Lenders slash mortgage rates to all-time lows By Yuan Phoon


Lenders have slashed rates on their mortgage products leading to all-time lows, mon- eyfacts research revealed last month. Woolwich made cuts to


its range five times in a row while nationwide slashed rates across the range with their 5-year fix going to as low as 3.89%. Santander, Halifax and Leeds have also dropped their rates in the last month. Speaking on the rate cuts,


andy gray, head of mortgag- es for Barclays, said: “With further falls to swap rates this month and the economic turmoil in greece impacting rates, we are able to pass on cuts to borrowers across our


Open Season


by Robert Sinclair director AMI


Sports fans and those who enjoy pot shots at flying birds are being served up feasts at the moment. How- ever as we hurtle into the second half of the year we continue to see a bag of very mixed economic messages. inflation remains stuck at


more than double its target, total employment contin- ues to rise and unemploy- ment, whilst falling in total terms, is still seeing a rise in claimant count and in the numbers of long-term unemployed. retail sales figures are


more volatile than a celeb-


mortgage range.” Previously cuts were only


being applied to the lower loan to value bands but it now appears that lenders are applying cuts equally across all LtV tiers. Lea Karasavvas, mortgage


broker from mortgageforce, said: “i believe such cuts are an indication that lenders are below on targets. We are seeing scorecards drop, and more and more deals be- ing accepted as lenders look to grow market share an in- crease pipeline business. “the cuts in trackers sug-


gest to me that lenders en- visage rates staying low for longer than perhaps they had accounted for at the begin-


rity marriage and our gdP figures are also delivering a degree of confusion to policy makers. the combination of these


factors, makes any rise in Bank of england rates more and more unlikely this year. However, as we have seen, swap rates and prevailing mortgage rates have re- mained quite disconnected from central rates for a very long time, and this is set to continue. We are seeing the start of


a potential price war on the high street as the big lend- ers begin to worry about market share. the uK public is adopting a much more cautious approach to spend- ing money and to borrowing more. We are seeing some excellent offers for consum- ers, however my concern is that this is merely masking deeper capacity issues. the news of the sale of


ning of the year. margins on trackers are reducing, and rates at higher LtVs are also reducing. “most importantly, we


are seeing price wars com- ing back. in one day this week four main lenders all slashed their rates. as lend- ers become more and more competitive, basic economics says that they will be only one winner: the client. “Price wars will reduce the


margins and my personal belief is that a 3.75% 5-year deal may well show its face at some point. But why take the gamble that it may surface, when 3.89% is available out there now.” michelle Slade, spokes-


northern rock and the disposal of the Lloyds branches should bring more competition in the longer term. more important will be how the european mort- gage directive and the next stage of Financial Services authority consultation on the mortgage market review will play out. these will give us policy


wonks a summer of excit- ing reading and meetings. However it does continue to deliver a degree of uncer- tainty for those trying to plan the futures of their businesses. What does continue is the


need for good advice to con- sumers from well-informed brokers. Having been a consumer recently anyone who thinks that going direct is a good way to get a mort- gage should probably not be allowed to own a home of their own.


woman at moneyfacts, said: “an imminent rise in bank base rate now appears un- likely and the cost of fund- ing on the swap rate market has reduced. this reduction in funding costs has led to average mortgage rates fall- ing to their lowest level since moneyfacts started recording rates. “Lenders are always slower


at bringing rates down than they are at raising them and as soon as the market expects a base rate rise, mortgage rates will start to increase again. if borrowers delay too long to secure a new mort- gage deal, they could find that they miss out on some of the lowest rates ever seen.”


in addition as we are now


going into debate of the new regulatory structures: the move from the FSa to the Financial conduct author- ity and the type of banks that are to serve us in future, means there is much that could go wrong. if we are to insulate retail


banking from riskier opera- tions, this will be a return to more boring banking, but also risks starving lenders of much needed capital. However, the once power-


ful engine that is our build- ing society sector also needs certainty as the compensa- tion bill from the crash still casts a heavy shadow over that sector. until there is certainty over the final bail- out bill, i am concerned that this will not be our route to salvation. the next few months will be testing and brokers need to fire on all cylinders.


mortgage introducer JULY 2011 5


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