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Mortgage Market Watch 7


Straight down to business this week and short-term Swaps have risen a touch whilst 3 year and especially 5 year money has dropped nicely. There is still not much going on with LIBOR which has stayed stable.

Three-month LIBOR is still at 1.08%.

1-year money is up 0.03% at 0.995%
2-year money is up 0.01% at 1.25%
3-year money is down 0.02% at 1.29%
5-year money is down 0.06% at 1.555%

As always I like to focus on the positive news and it was good to see inflation dropping to 3.6% and a dare I say almost optimistic speech by Merve King. Meanwhile, the Confederation of British Industry (CBI), reported that it believes that the UK will not fall into another recession and can expect to return to some modicum of growth once more, albeit very slight.

Whilst we do still have the perennial dangers lurking in the background as Greece gets closer to the expected end, (just default already and get on with it), plus the threats to the UK’s AAA status by Moody’s’, (where were you when we really needed you?), I remain cautiously optimistic as a whole.

Lloyds Banking Group are the latest to tighten up on their interest only requirements and you can expect other lenders to follow suit especially as lenders such as Accord have noticed a large uplift in interest-only applications following recent changes. It is difficult for any lender to remain in the “last man standing” position for too long and whilst ironically the FSA seem generally comfortable with the concept if used sensibly, interest only is facing it’s biggest challenge yet.

Whilst I personally disagree with lenders stance on this, before we decree the end of the mortgage market, (again), the reality is that this is just a further, though perhaps harsh, journey along the road to correcting the industry as a whole.

It does not mean that these lenders will not lend the same amounts they always did, it just means that borrowers will actually have to start repaying the loan back from day 1. For many, this is undoubtedly a good thing and with rents so high at the moment, the repayment costs are generally still comparable.

There seem to be a lot of gripes about down-valuations at the moment and a report in the FT by Esurv shows that there are some huge regional variations in this. Those in the North West are far more likely to be hit than those in London for instance.

I hope that rumours of valuers being told to be harsh and as difficult as possible are not true, but I would be interested to hear your experiences around the country on this.

Product wise there has been the usual plethora of changes with standouts being ING Direct reducing some rates which is welcome, Northern Rock increasing their cashback element to help First Time Buyers offset changes to stamp duty and well done to Woolwich for cutting some rates, cutting Buy-To-Let product fees and releasing their own version of Accords’ very popular track and fix mortgage.

Whilst the pricing on this may seem a touch out, they are more flexible as a lender than Accord and the Future Fix concept is a good one.


Hero of the week is AMI who have taken the brave move to strike out on their own. I have seen firsthand some of the excellent work they have done behind the scenes and as an industry we should get behind them and ensure their future. If your firm is not a member, now is a great time to start.


The Chancellor for refusing to see sense and continue with the Stamp Duty moratorium for First Time Buyers. Anything that helps those struggling to get onto the housing ladder should be kept going and I see no benefit in withdrawing this now.

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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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