Santander and NatWest have hiked rates this week on products in their Help to Buy mortgage guarantee range becoming the first lenders to do so.
NatWest has increased its fee-free 95% LTV two-year fix from 4.99% to 5.39% while the five-year equivalent has been raised from 5.49% to 5.89%. Santander has also increased its fee-free two-year fix to 5.09%.
Simon Crone, vice-president of mortgage insurance at Genworth, said the move meant many smaller building societies were now undercutting the big banks on rate.
“The decision by both Santander and NatWest Intermediary Solutions to up rates on their respective Help to Buy 2 ranges goes a long way to showing this. At present a number of building societies are delivering rates well below the 5%-plus these lenders are now offering.
“For example, Hanley Economic Building Society currently offers a two-year discount rate for 95% LTV at 4.19% compared to Santander’s 5.09% and NatWest’s 5.39% two-year fixes.”
Crone added the government scheme had increased activity in the market but advised brokers not to rely solely on the scheme for high LTV products.
“Clearly the introduction of the Help to Buy 2 scheme has stimulated increased activity in the higher loan-to-value mortgage market, however it is not the case that lenders participating in Help to Buy are offering the best products and rates for those with small deposit levels.”
