57 varieties

Interesting to note that since the Bank of England cut its lending rate two weeks ago from 5.5% to 5.25%, we have seen 57 lenders adjust their Standard Variable Rate (SVR) to reflect the 0.25 reduction. Encouragingly, Stafford Railway Building Society has done one better than the Bank of England by reducing its rate by a huge 0.35 per cent to make it the lowest SVR in the market at 5.99 per cent. However eight of these 57 lenders have cut their SVRs by less than a quarter point, including Northern Rock at 0.1 per cent and Britannia at 0.15 per cent. Most of these rate revisions will come into force in March. Northern Rock's failure to pass on the rate cut in full was no great surprise, with circumstances as they are at the moment meaning that new lending does not appear to feature in the stricken lender's strategy going forward, as now the focus is on their savings book and attracting more money into the coffers through competitively priced deposit accounts. On closer inspection, none of the top five biggest lenders has any current mortgage products linked to SVR.

As mentioned yesterday, there was just one lender left in the 125% product arena, namely Birmingham Midshires (who also call themselves BM Solutions). Lo and behold, today's new is that they too have withdrawn from this marketplace. This now means that it is only possible to borrow upto 100% of the property price, but not beyond it. Amazingly, Birmingham Midshires have announced this product withdrawal retrospectively, as the products were withdrawn last night ! So much for ANY notice period.

If the credit crunch continues, I can foresee lenders reducing their minimum lending to 95% only, which would enforce borrowers to have saved a deposit (which is always good advice anyway, as it saves literally thousands of pounds in associated fees).

This ties in nicely with other news today that First-time buyers (FTBs) are returning to the property market, with the National Association of Estate Agents (NAEA) reporting a fourth consecutive monthly rise in FTB's. New homebuyers increased their market share by 1.5 per cent between December and January, bringing it to 14.5 per cent overall. The increased optimism has been largely put down to the current financial climate with the drop in property prices in some areas acting as a platform for many those who may have otherwise struggled.

It is imperative that FTB's are able to afford property, as this class of borrower is who fuels the mortgage market from it's grass roots.

Interesting times, as always, in the mortgage market.