I start this week’s coverage with the news that inflation – however you want to measure it – is running too high for the Bank of England. Barry Naisbitt, writing in FA, highlights both the Bank’s intention to secure inflation at 2 per cent in the medium term and the prospect of returning to a Base Rate last experienced in April 2001 of 5.50 per cent.
This current concern over interest rate has seen more first time buyers opting for fixed rates. MM states almost nine out 10 buyers have chosen fixes, but some industry commentators have questioned the decision. Many lenders will have priced the possible rate rise into their pricing models and believe we are close to, or have already reached, their peak.
FSA review
The Financial Services Authority (FSA) has revealed the next stage of their review in MI, with its focus now on the lifetime and non-conforming market. Obviously both sectors give greater risk of consumers being taken advantage of and fits in well with the new focus on ‘Treating Customers Fairly.’ There are many people in the market that would like to see all customers, whatever their financial situation, getting the right financial solution. There are higher fees in this market and it’s up to us to ensure the client receives value for money.
Two other stories from the FSA caught my eye. MS reports that of the 30 non-conforming firms who received a thematic visit, 25 or so failed to satisfy the regulator. We will have to wait till June to see the full extent of the FSA’s findings. The second was a view from Ray Boulger writing in MM, who sees a new initiative – treating intermediaries fairly – as pleasant reading. This will hopefully increase the quality of service that brokers receive from lenders in their day-to-day dealings.
Packagers
FA carries the positive news that the packaging arena is alive and healthy, with research suggesting almost three-quarters of brokers are continuing to use the service. The research also highlights the impact of technology on the packager and the need to invest in lender cascading and underwriting skills to maintain their market competitiveness.
On the product side, MI gives coverage to the new ‘MERC’ mortgage from GMAC-RFC, an innovative proposition that you could argue embraces the ‘Treating Customers Fairly’ principles in its design. Despite the high arrangement fee, the rate is competitive and tying the early repayment charge to Base Rate does offer some comfort that there is a limit to how much clients would pay if they wanted to move to another product.
HIPs
With June rapidly approaching, there have been a number of articles examining the changes in legislation on Home Information Packs (HIPs) over the past six months. It’s no surprise that there is still some confusion in the housing market on what impact they will have, with FA suggesting a real change in positioning. Peter Mounty suggests the new purpose behind HIPs is to drive us all ‘green’, rather extravagantly save mankind, and to also drive additional tax revenue for the government, all of which are probably true. How much the public understands about this agenda is still to be known but I’m sure it’s not as great as we would all hope. This isn’t helped by the complaints the government has received about its advertising campaign, as told in MSL, which suggests that houses on the market on the 1
June need a HIP.
