Hello again. Back so soon? Is it really a month since my previous column?
Hold on. Let me light my Melt ‘Saddle’ scented candle, make sure I top up my tea, put on Richard Hawley’s dulcet tones to help the ambiance too as it gets close to midnight. Oh, and grab some Heroes chocolates that I have already eaten too many of.
What? It is Halloween, after all (at the time of writing, anyway), and let me tell you, after the Hammer Horror of a day I have had, I deserve them.
In fact, I hear a lot at the moment, from brokers up and down the country (and thank you to those who do get in touch to chew the cud and moan, or just engage in a little mutual support; I welcome all the calls), that some days over the past few weeks have been hard.
The housing agenda will hot up before the general election
It is nice sometimes to hear that it is not just you who goes through tough days or issues, and we as an industry are good at solidarity when we need to be. We can ignore the jokers and wind-up merchants.
There is a sense, however, that for the first time in a while the mortgage market has at least settled in a space where the sudden movements in rates have diminished and an eerie calm has fallen.
The Bank of England is not expected to increase rates again this year (at the time of writing, at least!), as one-year swaps are now below the current Bank base rate. We can only hope that common sense has finally prevailed, and this pause for breath to analyse further data will be welcomed by many. There really is no point in heaping further misery on mortgage borrowers, who have been hammered enough already.
Top of the cycle?
We have recently seen that inflation, and most importantly core inflation, has started to recede as previous rate rises filter through, and this is expected to continue. We could finally be at the top of the interest rate cycle.
Pent-up demand is continuing to grow and, when the levee breaks, it is going to be all hands on deck once more
There is a note of caution, however, as some economists point to ‘waves’ of inflation that recede then rise a few times, before finally subsiding for good.
It really is hard to call what happens next, with organisations such as the International Monetary Fund saying that rates in the UK have not peaked and they will have to stay higher for longer, but others believing rates will have to be cut faster than expected next year to avoid undershooting the inflation target.
Add in the fact that the global and inflationary outlook has been somewhat complicated again by tragic events elsewhere in the world and all the uncertainty they bring, and it is a brave person who claims they know what happens next.
What we do know is that pent-up demand is continuing to grow and, when the levee breaks, it is going to be all hands on deck once more.
There is a sense that, for the first time in a while, the mortgage market has at least settled
There is also talk around the forthcoming Autumn Statement — or Budget to you and me — and the fact that housing could play a major role.
We have already seen Mr Gove’s latest plans around phasing out the leasehold system. Proposals include ensuring all new houses built are freehold, capping all ground rents on existing leasehold properties to a ‘peppercorn’ rate, as well as changing the standard contract lease extension from 90 years to 990 years. They want to remove the two-year limit before a lease extension as well.
Gove has also said that the ban on Section 21 evictions will not be implemented until “various legal system enhancements are in place”. A sensible move, or deals done in darkened rooms with Tory backbenchers?
Other items said to be considered are an extension of the Mortgage Guarantee Scheme by a further year; and yes, you guessed it, folks — yet another tweak to stamp duty! Where is the new, fresh thinking?
It is time for lenders to come back to the table properly if anyone is going to have a decent year next year
The battle for the housing agenda will hot up before the general election and time will tell if Labour is able to grasp this particular nettle and offer a real alternative.
So, to everyone’s favourite subject — the money markets. Three-month Sonia has risen a soupçon to 5.18%, and swaps have fallen again, like a Tory majority in a by-election.
Since the previous column:
2-year money is down 0.21% at 4.89%
3-year money is down 0.20% at 4.68%
5-year money is down 0.16% at 4.44%
10-year money is down 0.09% at 4.30%
In mortgage lender land, Accord, Coventry, HSBC, NatWest, Santander and Virgin Money, among others, have all reduced rates over the past few days, but I still firmly believe that lenders can do more to help, whether in the rate department or in their process, affordability and criteria. It is time for them to come back to the table properly if anyone is going to have a decent year next year.
It’s good to see Molo Finance launching buy-to-let mortgages for non-UK residents, which is an underserved part of the market
Halifax Intermediaries has introduced three-year fixed-rate remortgage products, which I would like to see more of in the market. In fact, why not more choice with four- or seven-year mortgages?
The newly branded Co-operative Bank for Intermediaries (I recall suggesting that name change to Platform years ago in a meeting at the Ritz Hotel) has not just a new name but a new interest-only policy. It will do up to 75% loan-to-value pure interest-only or 85% LTV part and part, with minimum equity at application of £300,000.
It has also updated its maximum loan sizes, lending 95% LTV up to £600,000 and 90% LTV to £750,000.
Barclays has increased its loan-to-income (LTI) multiples, with borrowers earning jointly £75K to £100K getting up to 5.5 times borrowing. The maximum LTIs are one thing, but the affordability calculators also need to change to reach the higher levels.
It is such a shame to see Scottish Widows exit the mortgage market and focus just on later-life products. I feel it is an opportunity missed for that brand.
It is nice sometimes to hear that it is not just you who goes through tough days or issues, and we are good at solidarity when we need to be
I like Skipton Building Society these days and the fact it is consistently trying to be different. Its 100% mortgages with a 5% fee product transfer rate got me into some very interesting, though slightly stressful and demoralising, debates on social media, and it is now renaming joint borrower/sole proprietor mortgages as “income boosters”. OK, so maybe not quite sure on that, but it is doing something different and that should be saluted.
In the specialist world, it’s good to see Molo Finance launching buy-to-let mortgages for non-UK residents, which is an underserved part of the market. It also comes with a Molo savings booster.
That’s two boosters and, let’s face it, we can all do with a booster these days. Have a great month.
What Really Grinds My Gears?
October was Black History Month and on my journey into the Diversity & Inclusivity (D&I) realm I have taken time to listen to people to get their personal perspective on where our industry is and what our relationship is with many things, especially race and social mobility.
I have been lucky to spend time with three men I could listen to for hours. Dom Scott, Sidney Wager and Damian Thompson are the very definition of inspirational leaders, and our mortgage industry is so much richer for having them in it. We need more people from more diverse backgrounds at the top of our industry.
The point of mentioning this is that I, and others, still hear that ‘D&I is not needed’ or ‘has been done, now move on’, but we have only just scratched the surface.
While there is one person who doesn’t advance because of the colour of their skin, gender or social background, there is work to do.
Where one person decides not to go to an industry event because they don’t want to face derogatory comments, sexual advances or cheap gags, there is work to do.
Where one person doesn’t feel they can be themselves in the workplace because of their sexuality or background, there is work to do.
Where one person is ridiculed by stereotypes or castigated for the actions of others because of their religion, there is work to do.
Where one woman does not feel safe among our own industry, there is work to do.
We will do this work, however long it takes.
Hero to Zero
Consumer Duty reportedly leading to an increase in protection conversations, according to Ami — this is important
Uplift in the number of lenders now cutting rates further
Newly branded Co-op for Intermediaries, interest-only criteria and Barclays’ LTI improvements
Net approvals for remortgages hitting their lowest level since January 1999
The reported jump in mortgage arrears, according to Pepper Advantage
Scammers stealing £580m in 1.4 million fraud cases in the first half of 2023 — we all need to be alert
Andrew Montlake is a director at Coreco
This article featured in the November 2023 edition of MS.
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