MFB appointed by B&B as Mortgage Express ERC referral broker

At Mortgages For Business we are delighted to have been appointed as one of two firms to assist Mortgage Express borrowers looking to take adavantage of the Early Repayment Charge waiver if borrowers redeem their loan in part or full between 1 February and 30 June 2009.

Some borrowers may find that their original broker or financial adviser is no longer active in the mortgage market and will be looking for guidance on how they can make best use of the waiver opportunity. Callers to Mortgage Express Call Centres asking for advice on other mortgages will be referred either to MFB or another firm.

We have a specialist sourcing system that allows us to quote on 120 Buy to Let mortgage products and we have already been able to quote and arrange new mortgages to redeem Mortgage Express. We can also look at other properties to release additional funds to maximise on the opportunity....

BBG Call Centres are understandably experiencing record volumes of telephone calls so if you need to confirm any details of the Mortgage Express Early Repayment Charge amnesty please don't hesitate to call us on 0845 3456788 - as their Referral Partner we know how the full scheme works.

 

Bank Base Rate set to fall to 1% on 5th February 2009?

The next MPC meeting on 4 February with its announcement on 5 February is heading towards a 0.5% cut in BBR down to 1%.

The prevailing view is that 1% will be the last of the cuts in BBR and thereafter the Government and BoE will adopt other tactics including quantitative easing although Danny Blanchflower who sits on the MPC still believes that rates could yet go as low as 0.25% or 0.5%. His view isn't shared by the SWAP markets where 1 year SWAP rate has gone up slightly to 1.71% and 3 year SWAP is at 2.50% (27 Jan 2009).

The premium between BBR and LIBOR rate is only reducing slowly and stands at 68bps ie 2.18%. Whilst there are good technical reasons restricting downward movement, the margin this close to the next announcement is indicative of a 0.5% reduction.

It's all about cash flow!

These are tough times and as the recession takes hold many of us are now looking at ways of tightening our belts further. At this time of year, we are all looking at our expenditure for the coming year and deciding whether we can afford the family holiday, next term’s school fees, credit card payments, utility bills…. I could go on.

Those borrowers with Base Rate Buy to Let tracker mortgages have seen mortgage payments come down over the coming months but those locked in to relatively high fixed rate Buy to Let mortgages are now looking at ways to refinance to improve the monthly cashflow.

With residential mortgage rates now available below 4% and Buy to Let rates below 5%, now could well be the right time to pay a penalty on your existing mortgage deal, lock into a lower rate and reduce your monthly mortgage commitment. Paying a penalty and refinancing may not be right for everyone so please ensure that you get proper advice from your mortgage adviser.

If you are lucky enough to have a mortgage with the Bradford & Bingley Group (Mortgage Express, Keystone, and some GMAC/Kensington borrowers) you may well be aware that Bradford & Bingley will waive all repayment penalties if you refinance away from then before end of June 2009.

Our consultants are on hand to review your options and whether your mortgage is with Bradford & Bingley or not, it makes sense to review your mortgage arrangements today. You never know, you may be able to afford that holiday after all!

Will Base Rate stay below 5% in 2009?

2009 is shaping up to be an interesting year, but hopefully not for the same reasons as 2008. The actions by the Bank of England and other Central banks has been to attempt to stabilise the global markets and right some of the wrongs in recent years.

How long this will last will depend on the length of the recession we are about to enter statistically. Most analysts tend to look forward 12 months for potential rate movements, as looking beyond this period becomes more difficult to project as there are too many variables.

At this stage the predictions are for a BBR of 1% within 3 months and 0.5% within 6 months. BBR is then expected to be held at this low rate until this time next year. By early 2010, it is hoped that the economy will begin to improve and business stimulated. With this improvement, demand for money will increase, and therefore BBR will again rise to keep the economy and inflation under control.

As to when BBR is likely to be at or above 5% is not in current forecasts, but the suggestion by those in the know are for BBR around 3 to 3.5% in the next 24 to 36 months. The Swap rates set on 20 January 2009 has 5 year money at 3.01%, suggesting longer term rates should stabilise. This is providing the economy doesn't over react and inflationary pressure force the banks to increase BBR more quickly as a control measure.

This will natrually effect buy to let mortgages and residential mortgages but it simply depends on which way the rates go!

Mortgage Express waive ALL Early Redemption Charges!

Effectively this is an amnesty to allow Mortgage Express borrowers (both residential and Buy To Let) to re-finanace away at no exit cost. Letters will be sent to all their customers in the coming days but this offer would be a great opportunity for those in fixed rates to look at new lower fixed rates which are becoming available after recent Base Rate cuts.

We are expecting some new products in the next day or so at low levels but we expect lenders to experience an upswing in applications as Mortgage Express customers hunt for new finance.

The amnesty will also include some mortgage customers of GMAC, Kensington and Keystone whose loans are also part of Bradford and Bingley Group. If you are unsure of your position please give us a call.

Call our Mortgages for Business team NOW to discover how you can take advantage of this amnesty on 0845 3456788

SWAP rates and LIBOR rates on the move in 2009

The entry into the New Year was no doubt followed by many with a New Year's resolution on how to improve their lot in life and a glass or two, to bid fairwell to a truly awful 2008.  Of course, there would be those that would ask, was the glass half full or half empty?

Irrespective of your view of life, the first few steps into the New Year may have been bright and sunny for many people, but like the weather it has been bitterly cold, just like the economic data and outlook.  Sadly, 2009 hasn't introduced a clean slate and rid us of the "credit crunch" nor heralded a change of heart by lenders, yet...

