Posts with tag: cut in mortgage rates

HSBC Offers Five-Year Fix Mortgage at 1.99% Rate

Published On: April 20, 2015 at 10:01 am

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HSBC could cause a price war in the mortgage market after launching a five-year fixed-rate deal at 1.99%.

This latest offering is the first ever home loan of this type with an interest rate less than 2%. However, borrowers will need a 40% deposit.

From today, HSBC will be introducing the 1.99% rate five-year fix. This is the lowest ever rate on a mortgage of this length. If buyers wish to benefit from this offer, they will need to raise a deposit of 40% of the property’s purchase price, or have equivalent equity in their home. The loan also has a £1,499 fee.

HSBC Offers Five-Year Fix Mortgage at 1.99% Rate

HSBC Offers Five-Year Fix Mortgage at 1.99% Rate

David Hollingworth, from mortgage brokers London & Country, says: “HSBC has broken quite a significant boundary by launching a rate below 2%. It looks exceptional value and shows just how hard lenders are prepared to fight for new business.”1

HSBC already offers the lowest rate in the five-year fixed-rate market, at 2.19%. The new rate will replace this and cost £15 a month less on a £150,000 25-year loan.

The bank will put other lenders under pressure to cut their rates to compete. The next cheapest deal is 2.24% from the Co-op.

Mortgage specialist at Middleton Finance, Daniel Bailey, notes: “The five-year deals have been hotting up for some time and I think this will push other lenders to respond, which is good news for borrowers.”

Although, experts believe that HSBC are more likely than other providers to turn down applications, causing aspiring buyers to miss out on the offer.

Bailey says: “I’ve had a lot of clients unable to get HSBC deals. One was recently turned down because HSBC could not see evidence of their weekly grocery spend on their current account statement. That’s because the borrower always paid their Tesco bill using their credit card, but the bank turned them down anyway.”1

Mortgage broker Coreco’s Andrew Montlake explains: “The headline rate is extraordinary, but there will be lot of people who won’t get this as HSBC is not the easiest lender to get through.”

Nationwide, Halifax, Lloyds Bank and Tesco all cut their rates on a number of different loans last week. However, rates rose last month for a short period.

Montlake says: “While rate cuts are welcome, the problem is that they still only benefit the same people. There are thousands of people including the self-employed, contract workers and older borrowers who can no longer get a loan because mortgage lenders have tightened their criteria more than they need to. Those are the people who now need some good news.”1

1 http://www.theguardian.com/money/2015/apr/18/hsbc-five-year-fixed-mortgage

 

 

Buy-to-Let Lenders Cut Interest Rates

Published On: September 23, 2014 at 2:41 pm

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Categories: Finance News

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Recently released data indicates that buy-to-let investors have had an extremely profitable year. According to figures from LSL Property Services, landlords recorded a 12.7% profit on their portfolio, taking rental income and capital gain of the property into consideration.

Profitable

LSL’s findings show that landlords made an average return of £8,233 in rent and £13,066 in capital gain during the last 12 months.[1] It must be noted however that these figures were recorded without taking tax, mortgage repayments or maintenance costs into account. This had led to concern that landlords could get into arrears with mortgage payments, especially if there is a significant rise in rates.

Cuts

Thankfully, good news came recently with a number of leading mortgage lenders cutting the interest rates charged to buy-to-let landlords. This indicates that the market feels that rising interest rates seem to be way off at present.

Buy-to-Let Lenders Cut Interest Rates

Buy-to-Let Lenders Cut Interest Rates

The biggest cut was made by Leeds Building Society, trimming its two-year fixed interest rates from 3.49% to 3.09%, for those borrowers able to secure a 40% deposit.[1] Virgin Money, Santander and Accord have cut their mortgage rates by a nominal 0.1%.[1]

Landlords however are increasingly looking for longer term rates to secure themselves in case of any variable rises. Skipton Building Society has introduced a seven-year plan, which is the longest available on the market. A fixed rate of 4.6% will be offered until 2021 for investors with a 40% equity or deposit for the property. This will be subject to a fee of £750. For investors with a 25% deposit, rates rise to 5%, with the fee rising substantially to £1,750.[1]

A number of Britain’s private landlords fear that their returns may fall in the face of any interest rate increases. Particularly concerned are new borrowers, who were enticed into the market by low interest rates.

Buy-to-let-charges

Often, buy-to-let mortgages come at an increased price. Arrangement fees and interest rates raise owner-occupier mortgage costs. David Hollingworth, representative of London and Country Mortgages, said that large fees go hand in hand with the payoff of lower rates. Hollingworth said: “It’s more common to get bigger fees in buy-to-let but landlords will be more willing to pay up in order to drive down their interest rate.”[1]

Landlords can also be assisted by the lack of regulation attributed to buy-to-let mortgage applications, making loans more securable than those for homeowners. Hollingworth suggests that buy-to-let mortgage loans “are not subject to the same kind of affordability checks for ordinary buyers.” He goes on to say: “Lenders are also able to look at the property’s rental income, as well as the borrowers salary, when making a decision about a buy-to-let mortgage.”[1]

Hollingworth concludes: “Landlords are still in a healthy position, as the recent rate cuts show that the market is fiercely competitive. As a result, they benefit from rate cuts.”[1]

[1] http://www.landlordexpert.co.uk/2014/09/23/good-news-for-uk-landlords-as-buy-to-let-lenders-cut-mortgage-rates/