I can’t understand why it’s still raining. The weekend is over. Seemingly this Summer, weathermen and weatherwomen have had their lives made a whole lot easier with the endless downpour. In fact, why not disappear off our screens until September altogether and put something more meaningful on the TV instead?
Predictions are, of course, rarely this easy – otherwise we would all be millionaires off the horses. As it is, my money will last a lifetime – if I don’t buy anything else.
Ye jolly olde Bank of England’s Monetary Policy Committee therefore, believes that by dropping subtle hints, they make everyone’s lives in this, and other financial industries, a great deal easier.
The minutes on the voting are, of course, the mechanism for this. More recently it has been Mervyn King and his other merry men talking at unrelated events after the Base Rate announcement to voice their opinions still further. Must be the big lunches. Overlaying this, everyone knows that the reduction of inflation is the target, which is dropping towards the government’s target, but still no cigar.
By design, us Brits are polite and normally apologise for something we didn’t even have an influence over. For instance, someone will bump into you on the train and we mumble ‘sorry’ remorsefully. However, rather than approach the problem with tact, wouldn’t it have been far easier to hike rates up 1 per cent to start with, rather than chip away in instalments that individually slow down us in excruciating fashion? Apparently King reckons this would send ‘ripples through the market’. Huh. Isn’t that what you want – people to stop and think?
From another angle, our market is now awash with Harvard graduates at global lenders, yet they cannot appear to pin-point where to put their rate flag in the sand. So here we sit, second guessing whether the fixed rate we are recommending will survive until the end of the fact-find, or indeed wondering whether it should have remained on the sourcing system in the first place.
Lenders complain about reduced margins as they get caught out trying to remain competitive on price. Behind the scenes, their staff numbers have to grow to cope with the onslaught of changes and their communication tactics. Their 18th product guide is another wasted outlay and is retired to the bin. The shop fronts are redesigned.
Why? Because the boys meet once a month and feel compelled to play with their little toy. How about bi-monthly 0.50 per cent chunks? The salary saving alone must be worth something?
Mainstream
Nationwide has relaunched its 25-year fix at 6.39 per cent. Many in the government believe this is the way to bring stability to these shores, but as discussed previously in this column, I think recommending a product of this length is fraught with pitfalls – how will you know the price is right? The last thing you need is for rates to be at 4 per cent or below for 20 of those years as you could have a compensation battle on your hands.
The Mortgage Works (TMW) has significantly increased its maximum loan size on its 100 per cent mortgage to £400,000. This is a bold move as it is now in the realms of fickle house prices and could easily be caught out on a downturn in the market. To further incentivise larger borrowing, it has upped its joint income multiple to 3.75 times joint.
Buy-to-let
Kensington Mortgages is the latest lender to include a self-certification option of earned income in its portfolio to supplement its rental coverage options.
TMW has removed its loading for buy-to-let houses in multiple occupation up to 75 per cent loan-to-value (LTV). It has also reduced the minimum period before it will consider a remortgage from six to three months. This still protects it from the property developers that typically look at one to three days to make it effective for them.
Adverse
GMAC-RFC has introduced a higher lending charge for its popular status level one and two fixed rates over 90 per cent LTV.
First National has been famed for its high LTVs and generous affordability which has undoubtedly helped out copious first-time buyers. This week though, it has pulled back from first-time buyers on its light range – maybe this is sign of things to come.
Preferred Mortgages, which mainly operates in niche market areas, has usefully increased its LTV on its right-to-buy near-prime to 90 per cent, which combined to its tolerance to benefit income and relaxed property stance should prove helpful.
Melton Mowbray is the latest building society to trial adverse credit projects on a pilot basis.
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