ANALYSIS
JONATHAN CORNELL
INDUSTRY CONSULTANT
Swaps plummeted last
week. We saw some of the
biggest declines I can
remember, reversing many
of the increases we have seen in
the past few weeks. Three-month
LIBOR is now 1.45%.
1-year money is down 0.08% at 1.51%
2-year money is down 0.18% at 2.10%
3-year money is down 0.20% at 2.53%
5-year money is down 0.19% at 3.07%
It was sad to see that according
to the British Bankers’ Association,
lending by major banks fell in
March for the first time in four
months, trampling on any green
shoots we have seen of late.
And I was shocked to see that
UK banks are lending at cheaper
rates in Ireland than in the UK.
Halifax is offering a two-year
fixed rate at 2.9% for first-time
buyers in Dublin and it looks like
they can borrow up to 90% LTV. Its
90% LTV five-year fixed rate in the
UK is much higher.
The Royal Bank of Scotland has
a 2.95% product in Ireland while
the UK version is 5.99%.
Apparently, the Irish market is
more competitive and this has
forced both lenders to take lower
margins. This seems unfair to UK
taxpayers who have bailed these
banks out.
Halifax has launched a product
whereby it pays the Stamp Duty for
first-time buyers buying properties
up to £250,000.
This is good news but the rate is
an eye-watering 7.49% five-year fix
for loans up to 90% LTV.
As our generous chancellor has
decreed a Stamp Duty holiday for
properties up to £175,000, buyers
need to be spending more than this
to benefit.
Cheltenham & Gloucester is
offering a 90% LTV five-year fixed
deal at 6.59% so borrowers could
save themselves 0.9% per year. This
is a saving of 4.5% over five years –
enough to pay the Stamp Duty.
Abbey has launched an
affordability calculation guide and
if you use the lender, this is worth
12
marketwatch
Lending by big banks fell in March for the first
time in four months, which is disappointing
considering the green shoots we have seen recently
INTEREST RATE SWAPS
6.75
6.25
5.75
5.25
4.75
4.25
3.75
3.25
2.75
2.25
1.75
1.25
May 08
● 1 YEAR ● 2 YEAR ● 3 YEAR ● 5 YEAR
Jun 08
Jul 08
Aug 08
Sep 08
Oct 08
looking at. Apparently, 60% of cases
stuck in underwriting are due to
errors in budget planning or where
income has been input incorrectly.
Also, Abbey deducts service
charges so bear this in mind with
leasehold properties.
Nationwide has grabbed a lot of
headlines by launching its standard
mortgage rate. It’s strange that it
still doesn’t want to call it an SVR
like other lenders.
Nationwide is struggling with
such a low base mortgage rate. As it
has been diligent about bringing
down its BMR this is now at the
ludicrously low level of 2.5%. But
while new borrowers will revert to
the SMR at 3.99%, existing ones
will end up on the BMR.
The Mortgage Works has
launched its own revert rate which
has the catchy title of The
Mortgage Works Managed Rate and
comes in at 4.69%.
Abbey still has its excellent
two-year fixed rate deals at 3.39%
for purchases and remortgages.
Both products come with fees of
£1,995 for loans up to 60% LTV.
Purchases and remortgages
come with free valuation,
Nov 08
Dec 08
Jan 09
Feb 09
Mar 09
remortgages come with free
conveyancing and purchases come
with cashback of £250. The
maximum loan is a generous
£550,000. These deals are key
account exclusives so you should be
able to access them through clubs.
Abbey still has its two-year
fixed remortgage rate of 4.29% at
75% LTV with no booking fee and a
three-year fixed rate for purchases
and remortgages at 4.59% up to 75%
LTV, again with no booking fee.
Alliance & Leicester has
launched a four-year fixed product
for purchases and remortgages
with a decent rate of 4.39% and a
1% fee. It is up to 65% LTV and the
maximum loan is £1m.
Royal Bank of Scotland
Intermediary Partners withdrew
its purchase and remortgage range
at 60% LTV, with the email stating
that this was to “continue our
commitment to maintain our
service standards”.
RBSIP was blighted with poor
service for a long time but in the
past few years its director of
intermediary mortgages Chris
Pearson and his team have done a
great job improving this.
www.mortgagestrategy.co.uk
Apr 09
heroes&villains
● HERO OF THE WEEK
is Woolwich, which
has committed to
hike its mortgage
lending by £5.5bn
in 2009 as part of
plans to lend an
additional £11bn.
Any extra funding
for the mortgage
market is great.
● VILLAINS OF THE WEEK
are banks lending
at cheaper rates in
Ireland than in the
UK. Halifax is
offering a two-year
fixed rate at 2.9%
for first-time buyers
in Dublin and the
Royal Bank of
Scotland has a
2.95% product in
Ireland. This seems
grossly unfair on
taxpayers who have
bailed them out.
MORTGAGE STRATEGY May 4, 2009
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