22 January 2015
More rate fluctuations and lenders dislike payday loans!
Rate fluctuations seem to have been rife over the last few days as lenders continue to compete for business. Barclays have cut some Help to Buy rates by up to 0.7%, Accord Mortgages cut their five year fixed rates by up to 0.2%, both Skipton Building Society and Santander launched their lowest ever two year fixed rate deals whilst The Mortgage Works (the Buy to Let arm of Nationwide) has launched the first ten year fixed rate mortgage for Buy to Let customers. This is all good news for the end consumer but also shows how comfortable lenders are in promoting fixed rate monies over variable rates. To me, this is in line with the general market consensus that the Bank of England base rate is probably not going to change for some time yet.
Affordability plays a huge part in a lenders decision to assist customers with mortgage finance. All lenders will look at the customers ability to repay any loan both now and stress tested to higher rates in the future. As a result, some lenders have restricted the maximum they will lend to customers depending on their deposit.
This week, we have see Woolwich cap their income multiples for all loans over 80% of the property value. For anyone with less than a 20% deposit, income calculations will now be a maximum of 4.5 x income (previously this was up to 5.5). This is possibly as a result of recent Bank of England stipulations that only 15% of a lenders mortgage book may be loans with more than 4.5 x income calculations.
And finally, the news streams are saying this week is one of the busiest for customers looking to take out payday loans to pay off post Christmas debts. I can't advise you either way, but I will say that if you are looking to take out a mortgage in the next twelve months, and you have had payday loans, be aware that lenders are likely not to assist you. Payday loans are treated much like adverse credit but lenders are more likely to accept someone with historic adverse than someone who has taken out payday loans. Homework is therefore crucial!