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News Review: Products

Product numbers fall as lenders dither by

Rob McCoy, senior product and communications manager, Sesame Bankhall Group

I got my first prediction of the year correct following the Bank of England Monetary Policy Committee’s decision at their February meeting. They agreed for UK interest rates to stay on hold, but for quantitative easing to be in- creased. Even though there was some brighter economic news from business surveys last week, the Monetary Pol- icy Committee didn’t think that this would be enough to keep the economy warm. The ice cold winds, from Europe in particular, were strong enough for it to top up the boiler with £50bn more quantitative easing and to keep interest rates frozen once again. This action was not a surprise, but the ques- tion is, as always, will it be enough? This extra stimulus brings

the total size of the asset purchase scheme to £325bn, and when the purchases are complete, the Bank’s hold- ings will account for almost one third of the market in government bonds. Elsewhere, the European Central Bank left rates un- changed. They kept rates at 1% for the second month in a row and there was no discus- sion of a rate cut at the meet- ing. The ECB is currently in ‘wait and see’ mode, and it’s no wonder given all of the changes going on. According to the Bank

of England February Infla- tion Report, inflation fell

back in January to 3.6%, as the increase in VAT last year dropped out of the twelve- month comparison. It is like- ly to fall further in the near term as the contribution of past rises in energy and im- port prices diminishes, and unemployment and spare capacity bear down on wages and prices. The story that in- flation would be high in the near term but eventually fall back has been a recurring feature of the past six Infla- tion Reports and it is likely that we will see this theme continuing.

Products fall February saw mixed changes on products, with some lend- ers pulling products and delaying re-launch, or even pricing up their products in attempts to manage their ser- vice levels. This seems to be mirrored in the Trigold data

below, with the decrease in products on their systems. Last month also saw lend-

ers start to interpret the Fi- nancial Services Authority proposals for interest only mortgages. Abbey now only allows up to 50% loan to val- ue and the Lloyds Banking Group brands have changed what they will accept as suit- able repayment vehicles. On the flip side, some lend- ers namely Nationwide and Northern Rock, (now part of Virgin Money), have either increased their cashback in- centives or reduced arrange- ment fees for first-time buy- ers to support this sector of the market. Our product research last

month shows us that sales of short term mainstream products – one to three years – are still the popular choice for clients, with 75% of sales during January in this prod-

uct range. This is the same as the previous month. January also saw for the second con- secutive month, an increase in the sales for 5-year prod- ucts, with 11% of the sales being in this range. Overall, last month again

saw 2-year fixed rate deals as the most popular products with advisers and their cli- ents, although this particu- lar sector was down 2%. The split between fixed rates and tracker or discounted rates has shifted slightly to 55/45 from a previous split of 60/40. Buy-to-let sales continue

to be evenly split between fixed and tracker products, and, during January we saw a 78% of product sales in the one to three year period. Fi- nally, it was great to see Wool- wich’s return to the buy-to- let at 75% loan to value – a good reappearance in the market.

The product information below was the number of products as displayed on Trigold Crystal’s prospector system and includes any broker exclusives via distributors/networks as well as direct products from those lenders who supply them to Trigold Crystal.

Direct FTB Purchase

Remortgage BTL

1156 1108 1271 102

BTL Remortgage 108 Total 3745

Residential Term

0-3 years 3-5 years 5 years +


2802 1339 747

Increase (decrease) on previous month

1409 510 302

Source: TrigoldCrystal 15.02.12 products Tracker

908 302 157

Increase (decrease) on previous month

527 88 -7

Increase (decrease) on previous month

78 85 87 1

-3 Intermediary

1609 2882 2920 640 677

8728 BTL Fixed

301 116 62

Increase (decrease) on previous month

-153 7

-1 Tracker

170 34 28

Increase (decrease) on previous month

-152 -19 2

Increase (decrease) on previous month

-804 -705 -788 -288 -280


2765 3990 4191 742 785


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