If there’s any conclusion to draw from mortgage rates this week, it’s that lenders have been stretching their efforts to make the market more comfortable for every type of borrower. With high LTV mortgages rates reduced and offers for older borrowers expanded, the outlook for non-standard applications is certainly brighter.
Firstly, the gap between high and low loan to value (LTV) mortgages has closed considerably as 90% LTV mortgages have dropped to their lowest average rate. As a result, there’s now less than 1% difference between the average 2 year fixed rate at 95% LTV and 65% LTV which is the closest they’ve been in 5 years. The average 2 year fixed rate at 90% LTV has fallen to 3% and an average 2 year fixed rate at 65% LTV is now 2.03%. This has gap has nearly halved in recent years, aided by the lowest 2 year fixed rate on the market being just 1.39%.
TSB’s rate reductions helped to bridge that gap, reducing rates across its high LTV range by a significant 0.4%. Including 2 year fixed rates at 85% to 90% LTV, have been cut from 3.19% to 2.79% with a £995 fee. 3 year fixes at the same LTV were also reduced by 0.3% from 3.24% to 2.94%, while 2 year fixed rates at 90% to 95% LTV dropped by 0.2%. The lender’s remortgage rates at 60% LTV also saw reductions of 0.5% for a 5 year fix to 2.19% and 2.44% and 0.1% for 5 or 10 year fixes.
This is equally good news for borrowers with smaller deposits, who can now secure a rate previously reserved for those with more equity in their home. Those with larger loan sizes can also benefit, as the difference between the average high and low LTV mortgage on a £250,000 loan has fallen from £388 in 2011, to just £137.
TSB was not the only lender to have expanded its offers, however, with BM Solutions also introducing new remortgage products, while also extending its end dates for buy to let and let to buy deals. Now benefitting customers with the full length of their chosen term, BM Solutions is doing more to meet customer need amid the growth of remortgages in the buy to let market. Remortgage products include a 2-year fix of 2.49% at 60% LTV with a £995 product fee, or 2.89% for a 2 year fix up to 75% LTV. 5 year fixes are also available up to 60% LTV with a rate of 3.19% or 3.59% with the same fee.
In addition to this, Barclays announced rate reductions on its 2 and 5 year low LTV fixed rate range. 2 year fixed rates are now available from 1.39% at 60% LTV, 1.69% up to 75% LTV and 1.77% at 80% LTV. 5 year fixed rates were also reduced to 2.19% at 60% LTV or 2.45% at 70% LTV, as well as introducing a Rate Switch range, which allows existing customers to benefit from lower exclusive rates.
Lenders have certainly been improving their offers to meet more specific needs, such as Family and National Counties Building Society. Following the recent announcement that Halifax and Nationwide were increasing their maximum age limits to 80 and 85, Family and National Counties has re-affirmed its commitment to this sector by offering brand new mortgages to customers as old as 89.
Yet this is not a new thing for the lender, and whereas many on the high street have only recently eased their lending restrictions to borrowers past retirement, this is something Family and National Counties has done since 2010 and will continue to do so for borrowers right up until their 90s.
Elsewhere, Fleet Mortgages also announced changes to criteria with a focus on the transfer of property to limited companies. The lender revealed it will now consider applications for transferring properties to a limited company as long as it falls within standard purchase criteria. This applies to the lender’s entire range of limited company products for transfer/purchase, including a lifetime tracker at 4.19% with a 1.5% fee up to 75% LTV.
This change comes ahead of the April 2017 tax changes, where tax relief available to individuals will be cut from 45% to 20%, although this does not apply to company buy to lets. As such, many landlords are expected to transfer property to limited companies for the security of their existing portfolio or to purchase new properties within.
Other lenders have also started to prepare for the tax changes ahead, with Newcastle Building Society being the latest lender to up its rental coverage ratio to 145% on a reference rate of 5.5%, from 125% on a reference rate of 5%. This follows the likes of Barclays, Foundation Home Loans and The Mortgage Works, who have all raised their rental cover expectations to 145%.
We are proud to provide access to the latest market changes at just the click of a mouse, so stay tuned for the updates as they happen. As ever, if you have any questions regarding this article or simply the mortgage market in general, please do not hesitate to contact one of our expert brokers who will always be happy to help. You can also stay on top of the latest mortgage rates and industry news with our daily rate updates.