Kensington Mortgages launches credit recovery range and re-enters 95 per cent LTV
The credit recovery range, Resi 6, has a two and five-year fixed rate term with rates starting from 4.49 per cent.
It is available for both purchase and remortgage up to 85 per cent loan to value (LTV) and has a maximum loan size of £500,000. It also comes with free valuations and legals on certain LTVs.
The specialist lender has also relaunched its 95 per cent LTV residential range, with rates beginning from 5.19 per cent for a two-year fixed rate.
Kensington withdrew the 95 per cent LTV product last year at the start of the pandemic. It has since offered it on a limited distribution basis on certain cases over the past few weeks.
The specialist lender has also reduced rates for its residential select range at 90 per cent LTV, with rates now starting from 4.69 per cent.
It has also cut the rates for its large loan offering, with rates now pegged at 3.34 per cent for 75 per cent LTV for loans between £500,000 and £2m.
The lender has expanded its green mortgage offering to include buy-to-let. The product gives £1,000 cashback to landlords for improving energy efficiency of housing stock within the first 12 months of ownership.
The other option is a £500 reward upon completion when purchasing a new build property with an EPC rating of A or B.
Kensington Mortgages new business director Craig McKinlay said: “The pandemic has put an unprecedented strain on everyone, particularly the self-employed and small business owners, and many have experienced a bump in the road.
“Lenders shouldn’t use this blip against individuals though, and instead help those who have struggled over the last year with flexible and innovative solutions.”
UK housing cheaper to rent than buy for the first time since 2014 – Hamptons
The differential is particularly strong in London, and becomes even more intense for first-time buyers at 95 per cent LTV.
The average UK tenant paid £71 a month less by renting, compared to if they were servicing repayments on a 90 per cent LTV mortgage, in May.
The average monthly rental was £1,054, or seven per cent lower than a 90 per cent LTV mortgage repayment at £1,125.
This compared to March 2020, when those who bought on those terms would have been £102 a month better off.
In London, a buyer in March 2020 was spending £123 a month less compared to a renter, but by May of this year the situation had reversed, making it £251 a month cheaper to rent.
At 95 per cent LTV, the difference in favour of renting is stronger compared to at 90 per cent, partly owing to the cost of high LTV loans. At 95 per cent, a buyer would spend £195 a month on average more compared to if they carried on renting.
“The pandemic has reversed a six-year trend which now makes it cheaper to rent than buy. A year ago, lenders were either increasing rates or withdrawing higher LTV mortgages,” said Aneisha Beveridge (pictured), head of research at Hamptons.
“It’s likely the balance will swing back towards buying, but this could be offset by rising house prices,” Beveridge added.
Though rents have risen by 7.1 per cent on average in the UK over the past 12 months — the fastest rate of growth since 2013 when Hamptons began measuring — strong house price growth coupled with the cost of higher LTV mortgages have increased the cost of buying and owning a home.
In all regions it was cheaper to buy than rent back in early 2020, but this trend has been largely reversed. By May of this year, it remained cheaper to buy over rent in only in the North East, North West, Yorkshire & Humber and Scotland.
Record rental price growth was seen in May for the South East at 13 per cent, South West at 11.5 per cent, the Midlands at 5.8 per cent and in Scotland, 8.8 per cent.
The Hamptons Lettings Index uses data from Countrywide Group to track changes to the cost of renting based on 90,000 homes.
Over 300 products introduced since May as lenders compete on rates
According to Moneyfacts there are around 4,243 mortgage products on the market, which is the highest since the onset of the pandemic and the eighth month of growth.
Product counts increased across the measured categories, which included 95 per cent LTV, 90 per cent LTV and 60 per cent LTV, with 316 more products available compared to last month.
The largest increases were seen in the 95 per cent loan-to-value (LTV) category, with 192 products now available, an increase of 80 from May.
Average two- and five-year fixed rates across all LTVs increased slightly to 2.59 per cent and 2.82 per cent.
For 95 per cent LTVs, the average two-year fixed rate came to 3.88 per cent in June, an increase of 0.6 per cent compared to the same period last year and 0.63 per cent up from the same period in 2019.
Moneyfacts finance expert Eleanor Williams said that this is the lowest rate since last June when there were just 31 deals available.
According to the Bank of England statistics April, May and June are the first months since September last year that average two-year fixed rates have dropped below four per cent for 95 per cent LTVs.
