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Mortgage Lender New Products
New mortgage products launched by major high street lenders
Mortgage lenders are reporting an increase in customers taking up long term fixed rate mortgages, says the Bank of England’s Trends in Lending Report but the number of people remortgaging remains depleted and the demand for house purchases continues to be restrained.
Perhaps in response to these trends, new products are beginning to appear on the market and competition for business amongst the major lenders seems to be growing. Anyone looking for a new mortgage will be best advised to do plenty of research in order to find the best deals that are available at any particular time.
Report examines first time buyers ability and reluctance to arrange a mortgage
Meanwhile Halifax has released a report that highlights the perception amongst first time buyers that they are unable to afford to buy their own home and do not expect to be able to do so in the near future. This is despite the fact that 94% of first-time property purchases are now exempt from stamp duty and that the proportion of salary used to pay a mortgage is at its lowest percentage for 25 years.
Undoubtedly the need to raise a deposit is the factor that is holding back many first time buyers and figures how that it takes on average 5 years to achieve this aim. The lack of high Loan to Value mortgage products available since the credit crunch has meant that buyers who would previously been accepted by some mo0rtgage lenders – although at higher interest rates - continue to be kept out of the market.
Stephen Noakes, commercial director for mortgages at Halifax has said
“Affordability has significantly improved, meaning the amount of a typical first-time buyer’s monthly pay packet that needs to be dedicated to their mortgage is now below the 25 year average and importantly, despite perceptions, eight out of 10 first-time buyer mortgages are approved.”
Perhaps surprisingly the Halifax report found that just 3% of potential first time buyers thought that the lack of suitable products was the factor that prevented them from buying their first home. But these figures should perhaps be analysed alongside the fact that this group of buyers simply accept that they need to find a big deposit and then finding the right product has become much more difficult than it was 5 years ago.
New products available
Yorkshire Building Society joined other lenders in reducing some of their interest rates, for example they will now offer an 85% LTV with a low arrangement fee of just £495 and fixed at 4.59% for three years. Their three year tracker is set at 2.99% above the base rate and will not incur any early repayment charges after the first two years. The Society may also offer free basic valuations and cashback on some products.
Coventry Building society have introduced a new rate of 5.58% on their 85 and 90% LTV mortgages although customers will need to have parents or grandparents who have held an account with the society for the previous three years.
Kensington welcome applications from customers who may have been turned down by the major high street lenders and use their own credit rating system. They charge higher interest rates than mainstream lenders but have recently introduced new terms and conditions including maximum loans of £500,000 and up to 75% LTV. A three year fixed rate with 75% LTV is currently 6.69%. A three year fixed rate with 70% LTV is currently 6.29%.
The Nationwide reduced its rates this week by an average of 0.15% and is targeting customers who are looking to remortgage – a three year fixed rate deal is available at 4.09% at up to 70% LTV.
HSBC extended its special offer for a low fee lifetime tracker which is set at 1.69% above the Bank of England Base Rate but the product will require a 40% deposit.
Approval rates are high
HSBC claims to approve four out of five mortgage applications and the Halifax reports that it approves 80% of applications from first time buyers. Whether these figures are due to more relaxed criteria or good advice from a broker or financial advisor about the best products to apply for is unclear but the figures seem to indicate a positive growth in mortgage approval rates and lower interest rates for many customers.
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