Review: Products
What a difference a year makes by
Neil Hoare, head of lending, Personal Touch
On the 13th July 2012, whilst we were all waiting for the opening ceremony of the Olympics and remembering how Spain beat Italy 4-0 in the Euro’s, the Bank of England quietly launched its Funding for Lending Scheme. Twelve months on and we have seen some remarkable changes in the mortgage market with year on year lending up in July by almost 30%. Te number of people putting their foot on the ladder for the first
time
saw the largest quarterly total since 2007 with 68,200 pur- chasing their first home be- tween March and June. Tis
increase, along with
growth in lending to home movers, has resulted in a jump in total house purchase lend- ing for the quarter. First-time buyers now represent 45% of house purchases according to Academatrics. Te combina- tion of Funding for Lending and Help to Buy has been her- alded by the government as a real success – the proof will be if this momentum can be car- ried through the remainder of 2013 and not be dampened by either the lack of available housing or the rise in house prices – the Nationwide re- porting a 3.9% year-on-year increase. Fixed rates have been the
lynchpin of the rise in mort- gage volume but the news that interest rates have now been tagged to unemployment lev- els could call this strategy into question. Te Bank of England
want to see almost 750,000 new jobs created in the UK to hit the 7% unemployment level trigger when the Mon- etary Policy Committee will start discussing an increase in the base rate. Te MPC have suggested a 55% probability that the unemployed rate will have fallen to a level where we can have Len Goodman from Strictly Come Dancing an- nouncing his “seven” with an economic bent. So the question will be
asked whether this position will lead to a rise in tracker rates and discount deals. If you know the base rate won’t move for up to three years, a fixed rate is as good as a variable – a welcome relief for the Build- ing Society Sector who need to achieve a happy balance between the two. Of course there are the “It’s a knockout” provisos which the governor alluded to – he can’t take his eye off controlling inflation.
Tere is always the risk that as our houses increase in value, we all feel a lot happier about our lives, we start to spend on the high street and inflation starts to rise.
Reasons to be cheerful Te buy-to-let market contin- ues to drive forward with BM Solutions bringing some of its best selling semi-exclusives into its core range. Te news that Legal & General see the private rented sector as a great place to invest their money could drive up competition for property. Te strategy is based on a shiſt in property ownership over the past few years and seems to support the politics of a strong rental sector. Te Labour Party has suggested that longer term tenancy agreements would be good for the UK economy and beneficial to the landlord, reducing the number of unoc- cupied months - although they
Increase (decrease) on previous month
are not going as far as to bring back in rent control. In terms of product design
it will be interesting to see if lenders react to this message offering lower rental yield cal- culations based on the increas- ing length of tenancy agree- ments. Finally September 16th
is a key date in the calendar – the date that the US Fed- eral reserve meets to discuss its quantitative easing pro- gramme. We saw in May how much
of an impact the prospect of a reduction in the programme can have on the UK with five year swap rates jumping on the speculation. Tere is al- ready
talk of a reduction,
albeit a gentle one, which is causing markets in the east to drop significantly and due to the global nature of financial markets this ripple will cer- tainly find its way into our own longer term mortgage pricing.
The product information below was the number of products as displayed on Avelo Trigold Crystal’s Prospector system Direct
Intermediary FTB Purchase
Remortgage BTL
1,435 1,646 1,457 122
BTL Remortgage 122 Total 4,782
Residential Term
0-3 years 3-5 years 5 years +
Fixed
4,000 2,128 1,685
12 MORTGAGE INTRODUCER SEPTEMBER 2013
Increase (decrease) on previous month
-126 -10 32
Tracker
1,151 366 232
Increase (decrease) on previous month
48 22 28
-103 110 -19 2 2
3,450 4,049 4,332 998
1,114 13,943 BTL Fixed
378 185 92
Increase (decrease) on previous month
-29 21
-19 Tracker
138 47 45
Increase (decrease) on previous month
-9 -1 1
Source: Prospector 01.08.2013 products
www.mortgageintroducer.com
Increase (decrease) on previous month
374 254 357 21 41
Total
4,885 5,695 5,789 1,120 1,236
18,725
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