Average five-year fixed rates for 95 per cent LTVs were 4.07 per cent, which is an increase of 1.05 per cent compared to the same period last year and a 0.59 per cent increase from 2019.
Moneyfacts said the average rates for a two-year fixed rates at 90 per cent LTV stood at 3.37 per cent, which is an increase of 1.07 per cent from June last year and an increase of 0.73 per cent from the same period in 2019.
Average rates for a five-year fixed rate at 90 per cent LTV are 3.62 per cent have increased by 1.05 per cent from June last year and 0.59 per cent from the same period in 2019.
Williams added: “The resurgence of high LTV products and the fact that their average rates are beginning to fall is particularly good news for first-time buyers, especially considering that Nationwide Building Society’s recent House Price Index Report found that house prices have risen nearly £24,000 over the past year, meaning that building that five per cent deposit is even harder now.”
Average rates for both two-year and five-year fixed rates for 60 per cent LTV were the only LTV band to see reductions year on year, with rates currently standing at 1.61 per cent and 1.81 per cent.
The rate for two-year fixed rate for 60 per cent LTV is the highest this year so far and is the first time that rates have broached 1.6 per cent since 2019 according to Bank of England figures.
Williams said: “As well as changes in the top LTV tiers, rate competition has become evident at the opposite extreme of the LTV spectrum, with a number of lenders launching eye-catching sub-one per cent mortgage deals in the lowest LTV brackets.
“These record-low rates are available to low-risk borrowers with high levels of equity, but as to whether this competition will extend to higher-LTV deals remains to be seen as we navigate the full economic impact of the last year.”
Primis mortgage network’s proposition director Vikki Jefferies said: “As lender appetite improves, particularly in the 95% LTV space, advisers will be crucial in supporting this segment of the market and highlighting the options available to borrowers. With more customers likely to approach a broker for support when securing a mortgage in the coming weeks, it will be vital that advisers also educate them about their protection options, either by providing this information themselves or by referring clients to a specialist.”
She added: “Many consumers have been financially impacted by the crisis, but guidance from a qualified broker can ensure they are protected against future financial hardship, should the worst happen.”
TSB brings in high LTV product and increases rates
For the option with a £995 fee, the rate for the 90-95 per cent LTV is 3.79 per cent and it is 3.94 per cent for the fee-free alternative.
The lender is not signed up for the UK government’s mortgage guarantee scheme, which involves the government guaranteeing 95 per cent mortgages for customers with five per cent deposits. As part of the scheme lenders cannot introduce their own 95 per cent mortgages.
Lenders signed up to the scheme include Barclays, HSBC, Lloyds Bank, NatWest and Santander.
The lender has also increased the rates on a number of its first-time buyer and house purchase, remortgage and buy-to-let products by 0.05 per cent.
The changes are effective from today and apply to its two-year fixed rate first-time buyer and house purchase 80-85 per cent LTV which has increased from 2.39 per cent to 2.44 per cent. It is subject to a £995 fee.
The rates for its two-year fixed remortgage at 60-75 per cent LTV with a £1,495 fee has risen from 1.19 per cent to 1.24 per cent, whilst its 75-80 per cent LTW with a £995 fee has increased from 1.89 per cent to 1.94 per cent.
The lender’s rates for its five-year fixed remortgage product up to 60 per cent LTV for both its three-year early repayment charge (ERC) mortgage with no fee has gone from 1.89 to 1.94 per cent, whilst the same product with five-year ERCs has gone from 1.69 per cent to 1.74 per cent.
On the buy-to-let side, the rate for TSB’s two-year fixed house purchase and remortgage up to 60 per cent LTV with no fee is now 1.99 per cent.
For its five-year fixed house purchase and remortgage up to 60 per cent LTV with a £995 fee is now 1.89 per cent.
Accord Mortgages to cut 85 and 90 per cent LTV rates
From Wednesday, the two-year fixed purchase deal at 90 per cent LTV will be reduced by 0.05 per cent to 3.3 per cent. This product has £495 fee and £750 cashback.
The two-year fixed rate at 85 per cent LTV will be cut by 0.05 per cent to 2.45 per cent and the five-year fixed rate will be cut by 0.02 per cent to 2.75 per cent.
Accord Mortgages said the 85 per cent LTV option outlined above would come with a £995 fee and £300 cashback.
The company said that as part of its change it would increase the rate for selected 75 per cent LTV products.
