News Review: Products


Lenders go potty over football products by


Rob McCoy, senior product and communications manager, PMS


by


John Smith xxxxxxxxx xxxxxxx


We are well used to seeing big brands tune in to the big issues and talking points of the day, and so it proved with the marketing activity being undertaken by some of the big mortgage lenders in the lead up to the 2010 World cup in South africa. mortgage lenders tried to


divert people’s attentions away from the debate raging about england’s best team by launching a range of deals with a footballing theme. the potency of 1966 as an emotional hook on which to hang a product placement for english football fans has not gone unchecked with the latest round of product launches. northern rock launched


the ‘1966 product’, which had an arrangement fee of £1,966. meanwhile, abbey had the ‘Hat-trick mortgage’ - a three- year tracker with a three per cent initial pay rate and a £333 booking fee. So is this type of activity


just a gimmick or does it actually work? taking northern rock’s as an example, i remember at the time thinking: what happens if england is victorious? Will northern rock re-price the product with a £2,010 fee! away from football and


moving on to interest rates, the new coalition government looks likely to encourage the Bank of england to keep interest rates low for some time, and a number of the


major lenders are forecasting just that. current predictions from the major lenders are that the base rate is unlikely to go any higher than 0.75% for the remainder of this year. We will have to wait and see on that one. inflation last month jumped to 3.7%, which was met with calmness from the Bank of england given their view that these figures are likely to be temporary with falls expected later in the year. However, news from across the channel continues to raise some concerns as the eurozone contemplates what to do about greece and the debt mountains that have been accumulated by some of the other european countries.


Our survey says... So where does this leave mortgage brokers, and how are they feeling at the moment? Well, to coin a phrase from a popular tV quiz show: “our survey says…” the findings from our latest


round of broker research suggest that short-term fixed rates still dominate and as the table below shows this may be due to around 60% of the products available being in the 0-3 year range. although we did notice a slight shift, with a drop to two-thirds of all mainstream fixed rates recommended being two or three-year products, down from three-quarters. accord mortgages has tried to buck this trend by being innovative and introducing a 10-year fixed rate product, despite still having competitive two and three year products. interestingly though, of the


tracker rates that were being recommended, a noticeable shift had occurred with lifetime or term trackers accounting for nearly 50%. on buy-to-let products,


our research showed that two year products are still the most popular with a fairly even split between fixed and tracker rates. as i mentioned last month, this is hardly a surprise given that the number of products lenders are making available in the zero to two year space. of the 358 products on trigold’s Prospector system at the start of June, 57% of them were fixed or tracker in the zero to two year product ranges. Furthermore, over the


course of the last month our lending partners were still seeing the split of products being 60/40 in favour of trackers over fixed rates.


Term Rates


Up to 3 years 3 – 5 years Over 5 years Total


Fixed


past month, with fixed rate products now representing 3,612 of all available products, up 24 per cent from 2,292 on 5 may 2010. trackers also climbed 24% during may, with current figures listing 1,767, up from 1,423. now it depends on who


you believe with regards to the number of products available, as one well known comparison website claimed at the start of June that there were 3,100 products available to the general public. But that was still down 90% on 2007. However, it was the first time that more that 3,000 products have been available since July 2009. call me cynical, but does


this mean that there are approximately 2,700 products that only brokers can access, or are there lenders who do not appear on the comparison


previous month Rates 1913 767 351


3031


Mortgage products available on Moneysupermarket.com


at the start of June,


mortgage Brain listed the number of products - as at 31 may 2010 - at 5,805, up from 4,753 on 5 may 2010. this brought the number of live mortgage schemes available to its highest level since november 2008. mortgage Brain also claimed


that fixed rate products and trackers witnessed the biggest movements during the


Inc/Dec on Tracker Inc/Dec on previous month -7.4% 24.4% -16.0%


-0.3% -8.7% 10.0%


956 97


288 1341


As at As at As at Jun-07 Jul-09 Jun-10 28,413


2,177 3,100


sites? We all see the adverts from certain insurance providers about not being on comparison sites, the same also rings true about lenders and their mortgage products. So whilst i would not try


to teach anyone how to suck eggs, i’ll leave you with this one thought…do advisers point this out to clients who think they have found a best buy?


mortgage introducer JULY 2010 13


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