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.”
Newcastle BS becomes first lender to launch Deposit Unlock products
The Deposit Unlock scheme is a mortgage indemnity scheme, developed by the Home Builders Federation, 17 of its members and insurance broker Gallagher Re, and aims to help borrowers secure a new build up to £330,000 in value with a deposit of five per cent.
The lender has introduced a range of products, including a two-year fixed with a rate of 3.5 per cent. There is also a five year fixed with a rate of 3.75 per cent available.
The mortgages will be initially available on certain plots in Northeast England via four house builders Barratt Developments, Bellway, Keepmoat and Vistry.
Newcastle Building Society announced at the start of this month that it would be the first lender to launch products as part of the scheme. Around 20 mortgage lenders are understood to be engaged in the project.
Newcastle Building Society’s chief customer officer Stuart Miller (pictured) said: “More than ever, we need to help provide more options for low-deposit borrowers looking to buy a new-build home. Deposit Unlock is a truly innovative initiative and we’re pleased to be the first lender to offer products under the scheme.”
BSA’s head of mortgage and housing policy Paul Broadhead said that the scheme would be particularly helpful for younger buyers, who can struggle to build up a deposit whilst simultaneously paying rent.
He said: “Our research shows that raising a deposit is now the single biggest barrier to would-be buyers. Building societies are synonymous with home ownership and it is good to see Newcastle Building Society leading the way as the first lender to sign up. I am confident that more will follow.”
Home Builders Federation executive chairman Stewart Baseley said that Deposit Unlock could be a more “sustainable solution” to help buyers on the property ladder as Help to Buy has become less accessible in some regional markets, especially in Northern England and is due to be wound up in 2023.
Gallagher Re’s managing partner of mortgage indemnity Steven Rance said: “With the insurance indemnities effectively funded by the house builder community, Newcastle quickly recognised this as a long-term, commercial and sustainable solution that would unlock the return of 95% loan-to-value mortgages in the new build space.
“And having worked closely with them during its development, we are delighted to see Newcastle now go live with its first product rates, bringing the scheme to fruition and spearheading the way for many other lenders to follow suit.”
Kate Davies, Executive director at the Intermediary Mortgage Lenders Association (IMLA), said: ““There are, of course, other providers developing innovative schemes aimed at providing an alternative to Help to Buy. IMLA is pleased to have been able to facilitate discussions between providers and members and we are delighted that one of our members – Newcastle Building Society – is the first to launch with Deposit Unlock. We wish it every success.”
She added: “It will be interesting to see how this launch encourages and stimulates other providers and lenders to continue to find creative solutions to the challenges faced by buyers. Growing competition in this area can only benefit consumers, as they seek products which fit their individual needs.”
Platform trims high LTV rates; Zephyr launches 80 per cent deals
At 95 per cent LTV, Platform will cut rates on two, three and five-year fixed-rate mortgages by up to 0.37 percentage points from Wednesday. That means the lender’s two-fixed rate zero-fee deal for borrowers with a five per cent deposit will be reduced from 4.11 per cent to 3.74 per cent.
Between 60 to 90 per cent LTV, Platform will cut rates by up to 0.20 percentage points on selected deals.
A zero product fee option will be introduced to some 80 to 90 per cent LTV mortgage deals.
Fred Sharp, director of mortgage distribution at The Co-operative Bank, said; “We are committed to supporting first-time buyers who often need higher LTV lending, with some of our 80 to 90 per cent LTV products also offering up to £1000 cashback for borrowers.”
Zephyr Homeloans has launched an 80 per cent LTV mortgage through its packager channel.
Rates start at 3.89 per cent for a two-year fixed-rate mortgage and 4.15 per cent for a five-year alternative. Both are available for purchases and remortgages on standard properties. The maximum loan amount is up to £750,000.
Paul Fryers, managing director at Zephyr Homeloans, said: “Since Zephyr entered the market two years ago we have established ourselves as a lender that is finely attuned to the needs of specialist and portfolio buy-to-let landlords.”
