News Review: Products
FLS has positive effect on the mortgage market by
Rob McCoy, senior product and communications manager, Sesame Bankhall Group
In December last year, the Monetary Policy Committee leſt the bank rate on hold at 0.5% and the amount of quan- titative easing unchanged at £375bn. Tis wasn’t a sur- prise – in November, the MPC announced they judged it unlikely they would cut the bank rate “in the foreseeable future”. And, with the gov- ernment’s decision to trans- fer the ‘profits’ from the QE programme, there is, in effect, already a bit more stimulus splashing around the system. At least the MPC is not un-
duly concerned about the re- cent rise in inflation, which it puts down to temporary fac- tors. Tis could mean the end of any further QE. Firstly, the MPC seems to
be losing faith in the effective- ness of printing more money. Secondly, the minutes of the MPC’s November meeting revealed that the Commit- tee view the Treasury’s de- cision to transfer £37bn of gilt coupons as simply QE by another name. In other words, monetary policy has already been loosened fur- ther. Tis transfer, along with announcements like the 4G spectrum auction, helped the Chancellor present a broadly unchanged set of borrowing figures in his Autumn State- ment. Te European Central Bank
leſt interest rates unchanged at 0.75% at its December meeting. However, this de- cision was not unanimous,
leaving open the possibility of a future rate cut. Tis is not surprising with the eurozone back in recession, unemploy- ment at 11.7% and business surveys suggesting the slow- down may be
intensifying.
President Draghi urged Eu- ropean governments to make progress on the implementa- tion of the banking union to help restore confidence in the euro, stabilise financial mar- kets and stimulate growth. Te eurozone is set to con-
tract in 2012 as most euro area countries continue their journey along the long path of fiscal consolidation. President Draghi claims that “a gradual recovery should start later in 2013”. Te key word here is “gradual”. Te government’s Fund-
ing for Lending Scheme fea- tured widely in the trade and consumer press towards the end of 2012. Since the FLS launched in August, 30 lend-
ers have signed up to the initiative to take advantage of
the government’s subsi-
dised funding but the cash injection only appears to have gone to the lower end of the LTV curve. So far, accord- ing to recent statistics from Moneyfacts, there have been just 21 extra mortgage loans on offer above 90% LTV. Tis means that while borrowers with large deposits have had access to a wider range of cheaper products, those who only have 10% deposits are still locked out of the housing market. In fact, there are few- er products at 90% LTV than six months ago, and for those needing a 95% mortgage, rates have actually increased. Te FLS does seem to be
having a positive effect on the mortgage market but with the government calling for lend- ers to help first-time buyers it undoubtedly needs to do more. Let’s hit the New Year
Increase (decrease) on previous month
running and allow the first- time buyer market to actu- ally get a foot on the housing ladder. Te government has started to provide the tools, now is the time for lenders to finish the job! At the start of December,
according to Avelo, there was an increase in both the 3-to-5-year and 5-year plus products. Overall, there are still more than 70% of prod- ucts available to intermediar- ies compared to direct-only products. Our recent product re-
search shows sales of short- term mainstream products – 1-3-three-years – continued to dominate during Novem- ber. Tese products still reign as one of the favourite choices for clients, with 73% of sales last month. As usual, Halifax, Abbey
and Nationwide all
topped the sales in the 2-year product space as did Coven- try and Woolwich.
The product information below was the number of products as displayed on Avelo Trigold Crystal’s Prospector system Direct
Intermediary FTB Purchase
Remortgage BTL
1285 1285 1216 101
BTL Remortgage 97
Total 3984 Residential
Term
0-3 years 3-5 years 5 years +
12 MORTGAGE INTRODUCER JANUARY 2013 Fixed
3072 1660 1272
Increase (decrease) on previous month
-70 96 16
Source: Prospector 03.12.2012 products
www.mortgageintroducer.com Tracker
911 276 147
-76 -75
-112 -11 -17
2157 3007 3078 1034 1080
10356 BTL
Increase (decrease) on previous month
-149 -4
-145 Fixed
479 149 91
Increase (decrease) on previous month
38 -4 -2
Tracker
172 38 38
Increase (decrease) on previous month
-1 -8 -8
Increase (decrease) on previous month
-98
-358 -316 86 77
Total
3442 4292 4294 1135 1177
14340
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