A week commencing with ‘Blue Monday’ turned out to be far from drab for the mortgage market, with a colourful selection of revised rates and exclusive products now on offer. As residential mortgage rates continue to fluctuate, many lenders have been reducing buy to let rates and helping borrowers find a place on the property ladder, with first time buyer products aplenty.
Also making headlines was the introduction of the ‘Divorce Mortgage’ from Ipswich Building Society, ensuring divorcees face a smoother ride through January’s break-up season’. This takes 100% of child maintenance income into account when calculating affordability. It’s not all doom and gloom for the market, however, as figures revealed fresh lows for mortgage rates on all loan to values (LTVs) above 80%. The average 95% LTV rate was reduced by 0.04% to 4.28%, while average 90% and 85% LTVs fell by 0.03% to 3.08% and 2.58% respectively.
Elsewhere, Mansfield Building Society has been paving the way for more specialist borrowing, by launching its ‘Home Improvers and Future Valuation’ range, allowing loans to be assessed against the improved valuation of a property after it’s been renovated. A 3 year discounted rate for up to 80% LTV, of 1.6% below standard variable rate of 3.99% (SVR), means extra borrowing of over £15,000 can be released over 3 stages after the initial loan completion. This comes with a £199 application and £1,200 completion fee.
As the average rates for low-deposit mortgages continue to fall, further good news was revealed for first time buyers, as the number of fixed rate products available at 80% LTV and above rose this month, improving affordability for many.
Consequently, Virgin Money unveiled new products with a 5% deposit to allay the cost of stamp duty charges for first time buyers. This includes a 2 year 4.39% fixed rate at 95% LTV and a 5 year fix at 4.79% with no fee and £1,500 cashback. Help to buy 5 year fixed equity loans at 75% have also been reduced to 2.68% with a £995 product fee or 2.93% with no fee and £500 cashback. Santander similarly introduced an 85% LTV 5 year fix at 3.14%, 90% LTV 2 year fixes at 2.59% and a 90% LTV 5 year fix at 3.49%, exclusive to first time buyers.
Barclays has also shown its support for the help to buy scheme through its New Build range, now offering 2 and 5 year fixed rates and 2 year trackers from 2.04% up to 85% LTV, along with improvements to its existing help to buy range, which includes 2 and 5 year fixed rates and 2 year trackers from 1.85% at 75% LTV.
Despite bracing itself for increasing stamp duty, tax relief cuts and strict tenant checks, a majority of reduced rates remain for the buy to let sector. Virgin Money now offers competitive rates for landlords – especially for those with lower LTVs – through changes to its core buy to let range. 2 year fixed rates at 75% LTV have been reduced to 2.54% with a £1,955 fee and £500 cashback, and 2 year tracker mortgages at 60% LTV to 2.09%. Precise Mortgages has also released new buy to let rates, with fixed rates now starting from 3.69% and trackers at 3.29%.
The market has seen mixed messages as far as residential rates are concerned, however, with TSB increasing rates by up to 0.2% on short and medium term mortgages. 2 year trackers at 0-60% LTVs have been increased by 0.05%, whereas 60-85% LTV are up by 0.15% and 0.2% for remortgages. 5 year fixes with a 0-75% LTV also saw a 0.1% increase, while 2 year purchase mortgages at 90-95% LTV face an increase of up to 0.11%. Precise Mortgages, on the other hand, has continued to cut its residential rates now starting from 2.99%, with more expected to follow over the coming weeks.
As much anticipated changes for 2016 fall into place, change is certainly in the air for the mortgage market – which despite many worries – remains prosperous for now. Reports have shown that intermediaries’ confidence in prospects for the market has reached a record high since July 2013, as assurance in demand for remortgages, buoyant first time buyer offers and sufficient funding from lenders, has all had a positive knock on effect across the market.