%

With the cost of funds seemingly rising, we have therefore seen the usual rate withdrawals from lenders. I still do not understand how some lenders can always manage to give notice of such changes whilst other lenders never seem to try.

There is nothing worse than spending time advising a client on the best product only to see it disappear faster than a pile of cash allegedly speeding offshore into an account named after my dog! The last minute “tip-off” phone call that rates are going in the next millisecond really is a pain.

On to the good news. Although I have given Woolwich a hard time previously, their communication in the last week has been excellent, as are the changes they have announced. It is great to see them back in Buy-To-Let, and giving brokers access to a named, dedicated, mortgage underwriter for every residential case submitted is a real step forward.

It is nice to see a lender apologise for issues and move forward in the right direction, and please do not forget to book the rates before submission.

Norwich & Peterborough’s 10 year fixed rate looks especially good at just 3.99%, (though not available through intermediaries). Although these products are obviously not suitable for all borrowers, I would like to see this market open up a bit more. The challenge is to price a competitive 10 year fixed with some modicum of flexibility built in, much like Coventry’s excellent flexible fixed products.

Accord and Clydesdale are amongst those who have improved their Buy-To-Let offerings, with Clydesdale now the latest lender able to go up to 80%. Note, however, that this is only on a repayment basis.

Meanwhile, Natwest have reduced rates on their 90% LTV products.

Lenders who give notice on rate pulls, with special mention to Coventry for consistency and Clydesdale who are giving us almost a week to get applications in. Thankyou.

The last-minute rate pull lenders, you know who you are. I know it has been covered before but it really is a bug bear and I am sure there is something that can be done to make it more realistic.

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Andrew Montlake

Written by Andrew Montlake

Andrew Montlake, better known as Monty, began his journey with an Hons degree in Economics & Politics before starting in the mortgage industry in February 1994. As a main founder of Coreco in 2009, he successfully grew the brand, marketing, and communications, and was made MD in 2019 focussing on the overall vision, strategy, and culture of the company. As Coreco’s media spokesperson, Andrew can often be seen or heard on TV and radio as well as regularly commenting in the national, local, and trade press. He is the author of this acclaimed Mortgage Blog and is well-known for his social media, podcasts, and public speaking. Andrew is now proud to serve as Chairman of the Association of Mortgage Intermediaries, (AMI) as a cheerleader for the Mortgage Industry as a whole and continues to work at the coal face, writing mortgage business and advising clients.

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