More offering Help to Buy as others change rates and criteria

Santander is the latest lender to launch products to assist those with a small deposit via the government backed Help to Buy Mortgage Guarantee scheme.  All products are arrangement fee free, have a free valuation and £250 cashback to help towards solicitors costs.  NatWest is also due to launch a suite of products via brokers in the coming days.  A positive start to the new year for those with small deposits!

Even lenders who are not part of the Help to Buy schemes are trying to compete.   As such, competition in the 5% deposit arena is the best it has been for some time, so do review all the options available to you.   

Other products have also seen rate movements in the last few days:   In the Buy to Let sector, Mortgage Trust (part of the Paragon group) has launched products with no early redemption penalties at all. Their rates have reduced to around the 4% mark and fees are also reasonably low at around £995.

GE Money Home Lending have launched a large loans proposition (£250k and above) for those who have had a historic financial issue in the past, including defaults, CCJs, etc.  With rates sub 3%, these are a good alternative for when the high street lender says no.  GE and some other specialist lenders are only accessible via certain mortgage brokers or distributors.   

This years Budget will be closely anticipated to see if the Chancellor will offer anything to incentivise and stimulate the market further.  Stamp duty is a key factor and would benefit from payment commencing at a higher level than current, say £250k and smaller increases as the price bands increase.  Is this too much to hope for?   

Finally, a recent report from TSB suggests that nearly 38% of house hunters are concerned they will be rejected for a mortgage.  Levels of income required topped the charts with poor credit rating being the second most common anxiety.  Always keep any eye on your credit reports.  These are your financial history to any prospective transaction and any decisions will take these in to account.  Most are free and relatively simple to understand, but most importantly will highlight any issues that may need rectifying.       

Switch and Fix on Buy to Let!

More movement in the mortgage market this week as yet more lenders have decreased rates and a pricing war seems to be unfolding in the longer term fixed rate offerings. One lender, Accord Mortgages, have reduced their 5 year fixed rate to just 3.84%, available to 75% of the property value and with a lender fee of just £995. They have also reduced their 2 year fixed to 2.79%, also with a £995 fee.

Loans of 90% of the property value and over also seem to have been targeted this week as lenders seek to assist those with small deposits. The rates are reasonably priced, but as more and more lenders re-enter this arena, with sensible lending, the rates will decrease. One example is Kensington Mortgages, funded by Investec, who offer First Time Buyers a 2 year fixed rate at 5.99% with a £699 fee and a free valuation, with a 10% deposit required. For home movers, the rate is 5.79% with a £999 fee. The benefit with Kensington is they do not credit score, compared to many others. Certainly an area to keep an eye on over the coming weeks.

The Buy to Let (BTL) market has also seen huge changes as Natwest cut some rates by 1.4%, Mortgage Trust (part of Paragon group) launch 18 new BTL products, some starting from sub 4% and The Mortgage Works (part of Nationwide) launch a 2.99% tracker and allow ‘switch to fix’ on all of their Buy to Let trackers.

The Switch to Fix option is now available on both Residential and Buy to Let mortgages via certain providers. It is a great product offering allowing you to have the best of both worlds. Take a low base rate tracker and enjoy the Bank of England base rate whilst low, and when you feel you want to fix your monthly payments for a medium to longer term, transfer to a fixed rate with the same lender. Sounds great, but just beware that the lender may charge a product fee for the fixed rate and of course, you will only have access to those fixed rates available at the time of the switch. Terms and conditions apply!

Lenders products available via Intermediaries

There has been an influx of lenders joining the intermediary mortgage market recently. Having previously been solely ‘business to consumer’, these lenders are now establishing that there is value in offering their products via a wider audience and gaining a better exposure in a large, but somewhat strained, intermediary marketplace.

Although these lenders are not household names, they do have some superb product offerings and by distributing these products via intermediaries, the consumer has access to products they may not have been aware of otherwise.

Some lenders have chosen limited, or exclusive, distribution. For example, the Chorley Building Society, based in the north, has chosen AToM to exclusively distribute a product that caters for borrowing up to 85% of the property value right up to a maximum loan size of £1m. This is a rare opportunity as not many lenders will lend that high in the current climate. Others, including Precise Mortgages are choosing to solely distribute their products (aimed at those who have minor credit issues) through the intermediary sector, and AToM is one of their limited approved distributors! Mortgage Trust recently re-launched into the Buy to Let market, solely through intermediaries.

Metro Bank, Post Office and the oncoming launch of Tesco mortgages later in the year are likely to remain customer facing only. Which is fine for the right type of consumer. However, like most banks and building societies, you will only receive advice on their own products and not any others available in the market place. So although you may get a great deal on ‘club card’ points, there’s really no substitute for advice and recommendation from someone who can review the whole of market and cater to your exact requirements. Don’t you just wish they would stick to what they are good at rather than trying to take over the whole world?!

Finally, I am delighted to announce that AToM has been voted ‘Best Mortgage Packager’ for a second year running in the national MyIntroducer.com awards 2011. This is a great achievement and is in recognition of the hard working team we have at AToM.

It's good to talk!

We’ve been bombarded with visitors over the last few days as hoards of children embark on the Great Easter Bunny hunt, organised by the Rotary Club of Horsham. It’s wonderful to see so many people taking part and obviously its superb fun for the children as they are spoilt with chocolate, if they find the bunny and carrot! We’ve also had some great enquiries from those who have been dragged, I mean accompany, the children on their tour of the participating shops! This event has certainly been worthwhile for all involved and created a great community spirit.

The Buy to Let market has welcomed back an old name - Mortgage Trust has relaunched this week with some great mortgage rates and their products are only available via mortgage brokers/intermediaries. Mortgage Trust were a major player in the Buy to Let market some years ago and their new product range, some with free valuation and free legal costs, give the impression they want to achieve that status once again.

The “fix or track” debate goes on! With inflation down to 4%, many pundits are now predicting that the Bank of England base rate will not change for the remainder of the year. Therefore, a good low base rate tracker mortgage over a short term could be beneficial. However, there are also some great fixed rates on offer too. Who knows what is right and what is wrong!? Most agree that rates will increase. It’s a case of when and whether or not you are prepared to gamble your biggest monthly expenditure on a ‘could be this month’, ‘could be next month’ scenario. You will almost definitely find that by the time the Bank Base rate does start to rise, the cost of fixed rate monies will have already risen.

It’s good to talk, and we don’t charge for conversations! If you are worried out the cost of your mortgage or especially what would happen to your individual monthly payments should rates increase, please do come in and see us. On an average £100,000mortgage, a 1% interest rate rise could cost an extra £83 per month. AToM is totally independent and offers advice on mortgages for the whole market.

Wishing you and your families a very Happy Easter!