A month ago it felt a little like we were in the full eye of the storm, certainly when it came to the impact the war in Iran was having on our own mortgage sector. The fact that it came pretty much out of the blue was also playing a huge part in terms of lenders, in particular, having to react very quickly to turbulent money market conditions.
The big question as we enter May is whether that storm has dissipated in its severity, and if it has, whether this is merely the calm before another storm rears up. Because despite, at the time of writing, there being an ongoing ceasefire in hostilities, there are clearly some major obstacles to overcome, not least what is currently happening in the Strait of Hormuz, and over what timescale this can be solved.
We know already from the most recent figures that inflation has risen to 3.3%, and with the price of oil still high, energy prices are not going down anytime soon, and we must prepare ourselves for higher inflation through 2026 and perhaps beyond.
The further big question here is just how the Bank of England reacts to this. The immediate reaction has been welcome - no increases to Bank Base Rate (BBR) at the last two meetings and, it would seem, a reticence to move rates up due to the undeniable fact that doing so wouldn’t solve the main drivers of inflation, namely higher energy prices as a result of the spike in oil.
Overall, therefore, a month on from my last column, it would appear we are sailing in slightly calmer waters, albeit with the very large caveat that things could change again very quickly, and as market stakeholders we should certainly be aware of that, particularly for advisers when looking to place clients who may well need to refinance over the next few months. Now, is probably not the time to wait for ‘better deals’ to appear.
Which leads us to my regular monthly review of high LTV mortgage product availability, using Nationwide’s average monthly house price figure, which this month is £278,880 - 3% higher than last year and 0.4% higher than last month - and would require a 5% deposit of just shy of £14,000 in order to secure a 95% LTV mortgage.
The good news on that front is that after a very sharp fall in product availability last month, we have seen a return to market from a number of lenders in the high LTV product space, resulting in a significant pick-up in options.
Last month product numbers had dipped to a very low 200, however today as I write, there are 238 95% LTV mortgages available, split between 214 fixes and 24 trackers/discounts/variables. That’s 34 more fixes than last month and four more of the latter variety, which as a change over just a month, is noteworthy and certainly welcome.
Pricing is, as always, something of a moveable feast, particularly when it comes to fixed-rates which we know lenders are struggling with, because of sharp and ongoing movements to swaps.
We have seen that again in the Best Buy tables, particularly two-year fixes. While Lloyds offers a 5.27% rate for current account customers, it has 5.37% available for those who are not – a rate which is also available at both Halifax and the Leeds. All three of the latter products are priced higher than the best rate available from Barclays last month, 5.3%.
In the five-year fix space, we have slightly better news. Last month, the best rate available was again from Barclays at 5.31%; now you can secure 5.26% from Lloyds – again if you’re a current account customer – while both Leeds and the Halifax are offering 5.32%.
There has continued to be more noise in the discount/tracker/variable space perhaps as worries/fears about BBR increases have eased slightly. Bath Building Society continues to offer its 4.74% two-year discount; Scottish Building Society has the same product at 4.84%; while Nationwide also continues to offer its two-year tracker at 4.89%.
As perhaps we might have anticipated, there has been very little change in the 100% LTV space. We are still at nine products across six lenders; Bath Building Society is still offering its two-year discount product at 4.94%, while Beverley still offers a 4.99% three-year discount, although Lloyds has cut its three-year fix from 5.14% to 5%, again for current account only customers.
Overall, the big news here is the return of about half the product choice we saw fall out of the market during March. Whether this will continue to push upwards towards the level of products we had in the early part of the year, remains to be seen. I suspect there will continue to be very big dollop of caution taken by all lenders as they seek to navigate these still-choppy waters.
We should welcome this greater product choice but perhaps not stake our own mortgages on whether it will continue in this trajectory. Too much can change in too short a timescale at the moment, which makes the ability to secure products/rates now much more important that what might, or might not, be available, at some point in the future.
