Posts with tag: mortgage rates

Buy-to-Let Mortgage Market is Thriving

Published On: November 17, 2015 at 12:51 pm

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Demand for buy-to-let mortgages is booming, as confidence in the sector as an investment continues to grow and rents rise, according to data analyst Moneyfacts.co.uk.

Buy-to-Let Mortgage Market is Thriving

Buy-to-Let Mortgage Market is Thriving

Mortgage lenders are therefore taking advantage of soaring demand and are competing in an attempt to attract new investors.

Figures from Moneyfacts reveal that lenders are doing all they can to entice new borrowers. The average rate has dropped significantly, while the amount of deals with no arrangement fee has more than doubled in just 12 months.

Finance Expert at Moneyfacts, Charlotte Nelson, comments on the findings: “The BTL [buy-to-let] market is clearly booming, with rents at a high and BTL mortgage rates dropping to historic lows, there is great potential for prospective landlords.

“The finding that the average two-year fixed rate has fallen by 0.37% in just one year is particularly good news for older borrowers who are looking to access their pension pots to invest in bricks and mortar.

“However, the Bank of England has recently gained new powers to regulate the buy-to-let market, which may mean that the end is nigh for these low-cost deals. Potential landlords looking for a fixed rate should therefore act fast to ensure they are not disappointed.”

She continues: “Future legislative changes to the BTL market could also mean potential profits will fall, so investors need to keep an eye on any announcements to ensure BTL will still be profitable for them.

“The increase in deals with no fee is a sign that BTL lenders are trying to diversify and offer borrowers more choice than ever before. However, borrowers still need to weigh up the true cost of a mortgage to ensure the best deal is secured. Anyone thinking about entering this sector would be wise to seek the advice of an independent financial adviser to see if BTL really is the best place for their investment.”1

If you are considering becoming a buy-to-let landlord, or have rental properties already, keep up to date with the latest landlord law, finance news and goings on in the property market on LandlordNews.co.uk.

1 https://www.landlordtoday.co.uk/breaking-news/2015/11/moneyfacts-buy-to-let-mortgage-market-is-booming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank of England base rate rise on hold

Published On: November 6, 2015 at 11:48 am

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Categories: Finance News

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People buying a home in the UK have been encouraged, with the news that mortgage rates are set to remain at historic lows for some time, despite previously widespread reports that they would rise early in 2016.

The Bank of England has indicated that the present 0.5% base rate is highly likely to remain until deep into 2016 or even 2017. Rates have been at this historically low level now for 80 consecutive months.

Concerns

There are concerns however that home purchasers could get too used to low interest rates and, as a result, this could backfire as interest rates do eventually begin to rise.

An investigation conducted by Experian seems to suggest that people who failed to secure a mortgage are failing to conduct the basic research required to get control of their finances. 13% were found to be unaware of how much money they would have left over at the end of every month, while 18% did not know what monthly payments they could afford.[1]

Additionally, the research showed that 14% did not have a large enough deposit for the property that they desired, with 12% unable to secure the size of the relevant mortgage they needed.

Worried

Further research from Ocean Finance shows that nearly three quarters of home owners with interest only mortgages are worried that they may not be able to repay their loan. Interest only deals are where borrowers pay the interest on their loan for the duration of their mortgage, then repay the capital when the mortgage term ends.

Only 31% of these interest only borrowers stated that they had a separate investment policy in place to pay the capital , such as an endowment or an ISA. 16% said that they planned to switch to a repayment mortgage before the end of their existing loan, with 31% saying that they expected to have to sell their home to settle the existing capital.[1]

Bank of England base rate rise on hold

Bank of England base rate rise on hold

Gareth Shilton, spokesperson for Ocean, said, ‘interest only has become popular in the 1990s as a way for consumers to afford homes at a time when property prices were soaring. Lenders often agreed interest only loans without confirming borrowers could repay the capital owing at the end of the mortgage. By the end of 2012, most lenders stopped offering interest only deals after tightening their lending rules.’[1]

‘It’s advisable to seek advice on whether they can overpay on their current interest only deal, switch to a repayment mortgage, or use an ISA or pension to settle the capital payment,’ he added.[1]

Interest-only popularity

In the 1990’s interest only mortgages became popular as a way for consumers to afford property when house prices were spiralling. During this period, lenders often agreed interest only loans without confirming borrowers could repay the capital owning at the conclusion of the mortgage. By the end of 2012, the majority of lenders stopped offering these types of deals after tightening lending rules.

