[ Posted June 20th, 2012 ]
Although the most homeowners are cringing at the shape of the mortgage market right now, professional landlords are actually enjoying the fact that some of the best mortgage rates out there are designed for them. This is due to the fact that many high street banks are actually lowering their buy to let deals in an effort to draw business through their doors, as the rental business is reaching new heights. The reason for the recent surge in the buy to let market is two-fold, as it is partially due to the fact that many first time buyers cannot afford a home and partially due to the fact that property prices of potential letters is so low.
Leeds Building Society is the latest that hopes to draw in more professional landlords with an announcement of new buy to let mortgage rates designed to lure landlords their way. One of their newest products is a five year fixed product that is set at 4.99% for the length of the term and a low attached 70% LTV. In addition, if lenders needed another reason to consider the deal, the fact that the building society will also allow for 19% capital repayments every year without an early payment penalty is also very enticing.
Of course, this is not all that Leeds has to offer as they hope that their new fixed mortgages are going to draw a bulk of the professional attention their way. They have also added a few extra perks that should make signing a new buy to let mortgage deal with them even more tempting for landlords that are expanding their portfolios and taking advantage of the low property prices and high demand. Each of the perks has to do with fee cuts that are usually associated with a new mortgage.
For those that are willing to take the 5.49% offer that is also fixed at a 70% LTV or higher, fee assistance is available along with a free standard valuation that is otherwise considered to be valued at about £335. For landlords that are simply looking to re-mortgage their current mortgage, free in-house legal services are also provided as part of this deal to make it as simple as possible. Sales and marketing director for Leeds Kim Rebechhi stated the new five year product is aimed to help professional landlords that are looking to a competitive rate and looking to help first time landlords with the assisted fee program.
[ Posted June 14th, 2012 ]
Building societies and banks are improving their loyalty programs for customers that have existing accounts with them in an attempt for to keep borrowers who are shopping around for the best mortgage rates that will meet their needs. Banks are offering the loyalty drugs to all account holders that are part of their ‘loyalty’ mortgage deals. Over the last few years, many of the high street banks including Santander, Barclays, and Halifax have started to make better and lower priced mortgage deals available to borrowers that have an account with them in an effort to entice them to stick to their banks.
In order to qualify for any of the low mortgage rates banks require that their customers have had an account with them for at least two months if not more and regularly contribute a regular amount of money into that account on a monthly basis. NatWest just opened a new loyalty deal up to its customers with active accounts that are ten basis points less than the rates that other mortgage customers receive on the standard mortgage range. The deals are available for a five year fixed mortgage.
The products help NatWest look a lot better to its own existing customers that are looking for fixed mortgages with attached rates as low as 4.19% for their existing customers. The new deal does have a £999 fee, but it is much better than the standard five year fixed product that comes with an attached standard rate of 4.29%. Mortgage broker Andrew Montlake from Coreco stated that usually they do not recommend customers go with loyalty mortgage deals, but the deals have improved over the last several months and therefore they are taking another look at them.
Another loyalty deal being offered to current customers that is worth noting comes from the Co-Operative Bank and is a lifetime tracker mortgage that starts at an interest rate of 3.19%. What is notable about the tracker deal is that it is applicable for LTVs of 75% and under making it a great deal for those who are considering remortgaging their current deal. In order to be qualified for the deal, customers must also have held a bank account with the Co-Op for the past two months and in addition have their salary deposited into the account every month on a regular basis.
[ Posted June 5th, 2012 ]
The chatter among mortgage experts for the last several months has been that mortgage rates are going to start to steeply rise and that those who are not yet on fixed deals should jump in before it is too late. With many banks such as Halifax and RSB choosing to increase their SVRs, it looks as if the experts are right and as May closes most experts are predicting that more major lenders and building societies are also going to hike their rates. With this in mind, it is a pleasant surprise to hear that Barclays and Virgin Money have dropped their fixed deals by .2%.
Virgin Money announced at the end of this week that they have reduced some of their buy to let mortgage rates and select fixed mortgage deals by .2% to help entice property owners that want the safety of a better fixed rate in the uncertain housing market. For landlords, the buy to let mortgage rate of 3.85% may be enticing although certain credit restrictions and a set LTV value are required in order for this deal to fully be taken advantage of. The rate will change slightly depending on these factors.
