Goodness me, has January gone already? How on earth did that happen?
It’s been a busy few weeks, and your devoted product team are feeling a tad punch-drunk from the constant shifting in the market. So the month end seems like a good time to reflect on how 2013 started and what hints – if any – it gives for the rest of the year.
2012 finished with gross lending of £142billion or so (an improvement on 2011), optimistic noises from lenders about lower prices and higher availability, and a widely held expectation that the funding for lending scheme (see pretty much every post in the last 6 months) is going to give a healthy boost to mortgage lending in the year to come. So how has it panned out so far?
Well early signs are pretty good. If, for some bizarre reason, you were looking for a mortgage on Christmas Eve you could just about have got a 2-year fixed rate at 1.99% from HSBC with a hefty £2,000 fee – but more realistically you’d have been looking at something in the region of around 2.5% to give a decent range of lender and fee options.
Today that headline rate of 1.99% can be had with half the fee from Yorkshire Building Society, Chelsea (aka Yorkshire Building Society) and Norwich & Peterborough (aka, er, Yorkshire Building Society). And HSBC in turn has slashed its rate to, um, 1.98%. But when you look at that broader measure of a reasonable range of lenders and fees, there’s a whole bunch of options in the 2.2% to 2.3% range. And in fact looking at my little screen of product delights, something as preposterously high as a 2.5% rate doesn’t appear until well into page two.
Likewise if you were looking for a 5-year rate, the headline-grabbers haven’t really changed (2.79% before Christmas, 2.74% now), but today if you want a rate under 3% you’ve got well over a dozen lenders to choose from: from Abbey to Woolwich and most of the alphabet in between.
It’s a similar story in most other sectors – headline rates may not have fallen dramatically but we have plenty more lenders making hefty improvements to their offers. Just the other day Nationwide announced their fourth rate cut in as many weeks, Coventry and Halifax have done it three times, and the likes of Santander, Natwest, Woolwich, Yorkshire, ING, Virgin Money etc have gone at least twice (probably - I’m kind of losing track!).
So if it’s not an out-and-out price war, there’s certainly some hefty skirmishing going on – and the good news is there’s little sign it’ll ease up any time soon. Indeed, incoming Bank of England Govenor Mark Carney may have supplied more ammo by telling the recent international conference of Daleks in Davros [is this right? Ed] that he was essentially ready to let inflation go hang if it meant keeping interest rates low and boosting growth.
At the same time the persistent Europanic that was such a problem last year has largely abated (for now), the FTSE has had its best January since goodness knows when, and England won a test series in India.
In short, the outlook is fair bit rosier than it’s been for quite some time – for mortgages anyway: more options for first time buyers and movers, not incidentally bringing lovely stamp duty income to the treasury and spending on white goods, paint and plumbers; and many can now make decent savings by getting off their Standard Variable Rate freeing up income to boost anything from retail sales to bank balances (and therefore banks’ balance sheets).
Of course it could all backwards again tomorrow – we’ve seen that enough times - but here’s hoping the rest of 2013 lives up to January’s promise. Personally speaking, I’m not so much touching wood as entering a civil partnership with it . . .