Shilton feels that, ‘while there is a place for interest only mortgages, it is a specialised product that suits a small number of borrowers, rather than being the mass market product it become in the 1990’s. For example, if you have a large family home that you know you don’t plan to stay in once your children have left home, then interest only could make sense.’[1]

‘Interest only mortgages are now typically only being approved for borrowers who can demonstrate they have a repayment vehicle or pension pot that is forecast to repay the capital element. Usually, borrowers also need to have a significant deposit that gives them a big equity gap,’ he added.[1]

[1] http://www.propertywire.com/news/europe/uk-buyers-interest-rates-2015110611174.html

 

 

Beware! Low Mortgage Rates Have Frightening Fees

Published On: October 29, 2015 at 2:51 pm

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Categories: Finance News

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As if we need more fear-inducing facts at this time of year! Moneyfacts.co.uk has revealed that the true cost of low rate mortgages is frightening.

Beware! Low Mortgage Rates Have Frightening Fees

Beware! Low Mortgage Rates Have Frightening Fees

New research from the website found that too many borrowers opt into low rate products mistakenly believing that they will save them money.

However, the study shows that many would be better off choosing a deal with no arrangement fee over a lower rate deal.

Finance Expert at Moneyfacts, Charlotte Nelson, explains why: “Whilst these low deals look great on paper, they are often compensated by high fees that can scare even the most seasoned borrower.

“With fees on mortgages ranging from nothing all the way up to £2,794, with the average mortgage fee sitting at £939, it is easy to see why it can be a costly mistake to opt for the wrong deal.”

She states that low rate high fee products favour borrowers buying properties at the high end of the market.

She continues: “However, large fees can turn what appears to be a cheap deal into a costly one for the majority.

“For example, by opting for the lowest two-year fixed rate mortgage at 60% LTV with no fee will mean borrowers will be around £1,500 better off a year compared to the lowest option in that sector.

“Arrangement fees allow providers to have greater flexibility in what rate they offer, however, the set up costs are not greatly different between mortgages, so many will question what this is actually for.”

Nelson reports that the size of the arrangement fee is particularly important on two-year fixed rate deals, due to the short-term nature of the product: “Borrowers will have to remortgage relatively soon and could again pay yet another fee.”

She urges borrowers to calculate the true cost of their loan: “There are deals out there with no arrangement fee, so borrowers will have to decide whether they choose a trick or treat when picking a mortgage.”1

Don’t be caught out by high fees, make sure you work out how much the loan will actually cost you.

1 https://www.introducertoday.co.uk/breaking-news/2015/10/cheap-mortgages-come-with-frightening-costs

Fee-Free Buy-to-Let Mortgage Products Rise

Published On: October 29, 2015 at 10:32 am

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The amount of arrangement fee-free buy-to-let mortgage products increased in the third quarter (Q3) of this year, revealed data from Mortgages for Business (MAB).

Fee-Free Buy-to-Let Mortgage Products Rise

Fee-Free Buy-to-Let Mortgage Products Rise

The figures from the latest Buy-to-Let Mortgage Costs Index show that 17% of products in Q3 were offered without lender arrangement fees, up from 13% in Q2. Flat fee products dropped slightly from 47% of all buy-to-let mortgages to 46% over the same period.

The greatest declines were experienced on products with percentage-based fees, falling from 40% of all buy-to-let products in Q2 to 37% in Q3.

Charges, including arrangement fees, valuation fees and legal costs, have continued to have a negative impact on total costs. On average, they now add an extra 0.48% to the headline rate, down from 0.52% in Q2. When the index first launched however, in Q1 2013, the average was 0.67%.

These decreases were also witnessed in the high loan-to-value (LTV) sector, which has previously seen an average 0.9% added to the headline rate. In Q3 2015, the average additional cost on high LTV rates was down to 0.67% after three consecutive falling quarters.

The study also found that despite absolute product numbers by initial term – one to five-year rates and loan term products – rising across all categories, the market share of two-year loans has dropped annually from 54% in Q3 2014 to 43% now.

Longer term products, especially three and five-year rates, have increased their market share, gaining 9% of the market between them.

