News Review: Products
Rise in number of mortgage schemes available to brokers
by Rob McCoy, senior product and communications manager, PMS
At the November meeting of the Bank of England Monetary Policy Committee they kept the base rate at 0.5% for the 20th month in a row, maintaining Quantitative Easing at £200 billion - there’s a surprise! So, what does this all mean
for the future of mortgage rates? I said it before and I’ll stick my neck out again - do not expect any change in base rate until Q4, 2011. Some lenders we speak to are saying the same thing, “end of Q3” or “start of Q4”.
Live schemes Last month the number of live mortgage schemes available to intermediaries climbed to its highest level in two years, according to figures released from Mortgage Brain’s Monthly Product Analysis. Their data showed that they had seen variable rate products continue with their positive form, rising for the eleventh month in a row. Following their first decline in five months during September, fixed rate products witnessed a 7% increase in the past month. Trackers, however, continue to fluctuate and took a turn in the opposite direction and dropped by 7% during October. Our own research
amongst member firms indicated that the choice of product sales was split
evenly between fixed and tracker mortgages, 50% each way. However, a growing trend to consider is sales of three to five year fixed rate deals, which are up by 5%. Trackers are still popular however and lenders have been highlighting where they have a “Switch & Fix” or “drop-lock” facility - allowing the client to move from a tracker to a fixed rate without incurring any early repayment charge.
Arrangement fees They would still be paying a new arrangement fee on the new fixed rate so brokers should make sure that this is highlighted to clients along with the fact that it will be a fixed rate available at the time of the switch, not any of the deals currently on the market. Brokers have been vocal
about clients sitting on a low “revert to rates” or Standard
Variable Rates (SVR) after coming off any fixed or tracker deal. Yes, it’s true a lot of clients are, but not all SVRs are as low as 2.5% or 3.5%. Of the lenders on the PMS lender panel the average SVR is 4.78%, with the highest being 5.99%. So I do believe there are still some opportunities for brokers to contact these clients and to examine whether they can help them secure a new deal, which obviously brings rewards to all parties.
Research Our research on buy-to-let products shows fixed rates are still the predominate choice with 60% of cases being recommended, but unlike mainstream products there is no appetite for recommending longer term deals. The overwhelming choice is for two year products
but this is probably driven by rental calculations which are applied to the pay rate to obtain the loan amount required. Maximum loan-to-value (LTV) ratio is also a deciding factor when choosing a lender and their products, with brokers still asking our helpdesk staff for lenders who will do 85% LTV products. By the time you are
reading this, Christmas will be nearly upon us. So, with this in mind I would like to wish all the readers of Mortgage Introducer a Merry Christmas and a Happy New Year. I have only one resolution for the industry in 2011: let’s all work together, the regulator, trade bodies,
lenders,
distributors and brokers – stop the moaning on the blogs and newswires, and make this industry one that we are all proud to work in.
The product information below was the number of products as displayed on TrigoldCrystal’s prospector system and includes any broker exclusives via distributors/networks as well as direct products from those lenders who supply them to TrigoldCrystal.
(decrease) on previous
FTB Purchase
Remortgage BTL
BTL Remortgage Total
Direct 883
966 837 52 62
2800
Source: TrigoldCrystal 08/10/10 products Increase
Term 5 years + Fixed
0-3 years 2596 3-5 years 1780 1027
month 1506 917 550
Source: TrigoldCrystal 08/10/10 products 14 MORTgAgE INTROduCER DECEMBER 2010
month 117
154 87 11 11
Intermediary 1792
2798 2960 562 619
8731 Increase
(decrease) on previous
month 150
112 97 41 39
Total 2675
3764 3797 614 681
11531 Increase
(decrease) on previous
Tracker 1638 837 577
(decrease) on previous
month 785 318 192
Fixed 240 107 31
Increase
(decrease) on previous
month Tracker 21 -4 -9
147 44 40
Increase
(decrease) on previous
month 13 -1 4
Increase
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