Market Rates 11 May 2012

Since the last newsletter inJanuary, Swap rates have bumped up and down and overall increased marginally.

  • 1-year money is up 0.02% at 1.03%
  • 2-year money is up 0.08% at 1.34%
  • 3-year money is up 0.12% at 1.43%
  • 5-year money is up 0.09% at 1.66%
  • 3-month Libor remains at 1.01%

 

Swap rates, when referred to in relation to mortgages, are the cost of raising fixed term funding on the money markets.

They reflect the market's expectation of what will happen to interest rates in the future and the most commonly referred to are two, five and ten year swap rates.

Swap rates heavily influence the cost of fixed rate mortgages and can be substantially higher than the Bank of England base rate or Libor (London Inter Bank Offered Rate). Libor does have an effect on swap rates, but swaps are, in the main, driven by the market and what traders expect to happen to rates over a given period of time in the future. Effectively swaps take a longer term view while Libor is a shorter term measure.

Rate Basket - 14 May 2012

Although Swap rates have remained level and 3-month Libor has decreased, lender rates have increased, on average, by almost 0.25% since January. Both fixed and tracker rates have increased.

rate_basket

Tracker Mortgages fall while Fixed Rates Increase, 18/11/2010

Thursday, 18 November 2010 00:00 Written by Trevor Irons

The number of tenants looking to rent has reached an eight-year high as demand far exceeds supply, according to the Association of Residential Lettings Agents (ARLA).  ARLA said that levels of demand are the highest it has recorded since its survey began nearly a decade ago and are more than double the figures seen at the peak of the market in 2007. Ian Potter, operations director of ARLA, said: "The market has bounced back in a way that no one could have predicted to levels of demand that have not been seen since the last century.

Meanwhile Countrywide also say that tenant demand reached new highs in the third quarter of 2010. The letting agent said it saw more than 61,000 new tenants registering for rental accommodation during the period - a 19% increase on the quarter two. It takes the total rise in people looking to rent in 2010 to 44%. However, availability has fallen, meaning on average 5.8 tenants are vying for each rental property. John Hards, co-managing director of Countrywide Residential Lettings, says: "The private rental sector is the only viable option for a growing number of people and this issue will only intensify, especially in the wake of the government's cuts to the social housing budget." With Paragon re-entering the buy-to-let mortgage market, the number of schemes now available to new and existing landlords has increased to give greater scope to increase the supply of rental properties.

All the economic indicators point to the demand for rental properties continuing to rise so it is worth looking at some of the features of schemes that are currently on offer:

  • No employment income required - affordability judged solely upon rental income.
  • Up to 80% loan-to-value accepted.
  • If you want to let your existing property and move, the mortgage on your existing property can be ignored in the affordability calculation for your new mortgage as long as the monthly repayments are covered by the rent.
  • Refurbishment mortgages which allow you to make older properties habitable.
  • YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
    Whilst MortgageAbility does not charge for mortgage advice, please note that there will be an administration fee for arranging mortgages. The precise amount will depend upon your circumstances but we estimate it will be £295, payable on completion. MortgageAbility gives you the option to pay a non-refundable fee of 1% of the mortgage loan payable with the application. If this option is taken, MortgageAbility will refund any commission received from the lender.

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