As the first week of April draws to a close, much anticipated stamp duty tax changes have finally arrived, stirring activity in the previously quietened market. Changing criteria has been trickling through the mortgage market by the minute, with lenders looking to expand their reach to borrowers by offering new residential and buy to let offers.
Many lenders have been adjusting their criteria in an effort to make navigating the space easier for borrowers since stamp duty changes were applied. However, a new breed of lender is also working to bridge the gap on the market as Spear’s identified in their recent article. Featuring our very own Hugh Wade-Jones, you can read more about this here.
Ensuring the property market remains strong, despite the flurry of challenges that have come its way, lenders have continued to reveal many beneficial deals and reduced rates. For example, Virgin Money has updated its buy to let and residential mortgage range this week, as well as releasing a unique Stamp Duty Buster product. Now available with an increased amount of cashback on buy to let intermediary exclusives, from £500 to £750, or £1,500 for the Stamp Duty Buster, the lender’s 2 and 3 year fixed rates between 65% and 90% loan to value (LTV) have been reduced by up to 0.2%. 2 year fixes at 65% with a 1.69% rate are available with a £995 product fee, or 2.47% for a 2 year fix at 90% LTV. These are both available with £300 cashback for next-time buyers or £500 for first time buyers.
3 year fixed rate buy to let mortgages are also now available at 75% LTV with a 3.74% rate, a £995 product fee and £500 cashback, 3.69% for a 5 year fix at 75% LTV with a £1,995 fee and £500 cashback, or 3.79% with a £995 and £500 cashback.
Virgin Money has also revealed additional plans to double its new-build lending to at least £1 billion this year alone, developing its overall market share to 3.5%. The overall lending target has also been raised from £7.5bn to between £8.5bn and £9.5bn due to amendments to its affordability criteria. This has proved especially helpful for lenders with large income and relatively low levels of unsecured credit, applying changes to how they assess income and expenditure.
Another lender to have announced changes to criteria and thus an expansion to its available lending is Kensington, having now increased its maximum LTV on its core residential range to 85%. Since launching higher LTV products at the start of this year, Kensington will now only use a minimum income for applicants who do not already own a buy to let property when applying for a mortgage. This means applicants must now have been an existing residential homeowner for at least 12 months, or have previously owned at least 4 buy to lets for this length of time.
Not only this, Kensington’s policy shakeup has created clearer definitions for older borrowers seeking finance, with proof of future retirement income now required for customers looking to borrow beyond the age of 70 or their anticipated retirement age. Contrastingly, however, Mansfield Building Society has extended its lending age limit from 80 to 85 on its 2 year discounted rate at 65% LTV. This is available for both purchase and remortgages with a maximum repayment term of 30 years. Although unavailable on interest only, this allows borrowers to use 100% of the gross pension income for affordability calculations.
Elsewhere in the market, TSB has reduced rates to its shared ownership and shared equity home-mover ranges, which now includes a remortgage deal starting at just 1.99% for a 2 year fix, as well as a 2 year fixed rate at 2.19% or a 5 year fixed rate up starting at 2.94% up to 90% LTV. Other remortgage deals from the lender have also seen reductions on 3 and 5 year fixed products of up to 0.15% and 0.2% respectively.
TSB decided to expand its affordable housing offers this week by joining the Help to Buy London scheme, ultimately adding new products with reduced rates. This means London buyers with a minimum 5% deposit will now be able to benefit from a government equity loan of up to 40% of the property purchase price.
Following the news that the average 3 year fixed rate on the market has fallen below 3% for the first time on record, borrowers can now access the widest choice of products since 2008. The average 2 year fixed rate mortgage also fell to 2.54% in February, even lower than the 2.92% 3 year fixed average (down from 3.01%). Average 5 year fixes are also in decline and now stand at 3.25% – just a fraction higher than the record low of 3.24%.
These beneficial deals show no sign of easing up in the near future. As the development of Crossrail has encouraged further house price rises and investment hotspots, it seems more prosperous deals are just around the corner, especially for buy to let landlords looking to expand upon their property portfolio. This is certainly a space to be watchful of if you’re interested in investing in London in the near future.
If you have any questions on this week’s mortgage rate updates or market activity in general, you can contact one of our expert brokers below who will always be happy to discuss your options. Alternatively, you can stay on top of the latest mortgage rates and industry news as it comes with our daily rate updates.