SWAP rates (mechanism through which lenders can acquire a fixed price for funding over a specific period of time) have reduced over the last few weeks. The cost of 5 year fixed monies currently resides around the 3.30% mark. The Lender then provides the product to you, the customer, at rates currently in excess of 5%. Add in an arrangement fee of circa £999 and you will understand my sceptical view that huge profit figures will be released by the Lenders later in the year when they report on their 2nd half of 2009 figures!
The surprising bit is that despite such comfortable circumstances some lenders find themselves in, they’ve not replaced staff that were sadly laid off over the last 18 months and, as such, are incurring service issues! Some are in excess of ten days behind! With property prices competitively priced and deals in need of a quick completion, before the chain collapses or someone gets gazumped, such delays could not be incurred at a worse time.
Despite these issues, some lenders are following swap rates and have reduced rates this week. Good news for those looking to purchase or remortgage (bad news for those in a hurry!). Others have tried to curtail their volume of business by tightening up on criteria, or by increasing the deposits required on their mortgage product portfolio.
First Time Buyer enquiries continue to engulf ‘AToM towers’, exploring all avenues in order to get on to the first rung of the property ladder. With rates reducing, we are also predicting that remortgage applications will increase over the next few weeks as people look to secure decent rates and ensure monthly expenditure is fixed for the foreseeable period. We’re also informed that properties are selling like hot cakes, although supply is still somewhat sparse.
Many experts are predicting the worst is over and a slow recovery has started. How slow, no one knows, but it’s not just positive talk in the market any longer, small signs are beginning to show.
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