News Review: Products
Rising SVRs still good value for borrowers by
Rob McCoy, senior product and communications manager, Sesame Bankhall Group
In the UK last month you could almost hear the sighs of relief from Athens and Frankfurt after private in- vestors agreed to a deal on Greek debt which allows the next bailout to go ahead. It was touch and go whether they would as the deal is a tough one. Private investors swap ex- isting bonds for new ones worth less than half of the originals. On top of this, the new bonds pay less inter- est and be will repaid later. Things might be alright for a bit in Europe now, but there’s still a long way to go before the Euro’s sovereign debt issues are solved.
Closer to home Back nearer to home GDP fell by 0.2% in Q4 2011 but business surveys point to a return to modest growth in Q1. This is consistent with Bank of England governor Mervyn King’s recent warn- ing that the UK economy will “zig-zag” in and out of growth in 2012. Despite this mildly encouraging start to the year the UK economy still faces some challenges
- unem-
ployment continues to rise whilst the growth of average earnings remains low - and as the Eurozone debt crisis drags on there are now ex- pectations of weaker export growth too.
The Monetary Policy Com- mittee voted to keep the UK policy at 0.5% in March mak-
Residential Term
0-3 years 3-5 years 5 years +
12 MORTGAGE INTRODUCER APRIL 2012 Fixed
2807 1193 830
Increase (decrease) on previous month
5
-146 83
Source: TrigoldCrystal 14.03.12 products
www.mortgageintroducer.com Tracker
1043 296 287
Increase (decrease) on previous month
135 -6
130 BTL Fixed
376 153 84
Increase (decrease) on previous month
75 37 22
Tracker
191 34 28
Increase (decrease) on previous month
21 0 0
ing it three whole years that the rate hasn’t moved. Our fragile economic outlook suggests that rates will stay put for a good while yet. The prospect of weaker demand has led to pushing the start date for rate hikes further into the future.
SVR hikes The recent changes that some lenders have announced to their standard variable rates - Halifax, Bank of Ireland, and
Yorkshire/Clydesdale
Banks - may make some of their clients start consider- ing remortgaging. However, whilst this move might not have been popular with the clients, the standard variable rate of the top six lenders is currently between 3.89% and 4.24% and as such, still low compared to certain lenders within the market. I would imagine that many advisers
will be revisiting these clients and speaking to them about remortgaging where possible but it is worth remembering that the Halifax do pay intro- ducers for retaining clients through their product trans- fer range. At the time of writ- ing some of these deals are below or the same as the new variable rate.
Servicing backlog March saw a number of lend- ers still struggling to balance their appetite to lend and maintain service levels. This saw them reprice or even temporarily withdraw prod- ucts at short notice. Whilst we all know how frustrating this is last month has had some good news for interme- diaries.
According to the data supplied from Trigold inter- mediaries have seen a 16% increase in products being
available to them last month whilst the number of direct only deals fell by 5%. The buy-to-let market saw the 25% and 22% increases in products for purchases and remortgages respectively. 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 February in this prod- uct range. This is the same as the previous month. Feb- ruary also saw the sales for 5-year products being main- tained at 10% of the sales. Yet again overall during February 2-year fixed rate deals were the most popular products with advisers and their cli- ents, with an increase of 3% on January. The split between fixed rates and tracker or dis- counted rates has shifted sig- nificantly to a 75/25 split.
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
1079 1043 1240 101
BTL Remortgage 111 Total 3574
Increase (decrease) on previous month
-77 -65 -31 -1 3
Intermediary
1946 3215 3346 797 828
10132
Increase (decrease) on previous month
337 333 426 157 151
Total
3025 4258 4586 898 939
13706
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