Early economic results have been poor and sadly two further lenders, Bank of Ireland and Bristol & West have decided to close their doors to broker introduced business. Despite the news reports of those who prefer to see life as "half empty" and "we're all doomed", there are some positive aspects that need to be highlighted.

Much has been made by lenders of the Swap markets and cost of LIBOR funds to finance their loans. During much of 2008, the spread of Swap rates for 1, 2, 3, 5, 7 and 10 year funds was held in a tight range, with approximately 0.6% difference between the cheapest and most expensive.  However, due to the volatility in the markets, 10 year swaps were actually cheaper than 1 year Swaps.  The high cost of these rates reached a peak in late September 2008, at which time the 1 year Swap topped 5.81%, whilst 10 year rates reached a maximum of 5.26%.

The decision by the MPC at the Bank of England and other major Central Banks to instigate a unified reduction in Bank of England Base Rate (BBR), has helped in restoring some normality to the cost of these funds. When BBR began to fall in October 2008, Swap rates also began to settle into an expected order, with 1 year Swaps cheapest to buy and 10 year costs returning to be the most expensive. 

Although slow at first, the cost of each of the Swap rates has continued generally downwards, although this has been coupled with a widening in the gap. Whilst the gap in costs in late September 2008 was 0.6%, as at 9 January 2009, 1 year Swaps stood at 1.77%, and 10 year Swaps stood at 3.49%, a difference of 1.72%. Not all lenders have yet embraced these lower costs, some preferring to introduce collars into their products or widen their margins.  However, that is another argument.

The past year has also seen significant changes in the cost of LIBOR rates. It is hard to believe that on 23 January 2008, BBR was 5.50% and on the same day the LIBOR rate was 5.48%, remarkably 0.02% below BBR.  Needless to say this pleasent situation didn't remain long, with BBR and LIBOR slowly diverging throughout 2008. Between late January 08 and June 08, the gap in the two rates increased, with LIBOR 0.96% over BBR by June 2008 and still remained at 0.7% above BBR in September.  It was at this point that the wheels were perceived to have fallen off and banks became very reluctant to part with their money. This resulted in a wholesale removal of products, citing cost of LIBOR as the reason.

Following the first BBR reduction in October 08, LIBOR had increased to 1.77% above BBR.  It took a full month to recoup the increase, and still remained 1.18% above BBR by the time we reached November's MPC decision.  Following this historic reduction in BBR by 1.5%, LIBOR had increased to 2.56% over BBR.

So where is the good news, lenders haven't reduced rates in some instances. Well, part of this may be due to the lender having fixed its rates for three months and has not yet reached the review date.  Alternatively, it may simply be due to them wishing to price themselves out of the market for the time being.

   

However, like the Swap rates over the past few months, LIBOR has also continued to fall at a reasonable pace.  Despite jumps on the BBR reductions in December08 and January 09, the banks have supported the call for more assistance and LIBOR has made a good recovery, and is expected to be 2.33% (when confirmed on 13 January) only 0.83% above BBR.

Although it is too early to predict if there will be a further reduction in BBR in February 09, the longer term financial forecasts are predicting a fall in BBR to 1% within 3 months and to 0.5% within 6 months, this rate being held until this time next year.  If this becomes reality, then there is potential for significantly reduced funding costs, which would hopefully bring lower borrowing costs later in the year.

If you wish to adopt a New Year resolution, the glass is half full and remain positive. With this overall reduction in the cost of funding, some reasonable short term Buy to Let fixed rates and residential fixed rate mortgages can't be too far away.  If the cost of 5 and 10 year funds reduces further, there could be a strong argument to take advantage of a longer term fix, where appropriate.   

We just need the lenders to start lending properly again and we are there!

Bank of England Base Rate cut by 0.5%. How will this effect Buy to Let?

Good Afternoon and a belated Happy New Year!

So, the Bank of England has announced a further 0.5% cut in the Base Rate. Rates are now at their lowest for 300years and could still go lower.

Liquidity in the Banking sector remains an issue but despite what you may hear, lenders are lending and we are seeing an increase in the number of Buy to Let mortgage products available. As a guide, before the last Base Rate cut, our internal sourcing system Mortgage Flow was showing c80 products available. Today there are in excess of 120 products and we would expect a raft a new products shortly as lenders take into account the latest reduction in the cost of borrowing.

As an example, one lender this week has already launched a couple of 1 year products. A 1 year fixed at 3.49% and a 1 year tracker at Base + 1.99% - both with a fee of 3.5% added to the loan. Expect further buy to let fixed rates to be available over the coming weeks and please keep an eye on our website which keeps all product information up to date and in real time. (All rates were updated within 5 minutes of today’s Base Rate reduction!).

Our website will also keep you updated on the movement of 3m LIBOR rate which has steadily reduced in anticipation of today’s Base Rate cut. The good news is that the gap between Base and 3m LIBOR continues to narrow with the spread only 50bps before today’s announcement (compared to a gap of 118bps in Nov and 79bps before December’s cut). The reduction in LIBOR along with the implementation of the various Government initiatives will improve confidence and liquidity amongst the lenders which in turn will lead to an increase in available mortgage options.

We will continue to keep you updated. In a complex market it has never been more important to get the right advice about your mortgage options – our Consultants are on hand to assist you and keep an eye out for further Buy to Let Blogs and e-mails over the coming days and weeks.