The mortgage market can often be unpredictable and this week’s mortgage rates overview has certainly seen a mixed-bag of changes and new products. With updated interest only mortgages and a market-leading 2 year fix just a small portion of the offers now available, lenders have been pulling all the stops to compete against some of the cheapest rates and innovative deals being released. Providing more support for borrowers across the market, we take a look at everything from Leeds Building Society’s Large Loan range to Virgin Money’s latest Help to Buy offering, and all the rate changes in between.
Yorkshire Building Society was the first lender to come to our attention, with the launch of its 2 year fixed rate at just 1.14% up to 65% loan to value (LTV). Marking the current lowest 2 year fix on the market, this is available to borrowers with a 35% deposit and comes with a £1,345 product fee, which can also be taken as an offset mortgage at a rate of 1.34%. Clearly establishing more of a competitive position in the market, this follows the lender’s previous lowering of its minimum property valuation for buy to lets, falling from £100,000 to £75,000, as well as expanding its criteria to allow landlords a mortgage on ex-local authority homes.
Despite this, many lenders have been bumping up their rental calculations as far as buy to lets are concerned, with Newcastle Intermediaries the most recent to do so. Barclays recently hiked its minimum rental cover requirement from 135% to 145%, as well as reducing the stress test on new buy to let deals from 5.79% to 5.5%. Newcastle Intermediaries has also now increased its rental coverage ratio to 145% on a reference rate of 5.5%, up from 125% on 5%.
If it’s an interest only option you’re looking for, however, Leeds Building Society has expanded its offering this week, with the launch of a new Large Loan Interest Only range for loans up to £1.25 million. New products include a 2 year interest only offer with a rate of 1.6% up to 50% LTV, as well as a 1.7% 2 year fixed part-and-part interest only mortgage up to 75% LTV. These all come with free valuation and fees-assisted legal services for standard remortgages, with a £1,999 fee. This is aimed at high net worth borrowers looking to securing an interest only deal as part of a wider investment plan, or for homebuyers expecting a significant raise in income.
Also revamping its offers for higher net worth individuals is Nationwide, who will now be entering the equity release market. Aiming to make it easier for homeowners to pass wealth onto their children or unlock wealth tied into their properties, the lender is planning a new range of ‘safer’ equity release products with no access charges or penalties and no-negative-equity guarantee.
Nationwide has stated the need for a decent fixed interest rate with a no-negative-equity guarantee to remove the risk of repossession. Although still in the research and development stage of the process, this is a positive move towards helping older homeowners release equity and support the younger generation step onto the property ladder. Other lenders have also been moving towards the equity release market in recent months, with Legal & General launching a lifetime mortgage range, for example.
Providing options for those new to the market is still extremely important, with many lenders still tapping into the London Help to Buy scheme. This allows borrowers a Government loan of 40% of a property price when they put down at least 5%, proving very beneficial to those wanting their own home in the current market climate. As such, Virgin Money has now joined the London scheme, offering 2 and 5 year fixed rates at 55% LTV. This includes a 2-year fix at 1.78% with a £995 fee and £500 cashback or a 5 year fix at 2.4% with the same fees.
Virgin Money has equally launched Help to Buy products to support Scotland’s scheme, with products available up to 80% LTV, including 2 year fixed rates from 2.04% and 5 year fixes at 2.79%, both with a £995 product fee and £500 cashback. The lender additionally released a new ‘Stamp Duty Buster’ range this week, designed to cover stamp duty and additional costs with £2,500 cashback. This comes as a 2 year fixed rate at 80% LTV with a 2.95% rate or a 5 year fix at 3.65%.
As the EU Referendum edges nearer, house prices continue to rise and rates remain low, the future of the property market remains largely speculative, yet we can assure you we will stay on top of the latest mortgage rates and industry news, and are always available to find the right solution for your needs.
Although the aforementioned rates are indicative of current market activity, private lenders will not publish their rates, so we are restricted in our ability to relay this information. However, we should also emphasize the fact that their rates are often much more competitive.
If you have any questions on this article or market activity in general, please feel free to contact one of our expert brokers who will always be happy to answer your questions. Alternatively, you can stay on top of the latest market activity with our daily rate updates.