Residential homeowners are likely to find the two year fixed mortgages to be attractive. Those seeking a two year product will want to take a look at the 3.55% available with a high enough LTV and those who prefer the security of a five year mortgage term will want to look at the 4.09% rate. Once again, the amount of equity that you have in your home already or LTV that you can afford will impact the final rate, but for those who have been paying much more or are stuck on an undesirable SVR this may be a great solution.
Those interested in the deals can find them available via Northern Rock Bank which was purchased by Virgin Money in 2011. Borrowers that are interested in the deals can also head online to fill out a mortgage application or go through a registered mortgage broker. An official statement from Virgin Money also added that customers will also be able to take advantage of the cash back incentives that are normally offered on the same products. They also added in the statement that remortgage customers can also qualify for free valuation and free legal services.
[ Posted May 27th, 2012 ]
Banks that rely on the wholesale markets for their funding are the most likely to increase their mortgage rates and reduce the amount of lending that they actually make available to potential lenders if the economic turmoil within the eurozone continues to grow. The turmoil is actually altering the state of new debt and is making the financial situation in all European countries a bit shakier than it has been in the past several years. In the wake of the 2008 market collapse and the fragile market that ensued, the EU crisis may simply prove to be too much.
After the financial meltdown many of the high street banks in the UK focused on strengthening their funding positions by choose to reduce how much they borrow from the wholesale markets and instead focused on receiving large savings deposits to back lending from their customers. Despite this shift in practice, a few of the larger high street banks still lend out more annually than they receive in deposits making them the most likely to be forced to increase their best mortgage rates since they are still dependent also on the wholesale markets for lending purposes and will need to pay higher for funding.
A quick look over the high street lenders reveals that Santander and Lloyds Banking Group are the most dependent on the wholesale market with their loan to deposit rates coming in at about 138% and 130% respectively. On the other hand, other high street lenders such as the RBS and Yorkshire Building Society are in much better shape with almost perfect loan to deposit ratios that sit at 105% and 102% respectively. This means that the latter are less likely to feel the effects of the wholesale funding pressures since they only rely on the market for a small percentage of loan funds, making them the best candidates for the best mortgage rates.
Already Santander and Lloyds Banking Group have announced that they will reduce the amount of new mortgage lending that they will approve as they look to even up their numbers. Mark Harris, a mortgage broker from SPF Private Clients, stated that the eurozone crisis is going to continue to affect some of the largest high street banks and is going to force them to reduce their lending practices in an effort to stabilize their fragile positions and avoid a banking meltdown similar to a few years ago.
[ Posted May 18th, 2012 ]
According to figures from the Council of Mortgage Lenders buy to let mortgages continue to be the product of choice on the mortgage market with a marked increase of almost 32% during just the first quarter of this year. This has also led to the introduction of many new buy to let mortgage rates across the market for potential property investment as many are deciding to rent instead of purchase homes creating a high demand for the rentals. The CML also stated that repossessions have finally started to steady marking a decline in the amount of foreclosures that are affecting banks and the market.
This is the third year in a row that the value of different mortgages taken out for buy to let purposes has increased. Increasing rents and the overall decrease in house prices are making many investors and landlords take a second look at the buy to let market. Some are even securing commercial mortgage deals with the intent of renting them back out to businesses and organizations that do not want to get tied to a mortgage or cannot get approved for the structure that they need.
Over the first quarter of the year about 32,300 loans with a combined value of about £3.7bn were offered to buy to let investors. While this is a stunning 32% increase it is still only about a third of the lending that was seen back in 2007 before the mortgage market crashed. The CML stated that most of the property market is now spoken for by the buy to let sector, and banks seem to be responding to this fact as the best mortgage rates are generally offered to buy to let lenders over other lenders. Today the CML estimates that about 12.8% of all outstanding mortgages are buy to let mortgages.
While buy to let mortgages are continuing to become more popular, one reason that they may not have reached the same heights as in 2007 is due to the fact that landlords are required to have larger deposits than they did back in 2007. According to the CML, in 2007 the average LTV was about 85%, whereas today the average LTV is 75%. Despite this fact, it seems very telling that rental mortgages are still more popular than home mortgages and reflects where the mortgage market is slowly heading.
