With the New Year now in full swing, many are wondering what to expect from the market here on out. New fixed rates have been launched to help those remortgaging before expected rate rises, while buy to let reductions are providing wider choice for landlords to minimise upfront costs and compensate for the raised overall costs. Help to buy and first time buyer exclusives are also a key focus this week, working in line with the government’s scheme to help more people step onto the property ladder.
The cogs of lenders’ conveyor belts have clearly been working overtime, adjusting to the changes expected in 2016 while keeping borrowers’ best interests at the forefront of their offers. The best deals this week were aimed at help to buy customers, such as Nationwide’s 3.89% 2 year fixed rate, available to first time buyers borrowing between £25,000 and £250,000 at 95% loan to value (LTV).
First time buyers have been benefitting from exclusive deals, such as Santander’s 2 year 1.84% fixed product at 80% LTV with a £995 booking fee and a 1.99% 2 year fixed rate at 85% LTV. Other new products include a 5 year fixed rate of 3.14% at 85% loan to value (LTV) with a £995 booking fee and a 3.49% 5 year fix at 90% LTV with a £995 fee, for first time buyers only.
Despite previous concerns of a bursting bubble, mortgage approvals have topped a 7 year high with some of the best deals (expected to disappear after Christmas) still being released. HSBC is now offering a guarantee backed 2 year fix at 3.69% to 95% LTV with no fee and free valuation for help to buy customers, while Skipton Building Society’s latest variable rate mortgage is 1.49% for 2 year at 60% LTV.
Buoyant house prices (soaring by a record 10% in a year) and historically low rates are a product of the government’s help to buy schemes and the lasting low base rate. This has allowed many first time buyers to access lending previously unavailable to them, and caused a rush of buy to let purchases before higher stamp duty arrives. Many lenders have been tapping into this demand, including The Mortgage Works, which has reduced its 2 year fixed and tracker buy to let product by 0.5 of a percentage point to 2.49% and 2.24% respectively.
2016 forecasts choppy waters for the market, especially for buy to let landlords. Stamp duty hikes, tax relief cuts and immigration checks are all set to come into force (read more on what to expect as an investor here) along with the introduction of the government’s ‘right to rent’ tool. An increase in fees for bank customers is also rumoured to be on its way. Borrowers have been advised to consider remortgage options, as many large high street banks have already been cutting interest rates and increasing fees.
Elsewhere, Skipton Building Society has lowered its fixed rate products by up to 0.45%. This includes a 2 year fix at 1.55% to 60% LTV with a £995 fee, a no fee 5 year fix at 3.35% to 90% LTV and a 2 year fix at 2.54% at a 90% LTV for remortgages. Base rate tracker LTVs ranging from 60-90% LTV now include 2 year fixed rates at 1.49% to 60% LTV with a £995 fee.
Nationwide has also cut its 2 year fixed rates by 35 basis points, now offering a 3.89% product with a £999 fee and a 4.29% product with no fee. 5 year fixed rates have also seen reductions of 30 basis points to 4.69% with a £999 fee and 4.89% with no fee.
As far as buy to let mortgages are concerned, The Mortgage Works has proved to be one of the biggest buy to let lenders of late, currently boasting the lowest 2 year tracker at 75% LTV on the market and offering a 2 year fix at 2.49% with a 2.5% fee. Accord is set to bring strong competition, however, with 2 year fixes now as low as 2.19% with a £2,635 fee.
There’s no denying the future of mortgage rates remain in flux, especially for buy to let investors (you can download our comprehensive guide on the latest changes to the sector here) but many deals launched this week come with a hint of promise. As the perennial issue of which direction house prices will take still stands indefinitely, we will help you prepare for the rate rises which are predicted on the horizon – whenever they may occur.