First-time buyers taking high LTV mortgages fear negative equity
A survey by mortgage broker First Mortgage of more than 1,000 first-time buyers revealed 61 per cent are worried that their house will be worth less than they paid for it when the come to move home or remortgage in the future.
The concerns come as Halifax reported that the average house price increased to £261,000 after an annual rise of 9.5 per cent adding an extra £22,000 to the price tag of an average UK home.
With demand outstripping the supply of homes coming to the market, and some buyers armed with more savings that usual because of lockdown restrictions, bidding wars are breaking out and property prices are rising sharply.
Mortgage experts are concerned that first-time buyers are unaware of the risks of paying a high price for a property. First Mortgage’s survey results showed that 41 per cent did not know what negative equity meant and 21 per cent of first-time buyers thought it referred to property wear and tear.
Negative equity occurs when the outstanding balance on the mortgage exceeds what the property is valued for.
Some buyers had considered how they act should they end up in negative equity in the future.
More than 50 per cent said they would check with their mortgage lender if they could make overpayments to bring the value of their mortgage debt down.
Compliance director David McGrail of First Mortgage said: “Many first-time buyers would have been relying on high loan to value mortgages to secure their first property and just a small drop in house prices could leave them at risk of negative equity. Whilst being in negative equity does not cause immediate issues, it does mean that homeowners will have difficulty remortgaging in the future, meaning they may lose access to the very best rates on the market.”
McGrail said to avoid getting into negative equity buyers should do their research first to establish if the property represents value for money.
“Paying over the odds is the most likely cause of finding yourself in a negative equity situation,” he added. “If you find yourself in negative equity it is important to speak to a broker to understand your best way out of the situation which ordinarily would be a plan to overpay your mortgage on a monthly basis to bring the outstanding mortgage balance beneath the value.”
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.”
The West Brom releases new rates on three and five-year 95 per cent LTVs
The updates, which apply from today, include a two-year fixed rate for house purchases at 3.34 per cent down from 3.44 per cent, at 90 per cent LTV, with no completion fee and £500 cashback.
There’s also a three-year fixed rate for house purchases at 3.84 per cent, reduced from 3.94 per cent at 95 per cent LTV, also with no fee.
On the five-year fixed, for house purchase, there’s a new rate of 3.94 per cent, at 95 per cent LTV, and no fee.
The products are available direct and through intermediaries.
The maximum loan amount is £350,000, and the 95 per cent LTVs have a 30-year term.
At the end of the fixed rate period, the products revert to the West Brom’s standard variable rate of 3.99 per cent.
Richard Scott, head of intermediaries at the West Brom, said: “After a difficult year for first-time buyers and home movers with smaller deposits, we’re reducing rates on our three and five-year products. These deals will benefit many customers, especially those looking for payment certainty over the medium term.”
Coventry for Intermediaries boosts 95 per cent LTV range
With a rate of 3.59 per cent, the deal has a £999 product fee and is open to purchase and product transfer borrowers.
The Coventry has also cut the rate on its 95 per cent LTV five-year fixed rate deal from 3.89 per cent to 3.79 per cent.
Average 95 per cent LTV two and five-year fixed rates across the market now stand at 3.93 per cent and 4.09 per cent respectively, according to Moneyfacts.
Jonathan Stinton (pictured), head of intermediary relationships at Coventry Building Society, said: “This is great news for brokers and their first-time buyer clients. Our new competitive two-year fixed mortgage at 95 per cent LTV adds more choice to the market and means that more aspiring home owners will be able to take that all-important first step on the property ladder.
And the product is open to all purchase customers, so brokers can also secure a great rate for their clients looking for a higher LTV option.
“Plus, we’ve also recently widened our lending policy on bonus income and increased income multiples for loans greater than 90 per cent LTV, so clients could borrow more.”
Hinckley & Rugby BS returns to 95 per cent LTV
Borrowers with a five per cent deposit can access a 3.69 per cent deal. Those looking to fix for five years can lock in a rate of 3.89 per cent.