[ Posted April 26th, 2012 ]
The Government has voted down the Labour mortgage rate warning that would have resulted in amending the Financial Services Bill so that lenders would be forced to educate borrowers before they signed their mortgage papers.
The Labour party wanted a mandate that would require all lenders to be advised clearly on the fact that interest rates could change over the lifetime of the mortgage and how rate increases could change the actual costs and affordability of the mortgage package that they are considering purchasing. Chris Leslie, the Shadow Treasury financial secretary, led the call for the amendment that would have brought new proposals to the table over the next six months.
Mark Hoban, the Treasury financial secretary, stated that the change to the bill was not needed because the FCA is responsible for checking and requiring that mortgage providers offer an adequate amount of information to borrowers.
According to Hoban, placing a separate amendment to spell out that lenders needed to inform lenders about increasing mortgage rates was not necessary. He also added that many lenders already offer mortgage lenders information about this anyhow since they want to avoid foreclosures down the road.
Hoban went on to explain that those who seek out fixed mortgages already receive information on changing interest rates and there is currently a consultation being conducted on the mortgage market. One of the provisions that are part of the consultation includes requiring lenders to think about the changing interest rates in terms of each lender before offering them a home.
Therefore, the implication is that if lenders are lending funds responsibly and weighing in the change in interest rates then a lender should already be deemed able to afford the change down the road making it a non-issue.
Leslie on the other hand defended the proposal before it went up to vote stating that it was needed to help protect consumers down the road when their mortgages suddenly become more expensive because of the jump in interest rates.
He explained that mortgage rates are not going to stay low forever and people need to know that in the future mortgage rates are going to increase and therefore need to be ready and able to accept the change. He added that he was worried consumers will believe that mortgage rates are really this low when in fact the current mortgage market is far from normal.
[ Posted April 24th, 2012 ]
Over the past year the average mortgage rate of a fixed product has fallen down by about .8% dropping overall from 5.6% down to 4.86% which makes a large difference for those in the market for a long term fixed product.
The fall in the five year fixed term should be of interest to savvy homeowners with a mortgage that is on a standard variable rate given the fact that many of the larger lenders and a handful of the smaller lenders have announced that they will increase their SVRs come May 1st.
Moneyfacts.co.uk spokesperson Louise Holmes stated that the average fixed mortgage rate has been coming down over the last few years and they are currently at the lowest that the market has seen them in the past two years.
She added that fixed mortgages are particularly interesting to those that like knowing what their monthly payment is going to be for a certain designated period of time regardless of how the market performs. She also stated that this makes it easier to play for a financial budget since the repayment amount does not fluctuate over time requiring adjustment in the family budget.
One of the reasons that lenders are able to offer the best mortgage rates on fixed products is due to the fact that the price of lending in the swap rate market has lowered over the last few years helping out lenders that offer long term mortgage products.
Combined with the fact that the Bank of England is expected to keep the interest rate set at the low .5% for at least the rest of the year if not longer, borrowers should take advantage of the low rates while they are still available on the market.
Chief Executive for SPF Private Clients, mortgage broker Mark Harris stated that a five year deal is a logical length of time for the borrower that wants the certainty that comes with a fixed rate mortgage product.
He explained that a two year fix is not going to be that helpful since rates likely will not start to change until the two years are up and added that long term mortgages of ten years or more can be tricky. However, given the fact that there will be changes in the market over the next five years locking into a deal now can be a great way to get low rates and security.
[ Posted April 13th, 2012 ]
Britain is a country that is certainly focused on the housing market, the decline in home prices, and the rising mortgage rates. In fact, when you consider how much air time the subject gets day to day on the news it is a surprise that anybody would actually want to become a first time home buyer.
With the stresses of the market you would think that young professionals would want to stay as far away from the housing market as possible and instead rent without half of the obligation. Yet, they are still out there looking for great first time home buyers deals.
Of course, you have to bear in mind that most of these young professionals likely grew up in a home that their parents owned, thus owning a home seems more of a rite of passage than a business decision.
Regardless of their outlook, the tighter criterion for renting a home, lower LTVs, and larger mortgage rates mean that it is a bit harder to get up on the ladder. It used to be just income multipliers that decided if one was a good candidate for a mortgage, but now many major lenders judge mortgage applications based on ‘ability to pay.’
