The mortgage market has seen a mixture of fluctuating rates this week, from first-time buyer rewards and buy to let stress test changes, to new self-employed fixed rates. The diverse range of products available is undeniably fruitful for borrowers, especially with some lenders now concentrating on more specialist areas of finance.
The Saffron Building Society became one of few lenders to tailor products specifically for self-employed and professional borrowers, with rates starting at 3.37% for a 3 year fixed rate up to 75% loan to value (LTV), including the option for 10% overpayments with no penalty. Professional borrowers also have access to new rates, starting from 3.27% available up to 75% LTV, allowing up to 15% overpayments, all with a £30,000 minimum and £1 million maximum loan amount.
Elsewhere in the market, Paragon Mortgages has also entered the self-employed sector with its new product range, now offering rates up to 75% LTV at 3.7% with a 1.5% fee or 4.9% with no fee, 3 year fixes at 3.99% or 4.49% respectively and a 5 year fixed rate of 4.3%.
Turning our attention to the previous flurry of first time buyer deals, Accord revealed offers for an additional £500 cashback on all fixed rate purchase products at 90% to 95% LTV. This comes in addition to a range of incentives designed to keep the upfront costs of buying your first home down, in line with the government’s scheme. Including up to £750 cashback, plus the £500 first time buyer exclusive, first time buyers will now be able to take out a 5 year 95% LTV fixed rate with £750 cashback and receive an additional £500, with free standard valuation up to £695 and no product or application fee.
The importance of transparency from lenders remains at the forefront of borrower’s minds, however, as many find themselves facing record-high fees despite tumbling rates (see here for more on high fees vs. low rates ). Santander was one lender that proved to be openly responsive to upcoming additional costs for the buy to let sector, by changing its buy to let stress tests ahead of imminent tax changes. Intending to prepare borrowers for greater expenses in the near future, the new two-tiered affordability calculation has slightly raised the affordability rate to 125% of 5.5% for deals over 60% LTV.
Virgin Money, on the other hand, responded with an arguably more beneficial option for landlords, by removing the £99 application fee from its buy to let products altogether. As well as reducing selected 2 and 3 year buy to let fixed rates by up to 0.07%, Virgin Money’s products now include a 2 year fixed rate of 1.99% at 50% LTV, with 2.65% 3 year fixes and 3.59% 5 year fixes also set to be reduced.
In other news, TSB has now dismissed mortgage account fees completely from its 10 year remortgage product, while reducing rates by as much as 0.2% on 2, 5 and 10 year products for mortgages up to 85% LTV. As a principal consideration for home movers, first time buyers and those remortgaging, TSB’s decision to rid the fee in place of a slightly higher rate allows for a more competitive stance in the market, as other lenders’ fees currently sit between 1.8% and 2% for a 2 year fix, with a £1,000 arrangement fee. Despite this, TSB’s 2 year fixed rate mortgage has increased by 0.25% for 85% to 90% LTV and by 0.1% for homebuyers with a 90% to 95% LTV.
As longer term fixed rate deals continue to prove increasingly attractive ahead of potential rate rises, especially for those with larger deposits, Leeds Building Society has launched a range of 5 year fixed rate mortgages with new incentives. Also available for home purchases, the new range includes a 5 year fix at 2.5% at up to 65% LTV, 2.65% for up to 75% LTV, 2.69% for up to 80% LTV and 2.94% for 85% LTV. All with a £199 fee and free evaluation for remortgages, these are designed to provide the security of fixing monthly repayments before any market changes.
As the current market climate remains tumultuous, consistently low rates, creeping fees and criteria shake-ups are making it a fairly difficult space to navigate, despite the countless affluent deals still available. For example, buyers with a 40% deposit or more can now look for rates near 1% and fixed rate deals have continued to tumble. Yet with the base rate now anticipated to rise towards the end of the decade due to fraught global economic markets, much remains to be seen in terms of lender activity and rate updates, making it more important than ever to keep an eye on the market. (Read more about the effects of global turmoil on a rate rise here!)
If you have any questions on this article or market activity in general, feel free to contact one of our expert brokers who will be happy to discuss your options. Equally, you can stay on top of the latest mortgage rates and news with our daily mortgage rate updates.