If you’ve been following activity in the mortgage market lately, you may be aware that some of the best deals on record are currently available – and show no sign of slowing. Lenders have continued to introduce flexible criteria and significantly reduce rates, with customer demand flooding the market.
Since the 2014 Mortgage Market Review (MMR) and this year’s Mortgage Credit Directive (MCD), many borrowers have found themselves victim to stringent criteria and affordability checks, especially for those with specialist circumstances. Mortgages for expats have become increasingly difficult, for example, with some lenders withdrawing foreign currency loans altogether, while the challenges in the buy to let sector remain no secret.
Luckily, the good news is here: criteria are easing and some extremely competitive deals are flooding the market, with many more expected to follow. Lenders have been applying their best efforts to compensate for the expected drop in buy to let business and now look to increase the number of approved applications; their attempts to patch-up the sore spots left by tax changes and tighter regulations are clear.
Essentially, products are cheap and competition between lenders fierce, making now the best time to capitalise on the rewarding deals available.
Remortgage & Purchase
Rates remain low, yet the key focus is on increasingly flexible criteria, with rules for self-employed and interest only mortgages even being simplified. Take Saffron’s latest 5 year fixed rate Owner Occupier product; available for loans between £30,000 and £1 million at a rate of 2.57% up to 75% loan to value (LTV). This allows borrowers to lock into low interest rates while also benefitting from individual underwriting that isn’t based on credit scoring. Meanwhile, Coventry launched a 10 year fixed offset mortgage at 3.19% with a Remortgage Transfer Service – supposedly the only product of its kind.
5 year fixes are also particularly popular, with HSBC offering a 5-year fix at 1.99%. Santander’s latest fixed rates also include a 2-year fix of 1.89% at 60% LTV with no booking fee, as well as 5 year fixes ranging from 2.79% to 3.19%. It’s important to be alert to high or hidden arrangement fees, however, as HSBC’s product comes with a 35% deposit and £1,499 fee.
Numerous lenders have been raising their maximum lending age limits in a long-awaited reaction to societal changes and demand. Halifax has now raised its upper age limit from 75 to 85 and Nationwide’s rose from 75 to 85. Many building societies now lend up to the age of 85 or with no lending age limit at all, whereas HSBC, Santander and Virgin Money’s currently stand at 75.
First time buyers
Building a deposit is the biggest challenge for a first time buyer, so lenders have been trying to ease the pressure from parents’ purse strings. Barclays now offers a 3 year fixed Family Springboard Loan at 2.99%, which simply requires a 10% contribution from a relative or guardian. Instead of gifting a deposit, the family member opens a Helpful Start account linked to the mortgage, to deposit savings equal to 10% of the purchase price. The money is then returned within 3 years with interest.
Buy to let
As landlords anticipate the run-up to next April’s tax changes, thousands could find themselves barred from the market, as criteria becomes stricter and full tax relief removed. Despite this, rates have never been so competitive for the sector. Although The Mortgage Works increased its rental cover requirements from 125% to 145% and cut its maximum LTV, Accord Mortgages now offers a 2-year fix at 1.64%, and Virgin Money 2 year fixes at 1.89%, 3 year fixes at 1.94% and 5 year fixes from 2.44%.
As always there are variables within the mortgage market that can change in a moment, with lender activity constantly evolving. However, the possibility of a Brexit has the potential to threaten the positivity currently in the market, and dependent on the result, these deals could disappear within a heartbeat (you can read more about the effects of a Brexit here).
The temptation may be to sit tight until after the outcome of the EU Referendum, but we would strongly recommend otherwise. Other options will always arise yet if you have your eye on any current lenders’ offers, you need to act now and reap the benefits, so you can ensure your finances are secure whatever the outcome.
If you have any questions about this article or would like to discuss your options, our specialist advisers are available at your beck and call, anytime.