Products to become more expensive include a pair of five-year fixed rate deals which will go up by 0.05 per cent to 1.79 per cent and 1.90 per cent.
Accord Mortgages mortgage manager Jemma Anderson (pictured) said: “We’re committed to supporting brokers and their clients with a broad range of options to meet varying needs and have reviewed our range to deliver better value.
“While some rates at lower LTVs have increased, we’ve extended end dates to September and made positive changes to our higher LTV range which will be welcomed by those with smaller deposits.”
Beverley BS offers limited edition 90 per cent LTV deal
The low deposit mortgage comes with a family-assist arrangement. Both gifted deposits and guarantors are considered.
The deal, which can be used for a purchase or like-for-like remortgage, is available on a repayment basis only and comes with a fee of £995.
Overpayments of up to ten per cent are allowed during the product term, without early repayment charges.
The deal is available for a limited time.
Head of lending Graham Carter said: “We understand that higher-LTV mortgages continue to be a pinch point in the marketplace with just not enough deals available for people with lower deposits who, after all, are the engine room of the housing market.
“With this latest addition to our fixed-rate range we’re aiming to continue filling that gap.”
Clydesdale Bank adds 90 per cent LTV for first-time buyers
There is now a 90 per cent loan to value (LTV) two-year fixed product for those getting on to the property ladder. This has a rate of 2.89 per cent and a £1,999 fee. It also includes a free valuation.
A two-year fix at 90 per cent LTV for all borrowers has also had its rate reduced to 2.95 per cent. This also has a £1,999 fee.
Elsewhere, the bank has withdrawn a two-year fixed at 75 per cent LTV as well as a two-year discounted product with a rate of 1.74 per cent.
Clydesdale Bank has also updated the way it accepts product fees due to broker feedback. It now allows fees to be added to the total mortgage loan as long as it does not take a residential loan over 95 per cent LTV and a buy-to-let loan over 80 per cent LTV.
These changes came into effect today.
Nationwide ups LTI for first-time buyers
From 26 April, first-time buyers will be allowed to stretch their salaries five and half times in order to reach the mortgage amount they need to buy a home with a ten per cent deposit.
To qualify for a Helping Hand mortgage, borrowers must pick a five or ten-year fixed rate mortgage from its standard range.
A lower stress rate is combined with the 5.5 times income multiple to increase the size of the loan offered by 20 per cent. The society would not disclose the stress rate but said it was a new rate that applied specifically to this range.
The change means a first-time buyer couple with a joint income of £50,000 can now borrow up to £275,000 with Helping Hand, rather than the £225,000 they could borrow previously, assuming a ten per cent deposit and no other costs impacting affordability.
Nationwide said borrowers will be subject to “robust underwriting checks”, which includes scrutiny of the amount of unsecured debt on the credit report and a full assessment of the credit score.
If necessary a lower income multiple will offered.
Self-employed borrowers are currently excluded from the Helping Hand deals and while the range has launched to first-time buyers only Nationwide may look to extend it to home movers in the future.
To manage volumes, a minimum single annual income of £31,000 or joint earnings of £50,000 apply, which are inline with average national salaries for the typical first-time buyer age group. The minimum salaries will be kept under review.
First-time buyers using Helping Hand for enhanced affordability will have access to the standard product range, with consistent product rates, fees and features. All first-time buyers benefit from £500 cashback on completion of their mortgage.
Nationwide has set aside £1bn of lending to fund the mortgage range.
Henry Jordan, director of mortgages at Nationwide Building Society, said: “In the UK there are nearly five million private rented households, but many of these renters have dreams and aspirations of buying a home of their own.
“However, with household incomes rising at a slower rate than house prices, many first-time buyers are finding it increasingly hard to get onto the property ladder. Our new Helping Hand option supports borrowers in meeting the affordability requirements, making it easier for them to buy a home of their own.”
Nationwide is currently offering 95 per cent LTV mortgages to its existing borrowers only. It is understood the society is reviewing a wider launch but no plans are yet underway.
Dudley BS ups lending to 90 per cent LTV and Aldermore and Newbury BS cut rates
The 90 per cent LTV mortgages include two and five-year fixed products for purchase and remortgage. Both have a rate of 3.79 per cent, offer £150 cashback and a £499 product fee.
Fee-free options include the two-year fixed at 90 per cent LTV with a rate of 3.89 per cent which has now been widened to the whole of England and Wales, not just the local Dudley area.
