There is a frown line etched into my forehead that was garnered about this time last year as every edifice on my face contorted to try to understand the sheer lunacy of what we had all witnessed over a few crazy days.
If the past decade or so of Conservative governments will be remembered for anything, history and political students of the future will read one textbook, entitled, ‘How to shoot yourself repeatedly in the foot’.
Among the chapters will be such delights as ‘How to handle a referendum’, ‘Choosing your advisers wisely’, ‘A beginner’s guide to prorogation’, ‘The best time to hold a party’, ‘An idiot’s guide to avoiding the truth’, ‘The Budget for beginners’, ‘Economic experiments in the real world’ and ‘How to never admit your mistakes’.
Borrowers are rightly still rather confused
Future chapters could include ‘How to announce the scrapping of an infrastructure project in the very place it is meant to help’, ‘Looking after your wealthy friends’ and ‘How to morph from the Conservatives to Ukip’. I could go on.
The U-turn on the climate change agenda is another strange decision and it seems they are not content with letting down this generation but want to let down future generations too. Businesses looking forward to investing in a whole range of greener jobs and innovation are just as confused as landlords.
No matter your politics, deep down we all know we have been severely misrepresented for a long time. Whether a future Labour government will do any better remains to be seen, but one can only hope.
While swaps have increased in the past couple of days, they are being received an awful lot better than a Suella Braverman speech
Although the Mini-Budget is by no means the only reason for where we are now, as a contributing factor it cannot be overlooked. Listening to Liz Truss bouncing along merrily without a care in the world and holding court with her growth agenda like some kind of Second Coming makes me angry and more than a little sad.
Tumbleweed
I don’t want to get overly political, but the past few weeks have given us all some time for reflection as the tumbleweed continues to blow around the mortgage market. Borrowers are rightly still rather confused. Will house prices and mortgage rates continue to fall? Will there be a Budget bonus for buyers? Will inflation stay the same or fall dramatically?
Brokers who are prepared to go the extra mile will have a steady stream of returning clients as the market turns next year
According to Nationwide, house prices are 5.3% down, though unchanged on last month. I still believe there is some way to go, and a fall of 10% overall is not unexpected. This month will be a marker.
Zoopla’s latest report shows that homebuying numbers have increased by 12% since last month and the number of properties for sale is up 80% on last year. A buyer’s market it is, then. Well, as long as sellers actually need to sell.
We can only hope that future governments do take housing seriously. And, with Leeds Building Society forecasting that up to 426,000 first-time buyers in England will be priced out of the UK housing market between 2023 and 2027, something needs to be done to make sure housing is available and affordable to all who need it, whether private ownership, rental or social.
We shall see if the next few months represent a ‘Winter Wonderland’ or a ‘Winter of Discontent’
The Bank of England mercifully paused its rate rise programme last month, prompting a sigh of relief that echoed across the market and saw swap rates tumble. However, this market is far from simple or predictable, and in the last few days swaps have risen again, driven by expectation that, while food prices have fallen finally, oil prices are back on the way up. Some commentators are not ruling out a final Bank base rate rise to 5.5% before the year is out.
The government is working hard to take all the credit for inflation falling but much is beyond its control. While inflation will fall naturally, there is still danger in trying too hard to get it down and causing issues for the economy. There is still a host of borrowers yet to exit the comfort of ultra-low rates onto much higher ones, so another move by the Bank would be premature.
The general economy is, however, still proving to be robust, despite upticks in unemployment, redundancies and mortgage arrears. We shall see if the next few months represent a ‘Winter Wonderland’ or a ‘Winter of Discontent’.
Businesses looking forward to investing in a whole range of greener jobs and innovation are just as confused as landlords
What is clear is there is still a market. Brokers who are prepared to speak to people and go the extra mile will not only do well now but have a steady stream of returning clients as the market turns next year.
What of those pesky swap rates and their fiancée, Sonia? Three-month Sonia has risen again to 5.10%. While swaps have increased in the past couple of days, they are being received an awful lot better than a Suella Braverman speech.
2-year money is down 0.36% at 5.10%
3-year money is down 0.30% at 4.88%
5-year money is down 0.18% at 4.60%
10-year money is up 0.08% at 4.39%
At the time of writing, 4.82% is the new headline rate, courtesy of Virgin Money, which is also returning to its ‘seven-day sale’ policy with some products. A host of lenders have continued to reduce product offerings.
Nine lenders now have a fixed rate starting with a 4 on the residential purchase side, which is a whole lot better than it has been for some time.
Lenders seem, however, to have turned their attention to 2024 and hopefully are planning in earnest to ensure they increase their market share and finally ignite a rate war. Someone must light the touchpaper.
It is welcome to see LendInvest back in the BTL market
Apart from rate changes, there has been a flurry of activity where criteria are concerned. Nationwide has made a welcome change in its self-employed policy, increasing the maximum LTV to 95% and raising the maximum income multiple from 4.49 to 5.5 times.
Accord has increased the maximum LTV on its Cascade Range to 95%, and raised its maximum LTV on new-build flats for buy-to-let (BTL) to 75%. It has also enhanced its contractor policy. Also, a big welcome to The Co-operative Bank for Intermediaries, the new name for Platform, with its interest-only proposition.
In the large-loan market, Investec has slashed rates substantially, with some attractive tracker options.
In the BTL world, Paragon has an interesting new product. While I am not a fan of high-fee products, this one is 7%, the rate is good at 4.69% and unusually there are no penalties in the first year of the five-year fix. It is also welcome to see LendInvest back in the BTL market.
Nine lenders now have a fixed rate starting with a 4 on the residential purchase side
Quantum Mortgages has launched a product with a 100% interest cover ratio for landlords who are struggling to mortgage elsewhere. Available to 70% LTV, it “allows borrowers with a two-year clean repayment history to refinance, even where the property’s rental income does not meet the usual 125% income coverage requirements”.
Finally, I have to say something about the iridescently marvellous Sally Laker. Sally is a wonderful person; an inspiration and role model to many as that too-rare breed of female MD. She is witty, intelligent and knowledgeable, and someone who always has time for you. Her light always shines bright in every room and she will be missed when she does retire.
Hero to Zero
Hero to ZeroSally Laker – role model, inspiration, legend
More rates below the 5% level – more, please, lovely lenders!
Nationwide’s changes to self-employed borrowers – most welcome
Government’s U-turn on the environment – #oneplanet
The growth of unregulated advice on social media
A year since Liz Truss broke the economy and still no sense of remorse
What Really Grinds My Gears?
The equity release market is a funny one. It’s a product that has a place and can be a very important option for borrowers, but I can’t help feeling it is a market that needs to do more.
As a broker we have shied away from it, especially in the early days. While it is clearly in a much better place, the story I read in The Times of an 88-year-old borrower, who needed full-time care after his wife died, being forced to pay a £45,000 penalty did not leave anything other than a sour taste in the mouth.
In a Consumer Duty world such lender decisions, coupled with misleading adverts, a failure to signpost cheaper, more standard options, high fees that some would consider exploitative and proc fees that are just too high don’t sit right at all.
I still sense an air of indifference from some equity release lenders and firms, and I never like hearing that some brokers want to get into it because of the fees available.
Of course, there are many good brokers, firms and lenders in this space, and the good ones, with our help, need to work together to remove the shady elements.
This is a work in progress and I look forward to getting involved more as we begin our journey… if I am still welcome after this, of course.
This article featured in the October 2023 edition of MS.
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‘I don’t want to get overly political’ 🙂
You are never anything but overtly political Andrew. Why? You’re simply annoying a proportion of your audience.