The mortgage world has seen a steady flow of reduced fixed rates enter the market this week, as many lenders continue to offer more beneficial deals for those looking to lock into the security of long term repayments. With some new faces also revealing themselves, it seems a key motivation for lenders right now is to offer more accessible deals for underserved borrowers, with discounted rates ranging from offers for self-employed and professional landlords, to reduced help to buy and high loan to value (LTV) mortgages.
Despite this, Nationwide has announced it will be cracking down on its buy to let lending by reducing the current maximum LTV from 80% to 75%, as well as increasing rental cover requirements from 125% to 145%. Applied across Nationwide’s Mortgage Works buy to let range, this follows concerns over tax relief changes next year and the potential risk in the sector, since Chancellor George Osborne’s tax crackdown posed difficulties for many.
Masthaven Bank’s upcoming range could prove what the sector is in need of, however, as the bank plans to enter the market in the final quarter of this year. With a maximum LTV of 80%, products from the new range are expected to include first and second charge mortgages, bridging and renovation deals, as well as exclusive offers for buy to let investors.
Mint Bridging has equally announced a new venture in the market as it prepares to launch a new lending firm – MB Syndicates Ltd – which will focus on high value first charge loans between £350,000 and £5 million with lower LTVs, low risk development loans, second charge loans and commercial property.
Elsewhere in the market, Virgin Money has revealed it will be reducing a selection of rates across its help to buy range, now offering 2 year fixed equity loans reduced by up to 0.21% with no maximum loan size. This includes a 2 year fix at 1.84% with a £995 fee, 2 year fixes at the same rate with £500 cashback and a £995 fee and a 2 year fix at 2.38% with £500 cashback and no fee. Reduced 2 year fixed residential rates are also available at 2.38% up to 75% LTV, or with no product fee for 2 year trackers.
Ipswich Building Society was another lender to refresh rates across a selection of products this week, reducing its previously discounted 2 year rate of 2.79% to 2.59% at 90% LTV, which comes with a £199 product fee, £800 completion fee, 50% overpayment facility and 1% early repayment charges. 2 year fixed rates are also now available at 3.75% up to 90% LTV for purchase and remortgages to £750,000, including a 50% overpayment facility and 3% early repayment charges. 2 year fixes up to 90% LTV have also been cut from 3.09% to 2.89% for purchase and remortgages up to £350,000.
Despite changes faced by the market in recent months, many lenders have continued to record successful growth, with Mansfield Building Society reporting a 9.5% year on year growth in mortgage assets, as well as achieving its best ever mortgage completions of £70 million (a 35% increase on the previous year). Perhaps a result of its success, the lender has also now launched a 2 year discounted rate mortgage available up to 95% LTV. This comes in at 3.49% for loans up to £250,000 (house purchases only) with a £199 application fee, £300 completion fee and 2% early repayment charges.
Last but certainly not least, Barclays has stirred the market with its announcement of the first 100% mortgage to be launched since the financial crisis. This unique product allows buyers to take out a mortgage to 100% of the value of the property with no need for a deposit. Whereas most banks currently require at a 5-10% lump sum, Barclays’ offer need only be supported by a family member or guardian, who must set aside 10% of the purchase price in cash for 3 years in return for interest.
This is effectively designed to remove the issue of “bank of Mum and Dad” lending, especially since research found 35% of prospective first time buyers have to borrow from their parents. Instead of gifting a deposit, this allows family members or guardians to set up a Helpful Start account linked to the mortgage, where savings can be deposited at bank rate plus 1.5%. The borrower can then take out a fixed rate mortgage at 2.99% on a maximum loan of £500,000. (Aldermore also offers a similar product allowing for a family guarantee element, however rates of 5.48% or above are to be expected with a £1,298 fee.)
Despite speculation this induces risk reflective of the years leading to the 2008 crash, this is in fact an innovative product from Barclays. They’re offering a well-structured solution to a traditional problem that continues to plague the market, particularly as house price rises show no sign of slowing. This does not affect security, but effectively spreads it across the full loan and additional account. The only difference from this and a 90% LTV product, is that you will pay interest over the whole lot so everyone ‘wins’ but without a return to imprudent lending.
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. Yet we should emphasize the fact that their rates are often much more competitive.
If you have any questions on this week’s mortgage rate updates or market activity in general, please feel free to contact one of our expert brokers who will always be happy to discuss your options. Alternatively, you can stay on top of the latest mortgage rates and industry news with our daily rate updates.