News Review: Products


Eurozone woe sees trackers and long term rates rise TABLE 1


by Rob McCoy, senior product and communications manager, PMS


So another month passes and another month with the base rate remaining at its historic low rate of 0.50% but, with the Monetary Policy Com- mittee restarting quantita- tive easing in October, there was little chance of any fresh policy measures or an accom- panying statement this time. The immediate outlook has worsened since October’s meeting. Moreover, although the recent EU summit has helped stabilise market, it has not resulted in a meaningful improvement. Discussion of downside


growth and inflation risks are likely to dominate the Novem- ber Inflation Report and the minutes to this meeting. The last minutes alluded to some members wanting to provide greater stimulus. However, the Bank of England is committed to asset purchases until early February at present. With in- tense uncertainty over Euro area developments, many economists see little need for the MPC to act again this year, barring a material worsening in outlook. However, with the odds of a UK recession rising and the prospect of weak eco- nomic activity still to be en- trenched next year, one might expect the MPC to expand its asset purchases further in ear- ly 2012. Whether this proves the last of QE will depend on developments in the Euro area over the coming months. During the last few weeks we have seen a number of


change (in bps)


Interest rates (%) current On week On 1mth On 3 mths Bank Rate


0.5


£3mth LIBOR 2-yr swap rate 5-yr swap rate


0


1.01 1 1.51 11 1.86 4


lenders increase both tracker products as well as some of their fixed rate products. gen- erally these are lenders who are funding their product range via wholesale markets. These increases have been forced upon them due to the rise in LIBOR and the swap rates, as Table 1 shows with the change in basis points at various times over the last 12 months.


Competition as I said last month, there are still some competitive lon- ger term deals available - the likes of accord, Coventry, Na- tionwide, Northern Rock and Woolwich to name but a few. It will be only a matter of time before these deals start creep- ing up on the back of the funding issues mentioned. apologies to those lenders I


0 5


15 -4


0


16 34 8


12 18 -9


-81


haven’t mentioned but these lenders have caught my eye of the last week or so and do keep coming up on my sourc- ing system. Other news that has been


grabbing my attention re- cently is the rise in lenders increasing their loan to value limits on products – Nation- wide 90%, Woolwich 90% and aldermore extending its 100% Family guarantee Mortgage product to other distributors including ourselves at PMS and Sesame. With in excess of 50 fixed rate products alone now available for loans at 90% loan to value it makes a mockery of the stories in the consumer press and TV news bulletins that borrowers need a 30-40% deposit to obtain a mortgage. a friend of mine said his son was looking to buy a


Increase FTB Purchase


Remortgage BTL


BTL Remortgage Total


Direct 806 967 863 57 67


2760 Source: TrigoldCrystal 01.11.11 products Residential Increase Term 5 years + Fixed


0-3 years 2983 3-5 years 1553 818


(decrease) on previous month -370 -295 29


Source: TrigoldCrystal 05.10.11 products 16 MORTgagE INTRODUCER DECEMBER 2011


Tracker 1303 279 277


Increase


(decrease) on previous month -40 -97 64


Fixed 484 226 60


BTL Increase


(decrease) on previous


month Tracker -16 8


15


281 52 26


Increase


(decrease) on previous month -67 4


-1


(decrease) on previous month -114 -88 -45 3 3


Intermediary 2545 3571 3865 1078 1106


12165


On 6 mths 0 9 6 9


Prices taken at London close, 11.11.11; Swap rate quote conventions:UK - Semi, Actual/365 vs. 6M Libor


property but they felt he couldn’t as he only had a small deposit saved. Once I pointed out to him that there are deals at 90% loan to value and told him to go to the fi- nancial adviser he uses for his business he commented: “So why do lenders not promote this in the press and on TV more?” good question, one for


the lenders to respond too. My immediate answer to him was it’s just not sensational enough!


3-year popularity Our product research last month shows us that sales of short term mainstream prod- ucts – one to three years – are still the popular choice for clients with 84% of sales dur- ing October in this product range.


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 93


-94 96


-84 -86


Total 3351 4538 4728 1135 1173


14925 On 12 ths


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