Finance Director at MAB, Simon Whittaker, comments: “The recent falls in swap rates, almost back to levels similar to the start of the year, have helped lenders trim prices, but whilst they continue to be attracted to the buy-to-let space, they are having to be ever more creative to find the balance between maintaining their margins and offering competitive products.

“When looking at the market and the wider economy, the balance seems to have tilted towards there being no increase in bank rate for quite a few months yet.”1 

1 https://www.landlordtoday.co.uk/breaking-news/2015/10/fee-free-btl-products-increase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HSBC announce mortgage rate cuts

Published On: September 30, 2015 at 3:45 pm

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Categories: Finance News

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HSBC has made the latest move in the mortgage market by reducing interest rates on many of its standard range fixed products.

Rates have been cut across a range of LTVs, including 0.61% off a two-year fixed fee-saver mortgage at 90% LTV, down from 2.99% to 2.38%.

Lending increases

The cuts from HSBC come on the heels of a Bank of England report that shows mortgage lending remains strong, with last month seeing the highest number of mortgages approved for 19 months.

In August, mortgage lending rose by £3.4bn, in comparison to £2.8bn in July. This was the highest figure since May 2008.

HSBC’s revised mortgage range includes:

– 60% LTV 2yr fixed – 1.19% plus £1499 booking fee (new product)
– 90% LTV 5yr fixed – 2.88% plus £1499 booking fee (new product)
– 90% LTV 2yr fixed – 2.38% (down 0.61% from 2.99%) feesaver
– 80% LTV 3 yr fixed 2.44% (down 0.35% from 2.79%) plus £999 booking fee
– 60% LTV 5yr fixed – 2.19% (down 0.2% from 2.39%) plus £999 booking fee
– 60% LTV 2yr fixed – 1.49% (down 0.15% from 1.64%) plus £999 booking fee [1]

HSBC announce mortgage rate cuts

HSBC announce mortgage rate cuts

‘Remortgage season’

‘Autumn is typically remortgage season amongst homeowners; we have now made it even more compelling to remortgage to HSBC,’ stated Tracie Pearce, HSBC’s Head of Mortgages in the UK. ‘We are continuing to see confidence in the housing market and the Bank of England statistics support that view. With mortgage rates continuing to be extremely low, now is a good time for borrowers to review their existing mortgage arrangements, particularly if they are on a standard variable rate,’ she continued.[1]

‘We recently made our mortgages available to more people by expanding our broker partnerships to include London & Country. We are committed to continuing to offer our customers competitive rates to help them achieve their property hopes and dreams,’ Pearce added.[1]

[1] http://www.propertyreporter.co.uk/finance/hsbc-announces-rate-cuts-of-up-to-061.html

New five-year fix at Hinckley and Rugby

Published On: September 28, 2015 at 3:26 pm

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Hinckley and Rugby Building Society has today announced changes to its high LTV products.

The organisation has launched a new 95% LTV mortgage, alongside cutting rates on two other high-end deals.

Changes

Coming with a £199 booking fee and £800 completion charge, the new 95% LTV mortgage is a five-year fix at 4.79%. In addition, there are free valuations up to £1m.

However, the mortgage does have ERC’s ranging from 5% in year one to 1% in year five. Overpayments of up to 10% per annum are permitted, without incurring ERC’s.

Included in the rate cuts are a two-year fix at up to 95% now at 3.95%, from 4.29% and a five-year fixed rate deal at 3.54% up to 90% LTV, from 3.79%.[1]

For the two-year discount buy-to-let mortgage at up to 75% LTV, the building society has moved the completion fee from £999 to 2.5% of the advance payment.[1]

New five-year fix at Hinckley and Rugby

New five-year fix at Hinckley and Rugby

Hinckley and Rugby chief executive Chris White commented, ‘available direct and through brokers, the new five-year fix is designed to be attractive to first time buyers and well as the wider market.’[1]

‘These are very attractive reduced rates that offer customers the certainty of a fix followed by the value of a discounted rate,’ he added.[2]

[1] http://www.propertyreporter.co.uk/finance/new-5-year-fix-launches-at-hinckley-and-rugby.html

[2] www.mortgagefinancegazette.com/latest-news/hinckley-rugby-cuts-rates-on-high-five-litv-fixes