It used to be that first time buyers received better deals and the best mortgage rates simply based on the fact that they are not part of the mortgage chain market and therefore are fresh applicants. However, as the price of lending continues to increase and now high deposits are reasonable for keeping most out the market lenders have been forced to find other methods and schemes in order to help first time home buyers actually get back into the market.
Due to this fact, even with the poor economic conditions there is more flexibility being introduced for first time buyers into the market which is a very helpful factor. One adjustment that has been made is that many of the larger banks such as Halifax and Nationwide will extend mortgage terms for forty years instead of just 25 which will help make a loan more affordable.
Of course, in the long term borrowers will end up paying more unless they remortgage successfully, but this is a good way to at least get out into the mortgage market. Lenders also are offering new incentives to first time buyers including free valuation fees cash back, and legal fee assistance which are all great features to take advantage of.
[ Posted April 7th, 2012 ]
As most banks continue to face the harsh lending conditions of the current lending environment, due to a combination of factors including the continual eurozone debt crisis, mortgage rates are continuing to increase.
Most banks are aiming to lower the amount that they make available for lending this year which is hurting those that want a to purchase a new home and turning the UK into more of a renter’s market than a buyer’s market with most analysts predicting that the buy to let market will make up the majority of lending this year.
This week Co-op joined the group of lenders that have had to announce higher SVRs, increasing their average term by about 0.5% up to the standard rate of 4.74% as of May 1st. Over the month of March Bank of Ireland, Halifax, Yorkshire, and Clydesdale Banks have all also announced new mortgage rates, making it harder for the average home owner to find a lower deal on their SVR at any large high street lender.
Chelsea Building Society also announced an increase of 20 base points to all of their fixed mortgages deals and Nationwide Building Society raised the cost of both tracker and fixed mortgage deals. John Charcol mortgage broker Ray Boulger stated that there has been a steady trend of major and smaller lenders increasing their mortgage rates over the last month or so, with many doing so because they want to lend less.
He explained that most lenders are saying that the wholesale funds increasing rates are the reason why they are being forced to increase SVRs, but over the last few weeks this is not so much the case as they have stayed steady. Therefore, the reason for the increase is simply to decrease the amount of lending they conduct with consumers.
Largemortgageloans.com broker Nigel Bedford said the same as he pointed out that the interbank lending rate and the two year rate swaps that are used to create a mortgage package have actually decreased slightly therefore it cannot be blamed on the high cost of lending funds. Despite this fact, most brokers are expecting that mortgage rates will continue to increase over the next few months making it vital that those who want a good deal get in on the market now.
[ Posted April 7th, 2012 ]
Skipton Building Society announced a new set of buy to let mortgage rates this week designed to attract landlords that are looking for fixed products with two, three and five year deals. The new products include different rate/fee combinations to attract every type of lender and is the first time that the building society is offering landlords 75% LTVs since they entered the buy to let market last year.
As buy to let lenders continue to dominate the lending market this is Skipton’s attempt to lure them towards their products. The two year fixed mortgages are available with LTVs as high as 70% and come with an attached rate of 4.69%. The completion fee for this product is £750 and the application fee is £245.
Also available is another two year product that offers the elusive 75% LTV but as a trade off the rate increases up to 5.09% with a completion fee of £1250 and the same application fee as the previous product. These are good choices for the landlord that wants a short term deal with the hope of better products on the market once the loan value decreases.
For those looking for a slightly longer deal Skipton is also offering a three year set of fixed deals that also range in value from 70-75% LTVs. The buy to let mortgage rates range from 4.59% to 5.39%; with the latter corresponding to the 75% LTV for those that do not have as high of a deposit or equity in their products. The higher LTV product comes with a completion fee of £1,250, the lower product comes with a completion fee of £750, and both have an application fee of £245.
Also available are two five year fixed rate products also set with 70 and 75% LTVs. The five year 70% LTV product is an excellent choice for those looking to cut down on fees as it does not carry an application fee and comes with a 2% completion fee based on the value of the loan and an overall interest rate of 5.19%. The 75% LTV comes with an interest rate that is set at 5.69%, an application fee of £245, and a completion fee of £1,250 which makes it a good choice for those with a high value mortgage.