A fee-free five-year fixed has also been launched at 90 per cent LTV. This has a rate of 3.89 per cent. Both products offer cashback of £150.
The mutual has also added 85 and 87.5 per cent LTV mortgages to its range. This includes two and five-year fixes at 87.5 per cent LTV for purchase and remortgage, both with rates of 3.74 per cent.
For fee-free options, there are the two and five-year fixes at 87.5 per cent LTV with rates of 3.84 per cent.
Elsewhere, products at 85 per cent LTV have seen rate cuts of up to 20 basis points.
Newbury BS reduces rates
Newbury Building Society has reduced rates on standard residential mortgages at 60 and 75 per cent loan to value (LTV) as well as its 95 per cent LTV shared ownership range.
The products have been reduced by up to 0.50 per cent and the mutual has removed its booking fee from shared ownership deals.
For existing borrowers, the three-year fixed at 75 per cent LTV has been reduced from 2.49 per cent to 2.14 per cent.
The five-year discount mortgage at 60 per cent LTV has been cut by 10 basis points to 1.59 per cent and the 75 per cent LTV alternative has seen a rate cut from 1.89 per cent to 1.59 per cent.
The three-year fixed shared ownership product has been reduced from 4.29 per cent to 3.99 per cent, while the five-year fix has been cut from 4.59 per cent to 4.29 per cent.
Roger Knight, lending manager at Newbury Building Society said: “We want to offer products which give prospective and existing borrowers the greatest chance to fulfil their homeownership ambitions.
“We believe the decision to reduce a number of our products does just that as we continue to listen to brokers and their clients to ensure we provide the financial products they need.”
Aldermore cuts product switch rates
Aldermore Bank has reduced rates across its product switches for residential and buy-to-let borrowers with single residential units.
The rates on two-year fixed mortgages for residential borrowers now start from 2.5 per cent, down from 2.98 per cent while five-year fixes start from 2.8 per cent, down from 3.18 per cent.
For buy-to-let clients with a single residential unit, two-year fixes start from 2.95 per cent from 3.38 per cent. Five-year fixed rates begin from 3.35 per cent, previously 3.75 per cent.
Buy-to-let clients with a single resident borrowing through a limited company will now see two-year fixed rates begin from 3.15 per cent, down from 3.38 per cent and five-year fixes start from 3.55 per cent from 3.78 per cent.
Jon Cooper, head of mortgage distribution at Aldermore, said: “2021 is a year in which we want to show our ambition; we will not settle for simply recovery this year as we move towards a post-pandemic environment, but seek growth and innovation to what we can provide and do for our customers.
“I’m delighted to introduce our new loyalty range which offers some of our cheapest rates yet. This is not the end goal but a next step; we will continue in striving to deliver the best products we can and ensure our service is as straight-forward and seamless as possible as we move forward.”
Nationwide cuts rates and expands £1,499 fee range to 90 per cent LTV
The lender has also overhauled rates on its product transfer range increasing some by up to 0.45 per cent but is also cutting others by up to 0.2 per cent.
New business rate cuts of up to 0.25 per cent apply to products for first-time buyers, home movers and remortgaging from tomorrow.
For first-timers, this includes the five-year fix with no fee at 75 per cent LTV reduced by 0.25 per cent to 2.04 per cent, and the two-year fix with a £999 fee at 90 per cent being reduced by 0.05 per cent to 3.14 per cent.
In the house purchase range reductions includes the five-year fix with no fee at 75 per cent LTV reduced by 0.20 per cent to 1.99 per cent, while for remortgaging the two-year fix rate at 85 per cent is cut by 0.15 per cent to 2.84 per cent.
Nationwide is also extending its range of £1,499 fee products up to 90 per cent LTV.
Previously, they were only available at 60 per cent LTV but this limit will be increased and with applications open for loans of £275,000 or more across all LTVs.
For example, the two-year fix up to 90 per cent LTV will be at 3.04 per cent with the tracker version at 3.49 per cent.
Rates on the mutual’s existing customer moving home and further advance ranges will continue to be aligned to the lowest rates Nationwide offers new customers, the lender said.
Nationwide director of mortgages Henry Jordan said: “We are reducing our rates again to ensure that we continue to remain one of the best lenders in the market for rate as well as service.
“The changes are being made across our range meaning all types of borrowers could benefit, whether they are moving home, getting their first home or remortgaging.
“The extension of our £1,499 fee product range to all LTV tiers up to 90 per cent also expands the choice available to borrowers with the society.”