Mortgages for Business’ David Whittaker has said today that yesterday’s increase in Bank Base Rate (BBR) by the Bank of England’s Monetary Policy Committee (MPC) does not worry him but he is concerned by recent changes in swap rates.
Speaking at the Financial Services Expo (FSE) Midlands, Whittaker (pictured) said the increase in BBR from 0.25% to 0.5% was simply “putting right what they did last year” and suggested that “we shouldn’t be getting this wrong”.
He pointed out recent increases in five-year swap rates: “The moves on five-year swap rates worry me greatly – I think it is 1.09% today but in September it was 0.77%. Come February next year I can’t believe any lenders will be running sub-4% five-year fixed rates by then. I tell people that the fix-rate ship is sailing from the harbour and that they need to get on it because it’s not coming back anytime soon.”
Whittaker also highlighted how Keystone had moved its pricing this week on its five-year fixes but said he could see swap rates going up further and therefore suggested rates will continue to rise.
Whittaker said that a new buy-to-let lender was due to launch into the market next month but also suggested any future new lenders would lose credibility if they didn’t come to market with both a personal and limited company product proposition.
He also pointed out the increase in limited company buy-to-let mortgage activity over the last 12-18 months, with 15 out of 37 buy-to-let lenders now offering limited company products. As of today, out of 1,233 buy-to-let mortgage products, 263 accepted limited company applications.
Whittaker said the recently-introduced PRA underwriting changes for portfolio landlords had landed but “a whole lot of lenders have had to change their DNA, skills and computer systems” in order to comply. He said: “There will be a car crash at some point when all this comes together.”
Part of the requirements under the new underwriting changes was the need for brokers to provide a portfolio landlord spreadsheet. He said: “As of the 1st October three out of those 37 lenders released spreadsheets which were either PDF or Word documents. It is very disappointing that 37 lenders couldn’t get in a room together and come up with a universal spreadsheet to be used across all of them.”