News Review: Products
Tracker products double as Bank Base Rate stays low for future
eyes are also turning to by
Rob McCoy, senior product and communications manager, PMS
What a difference we have seen in the past few weeks. Since my article last month, george osborne’s mansion House speech and his proposals in the emergency Budget have had an effect on the mortgage products, and lenders are starting to reassess their base rate predictions. Based on our conversations
with lenders, most are now saying that they do not expect any change in the Bank of england base rate until the first quarter of next year. in fact, according to
the centre of economic Business research, it is more bearish about the economy than the office of Budget responsibility and is suggesting that the base rate of interest could remain unchanged until the end of 2012. its reasoning behind this is a lower growth forecast. recent economic events
have also meant that the markets are looking at the eurozone, and Spain in particular, with increasing concern. the country’s worrying
levels of unemployment, around 20%, and profligate government spending that is way beyond its means is understandably causing some market jitters.
France – and not just because FiFa president Sepp Blatter let rip against nicolas Sarkozy’s government-led football witch hunt! But this is one issue that
england is certainly not immune to. after all, France’s off pitch woes are starting to sound worryingly familiar. as for our product
research and analysis, there has not been a great deal of change this month, with the findings from our latest round of broker research suggesting that short-term fixed rates still dominate the market. However, where we have
seen a change is a drop in the number of products available in the 0-3-year range. meanwhile, the number of fixed rate products in the 3-5-year range has seen an increase of nearly 40%, in terms of the number of products available, and the number of products with terms of over five years have seen a significant rise. the 4.19% and 4.39%
5-year fixed products from accord, and the 4.39% tmW prime deals are a couple that caught my eye and look competitive. Since the start of June the number of tracker rates has also doubled in this 3-5-year range, up from 97 products to 209 products. all this is set against a back
drop of brokers telling us that they are still recommending tracker products over fixed rate deals. despite lenders still offering competitive
14 mortgage introducer AUGUST 2010
“ The number of fixed rate
products in the 3-5-year range has seen an increase of nearly 40%”
fixed rate deals, it is not so much a question of brokers turning their back on them, but more a case of brokers simply doing their job correctly. this situation can be
neatly summed up by a comment i received recently from one particular broker, who said: “in the past year, how many 2-year fixed rates have we sold? not many. even at 2.99%, a 2-year fixed is higher than a comparable tracker at 2% above base rate. People don’t feel like paying
Term
Up to 3 years 3 – 5 years Over 5 years
Total
that premium unless it is for longer than two years.” as for buy-to-let products,
our latest broker research found that 2- year products are still the most popular choice, with a fairly even split between fixed and tracker rates. this is hardly a surprise given the number of products that lenders are making available in the 0-3- year space. So in summing up, i think
the fiscal measures that we face will overshadow any medium term concerns about inflation running above target. that is why we are in agreement with the views of many of the lenders that we will not see any change to interest rates for the rest of 2010 at the earliest.
Furthermore, if anyone
knows when the right time will be for their clients to come off their low SVr deals and kick start the remortgage market can i take a look at their crystal ball please?
Fixed Inc/(Dec) on Tracker Inc/(Dec) on Rates previous Rates previous month
1562 (-18.35%) 1073 661
39.90% 88.32%
3296
month 946
209 310
1465 Source: TrigoldCrystal 28/6/10 mainstream products Term
Up to 3 years 3 – 5 years Over 5 years
Total
Fixed Rates 140
61 26
227
Tracker Rates 104
10 57
171 Source: TrigoldCrystal 28/6/10 buy-to-let products
(-1.05%) 115.46% 7.64%
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44