News Review: Products
Signs are positive for the industry
by Rob McCoy, senior product and communications manager, PMS
If we were to believe what was being reported on the TV and in the consumer press, we should all be bracing ourselves for a rise in base rates sooner rather than later. By the end of January the gradual ratcheting of interest rate expectations did cause the money market rates to increase while fully anticipating the first 0.25% hike in bank rate by May and go a long way to pricing another two subsequent increases by year-end. December’s
inflation
figure of 3.7% led to a serious discussion of rate hikes at January’s meeting, with two members of the Monetary Policy Committee (MPC) voting for an increase in the bank rate and as we know in the last meeting that number has now risen to three. But in February, as in January, the “no change” brigade prevailed as rates were kept at 0.5%. Worries about the strength of the recovery will doubtless have been a factor. All eyes are now on whether the MPC will hike in May or August (the next two inflation report months, when the Bank of England revises its economic forecasts). The rise in swap rates
caused a number of lenders re-price upwards, Abbey, Nationwide, Northern Rock, Coventry for Intermediaries and Accord Mortgages to name but a few. However, Halifax reduced some deals by as much as 70 basis points.
The change in swap rates is an interesting one. According to Lloyds Bank Corporate Economic Research, at the start of February the two year swap rate stood at 1.96%, an increase of 40 bps since the start of January. However this rate is 17 bps lower than that the start of February 2010 when it stood at 2.13%. Abbey had a two year fixed rate homebuyer product with 3.69% at the start of February 2010 but the equivalent now is 3.35%. Last month also saw a
series of criteria and product innovations
Lloyds TSB announced a scheme to help borrowers who find themselves in negative equity and whilst this is only for their direct customers currently, if it proves a success I’m sure it will not be long before an intermediary version will become available. Kensington made some changes to its criteria, including increasing
announced.
the maximum loan to value limits on its buy-to-let range to 85%. our research from member
firms indicated that the choice of product sales was definitely beginning to tilt towards fixed rate products (70%) as opposed to tracker or discounted products (30%). The actual product mix is still predominately towards two year deals with, in some cases as high as 65% as opposed to longer term products. Where clients are taking a tracker product again the two year products are still the popular choice in approximately 60% of cases. As previously mentioned the Halifax product changes in February saw some aggressive pricing which seems to be aimed at trying to kick start the remortgage market although do not expect these rates to be around long. our research on buy-to-
let products still shows a balanced split between fixed rates and tracker rates with
(decrease) on previous
FTB Purchase
Remortgage BTL
BTL Remortgage Total
Direct 741
787 771 51 61
2411 Source: TrigoldCrystal 01/02/11 products Residential
(decrease) on previous
Term 5 years + Fixed
0-3 years 2466 3-5 years 1547 977
month 979 442 348
Source: TrigoldCrystal 01/02/11 products 14 MoRTgAgE INTRoDuCER MARCH 2011
Tracker 1654 823 514
Increase
(decrease) on previous
month 721 318 144
Fixed 280 108 33
Increase BTL
(decrease) on previous
month Tracker -3
-15 -9
212 43 40
Increase
(decrease) on previous
month 23
-20 -3
Increase
month -115
-914 -116 -17 -17
Intermediary 1840
2992 3110 708 759
9409 Increase
50% apiece. There also seems to be no change in the term of products being recommended with the overwhelming choice still for two year products or less. Appetite for buy-to-let
lending seems to be growing amongst lenders. A number of lenders have announced in the last few months that they were considering entering or re-entering the buy-to-let market at some stage this year. Yorkshire Building Society was the latest to announce they would do just this with the appointment of Jeremy Law as head of buy-to-let lending. The likelihood is that it would include their intermediary
subsidiary
Accord Mortgages. Lastly, is it me or is the
mortgage market beginning to fight back? New products, competitive pricing, new lenders - 2011 seems to have started in a positive manner so let’s hope this is the start of good things to come.
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
month -34
-2198 111 75 67
Total 2581
3779 3881 759 820
11820 Increase
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