There are a few notable dates to be aware of this month – first up is the Budget which will take place on the 15th March, followed by the next meeting of the Monetary Policy Committee (MPC) on the 23rd March, and just for good measure, how about the 26th March when the clocks go forward and we’ll all be officially on British Summer Time.
Now the last one is not exactly mortgage industry-specific, but considering we’ll be officially out of Winter then, plus our market tends to benefit from a Spring-time boost in terms of activity, then I’m sure this will be a welcome change for many stakeholders.
But, what about the first two dates? Well, firstly the Budget is (in my opinion) likely to have some significant housing/mortgage market ‘content’ within it – there are rumours of further stamp duty changes, and one wonders if the Government, having seen the end of Help to Buy, might be still looking to support first-time buyer activity in other ways. We shall see.
The MPC meeting will always figure heavily on our radar, especially this month given that it is likely to provide a very big steer in terms of where the Committee members’ heads are right now.
Judging by the public pronouncements that have been made by different MPC members since the last meeting, you can clearly see a split in terms of future BBR rate movement. The next MPC will be interesting for a number of reasons, not least because swap rates have been moving around a fair amount over the course of the last month, as it becomes more difficult for the markets to predict what rates are going to do.
Again, as we know, if swaps are showing a greater degree of volatility, then this will feed through into mortgage product rates, and again we’ve seen that recently with a number of lenders pushing product rates up. If the MPC decides not to raise rates again in March, this may well signal to many that we are either at the top of the BBR hill, or we are very close to its peak.
For first-time buyers, this constant shifting of rates may be difficult to get their heads around – it’s why they should use an adviser after all – but it’s likely to be something they’re going to have to get used to. Particularly, when meeting affordability criteria is a big part of the mortgage process, and different/changeable rates clearly impacts on this.
There is however some ongoing good news for potential first-timers and that comes in the form of ongoing product choice. As I hope you know, each month, I look at the availability of 95% LTV products, based on that month’s Nationwide average house price, which for February was £257,406.
You will I’m sure have seen that these Nationwide figures for February showed the first annual house price fall since June 2020 – just after the end of the first lockdown – with a drop of 1.1%. It does mean that those saving for a deposit are potentially able to get to where they need to be with less money, although as we know, this won’t be a uniform picture across the country.
However, for these purposes, we’re using a 5% deposit amount of just over £12,870, and looking at product numbers it’s positive to reveal that these have gone up to 147 products from 135 last month.
At the moment we’re adding about a dozen new 95% LTV products each month, and while this still leaves us short of the numbers available pre-‘Mini Budget’ we are moving slowly towards that level.
So, out of those 147 95% LTV products, we have 123 fixed-rates and 24 trackers/discounts. Perhaps unsurprisingly those latter product rates have started to inch up as BBR and swaps moved. Last month the cheapest discount/tracker was priced at 4.04%, now it is a lifetime discount with Vernon Building Society of 4.15%.
However, longer-term fixes continue to be trending downwards – last month the best five-year fix was priced at 4.93%, now it is the Skipton with its 4.75% rate, while the best two-year fix remains the Monmouthshire at 4.9%.
Overall, therefore, it’s positive to see the 95% LTV market continuing to move in this direction, and hopefully as the competition grows so shall the downward pressure being placed on rates.
Interestingly, in the last few days, swaps appear to have been inching lower again, and as mentioned, the markets will undoubtedly take a great deal from the next MPC decision, particularly if it is one to keep BBR as is, rather than increase it once more.
Patrick Bamford is head of international business development at Qualis Credit Risk, part of AmTrust International