The deals are open to both first-time buyers and home movers.
Chris Holmes, customer proposition analyst at Hinckley & Rugby, said: “Over the past 12 months the society has seen a strong growth in house prices which has put pressure on borrowers with smaller deposits especially first-time buyers who have had limited high LTV options due to the pandemic.”
Earlier today, Nationwide announced its return to 95 per cent LTV lending. From Thursday 20 May, Nationwide will offer a number of deals including a 3.49 per cent two-year fixed rate, which will be the lowest fix at this LTV on the market, according to Moneyfacts.
Nationwide launches lowest 95 per cent LTV fixed rate on market
First-time buyers and home movers are eligible for the five per cent deposit deals but self-employed borrowers will be locked out. Flats and new build properties are excluded.
From Thursday 20 May, two and five-year fixed rates and a two-year tracker are available from 3.49 per cent and will be offered outside the government’s guarantee scheme. By not using the scheme, Henry Jordan, director of mortgages, said Nationwide could offer “improved value”.
Its two-year fixes come with three fee options, 3.49 per cent with a £1,499 fee, 3.69 per cent with a £999 fee and 3.84 per cent no fee.
According to Moneyfacts the 3.49 per cent deal will be the lowest fix on the market. Platform offers the next cheapest deal which is a two-year fixed rate of 3.61 per cent with the same fee.
The same fee options apply to the five-year fixes and tracker deals. The lowest five-year fixed rate on offer from the society is 3.79 per cent. The tracker mortgage prices start at 3.59 per cent.
First-time buyers will get £500 cashback on completion.
Three new deals will be added to the 95 per cent LTV range for existing borrowers.
Nationwide withdrew from 95 per cent lending in mid June 2020 after offering the deals direct to borrowers, excluding the intermediary channel, from March. When it announced it would retreat from 95 per cent LTV, Nationwide said it was due to uncertainty in the housing market. The society said it wanted to make sure borrowers could afford their repayments and avoid the risk of negative equity.
On the society’s re-launch Jordan said: “As the UK’s biggest building society and second largest lender, supporting people into their first home is at the heart of what we do. As one of the leading lenders to first-time buyers, we feel confident returning to the 95 per cent LTV market without the need for the mortgage guarantee scheme.
“By not being part of the scheme, we can provide improved value to our members and this is demonstrated by the market-leading rates we’re announcing today.”
Platform back in 95 per cent LTVs and refreshes wider resi offer
The mortgages will be available from Monday with two and five-year fixed rates, fees at £0, £999 or £1,499, and £250 cashback on all of them.
The two-year rates are 4.11 per cent for a fee-free option, 3.77 per cent with £999 fee, and with £1,499 fee, the rate is 3.61 per cent.
The five-year fixed products are priced at 4.13 per cent with £0 fee, 3.99 per cent with a fee of £999, and at £1,499 fee, the rate is 3.93 per cent.
Carolyne Gregory, director of retail lending at Platform’s parent company, The Co-operative Bank (pictured), said: “We are really glad to be re-launching our 95 per cent LTV range to the market, adding more options in support of aspiring home-buyers who can only afford a five per cent deposit.
“We’ve seen demand for this LTV band and have come back to market with competitive mortgages,” she said.
More five-year options
Further, Platform added more five-year fixed options and cut rates on a number of other products. Rates on the Professional Mortgage range have been reduced by up to 0.12 percentage points.
There’s a two-year fixed at 60 per cent LTV, priced at 1.15 per cent, with £999 fee.
The two-year fixed at 85 per cent LTV is priced at 2.34 per cent, with £1,499 fee.
And the two-year rate at 85 per cent LTV, with £999 fee, is 2.48 per cent.
The trio of two-year products come with £250 cashback.
There’s also a five-year fixed products at 85 per cent LTV, priced at 3.08 per cent, with £0 fee and £1,000 cashback.
The lender changed two criteria: it will accept stipends alongside another source of income, and LTV limits are raised from 75 to 85 per cent LTV on residential applications for capital raising and debt consolidation.