News Review: Products
Lender competition heats up in price war
by Rob McCoy, senior product and communications manager, PMS
Last week, a colleague of mine in the communications team here at PMS said: “Time to get the armour out – it’s a battlefield out there!” This comment was made
on the back of a conversa- tion that the team was having about the number of product changes in the market that we had seen developing - in- cluding both core ranges and exclusive deals. The question on everybody’s lips is wheth- er this marks the start of a price war. As we moved out of May
and into June, we also saw the launch of some seven day product sales by Halifax, BM Solutions and more recently, by Abbey. Lenders reduced rates by as much as 0.40% in some cases. According to Mortgage
Brain’s Monthly Product Analysis, the number of mortgage products avail- able to intermediaries has reached its highest level in three years. May welcomed over 200 new products to the market – this represent- ed a 2% increase in product availability, and brought the total number of live mortgage products listed on Mortgage Brain’s sourcing system to its highest level since May 2008. Moneyfacts Group re-
search of late also comment- ed that the first-time buyer mortgage market is showing some signs of recovery given that there are currently 183
mortgage products for first- time buyers available. This is a figure that has
increased significantly over the last two years, reflecting a slight loosening of lend- ing criteria at higher loan to value tiers. The number of first-time buyer mortgages has nearly tripled from June 2009 when there were just 62 of these products available. of the 183 mortgages cur-
rently aimed at first-time buyers, 31 are available to those with just a 5% deposit. This figure has risen from 19 of these products at the same point last year. couple this with the in-
crease in residential mort- gage valuation activity of 22% year-on-year in May, due to rising demand from first- time buyers, according to connells Survey and Valua- tion’s latest Housing Market Activity report, and this is obviously good news for the market. in May this year, they re-
ported that there were 26% more valuations for first-time buyers than in May 2010,
with first-timers now mak- ing up 34% of all valuation activity. While there is much negative press at the moment surrounding the difficulties faced by first-time buyers, this data seems to paint a dif- ferent and altogether more optimistic picture.
Bank Base Rate on another note, the infla- tion versus growth debate has now reached fever pitch. Bank of england governor Mervyn King recently gave an early warning of an in- terest rate rise sooner rather than later. This was following worry-
ing predictions that inflation will be nearer 5% by the end of 2011. What a difference a month makes, given that in May he said he thought rates would stay at 0.5% for quite some time. With fuel and commodity
price increases feeding infla- tion, it is hard to see how a rate rise will do anything but suck more consumption out of the economy. As a result, we foresee a worsening data
Increase FTB Purchase
Remortgage BTL
BTL Remortgage Total
Direct 788 762 840 70 80
2540 Source: TrigoldCrystal 08.06.11 products Residential Increase Term 5 years + Fixed
(decrease) on previous month
0-3 years 1701 -1387 3-5 years 1134 -1006 610
-258 Source: TrigoldCrystal 08.0611 products 14 MorTGAGe inTroducer JULY 2011
Tracker 508 173 84
Increase
(decrease) on previous month -854 -242 0
Fixed 458 144 46
BTL Increase
(decrease) on previous
month Tracker -156 -118 15
202 30 30
Increase
(decrease) on previous month -170 -6 -3
(decrease) on previous month 2
-1
979 -6 -2
Intermediary 2123 3425 3646 809 841
10844
set on unemployment, house prices and repossessions in the second half of this year. However, this prediction may not be enough to head off MPc members who are wor- ried about inflation. This month, our research
from member firms indicat- ed that the choice of main- stream prime product sales is still biased towards the fixed rate products (55%) as opposed to the tracker or dis- counted products (45%). Having said this, for the
second month running, the gap between these products is closing. Lenders such as Woolwich, Abbey and nationwide have all been launching competitive track- er products and this, com- bined with the switch and fix options, may be an indicator that this facility is now being picked up by advisers. it is well worth keeping
an eye out for some no early repayment charge products for various terms, such as the Platform 4-year tracker, as these could also be viewed as lifetime switch and fix deals.
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.
Increase
(decrease) on previous month 323 603
-391 531 523
Total 2911 4187 4486 879 921
13384
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