Santander ups new business and PT rates; TSB pulls select five-year fixes – round-up
Residential purchase mortgages have seen rate increases of up to 0.5 per cent on mortgages up to 95 per cent loan to value (LTV).
Changes include the two-year fixed rate at 75 per cent loan to value (LTV) product, which now has a rate of 3.09 per cent up – a 0.5 per cent increase. This product has a £999 fee.
The rate on the five-year equivalent has risen by 0.4 per cent to 3.14 per cent.
At the same lending tier, a fee-free deal has been introduced with a rate of 3.39 per cent. The rate is fixed for five years.
At the other end of the scale, the fee-free five-year fixed rate at 95 per cent LTV has seen a rate increase of 0.15 per cent, up to 3.54 per cent.
The rates of Santander’s new-build products at 75 and 85 per cent LTV, fixed for either two or five years, have risen by up to 0.5 per cent. Help to Buy deals at 75 per cent LTV have risen by up to 0.45 per cent while large loan products, across both purchase and remortgage, have gone up by as much as 0.5 per cent.
Remortgages up to 90 per cent LTV have also seen rate increases and a fee-free, five-year fixed remortgage at 75 per cent LTV has been added with a rate of 3.44 per cent.
Buy-to-let purchase and remortgage products have had rate increases of up to 0.5 per cent, while both residential and buy-to-let product transfers have risen by up to 0.55 per cent.
The bank is also cutting the rate of its buy-to-let lifetime tracker by one per cent.
Elsewhere, Santander has pulled first-time buyer exclusive deals at 85 and 90 per cent LTV, and withdrawn remortgages at 90 per cent LTV with £999 fees.
TSB has also pulled five-year fixes for first-time buyers and home movers with a £995 fee for residential borrowers.
This change is effective from today.
Top 10 most read mortgage broker stories this week – 24/06/2022
It was introduced in 2014 and required lenders to calculate if a borrower could repay a mortgage if the rate was three per cent above the reversion rate.
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Santander and Platform withdraw products – round-up
Santander said it was temporarily withdrawing all 60 per cent loan to value (LTV) residential purchase and remortgage products along with all of its 75 per cent LTV zero-fee residential purchase and remortgage products.
The rates being withdrawn include:
- 60 per cent LTV, two-year fixed rate, 2.54 percent, £999 fee, purchase
- 60 per cent LTV, two-year fixed rate, 2.59 per cent, £999 fee, remortgage
- 60 per cent LTV, two-year fixed rate, 2.69 per cent, £999 fee, purchase and remortgage
- 60 per cent LTV, five-year fixed rate, 2.89 per cent, no fee, purchase and remortgage
- 75 per cent LTV, two-year fixed rate, 2.89 per cent, no fee, purchase and remortgage
- 75 per cent LTV, five-year fixed rate, 2.94 per cent, no fee, purchase and remortgage
The bank said it was also extending its completion deadline for remortgages by two months so that borrowers whose deals were about to end could have more time to sign their next agreement.
Specifically, its completion deadlines have been rolled on to 5 November 2022 for product transfers, 30 December 2022 for purchases and 6 January 2023 for remortgages.
Because of the latest BoE action on interest rates, Santander said, the pay rates on its base rate tracker products would increase as of today on new offers only. Existing Santander base rate tracker customers’ rates, it said, will not change until next month and payments won’t change until August.
Platform, part of the Co-operative Bank, cited “unprecedented demand for our mortgage products and to maintain application processing expectations” as the reasons it was temporarily withdrawing its new business range.
The lender said it would re-launch on Thursday its mainstream and buy to let (BTL) mortgage ranges for both new business and product switching.
Yorkshire Building Society appoints interim CEO
In its announcement to the London Stock Exchange, the building society also announced the appointment of Robert Purdy as interim chief finance officer (CFO).
Stephen White, who has been acting as interim CEO, will leave the mutual to take up a new role with Santander.
Both appointments are subject to regulatory approval.
John Heaps, chairman of Yorkshire Building Society, said: “Alasdair Lenman has 23 years’ experience in finance and has worked in financial services for 15 years, most recently as our chief finance officer. He has played a leading role in the development of our existing strategy, which has yielded some of our strongest financial results in our history.”
Heaps added that the process to appoint the next permanent CEO was well advanced and would conclude as planned later this year.
Lenman added: “Yorkshire Building Society is enjoying its strongest trading performance in its over 150-year history. This is enabling us to reward our members with market leading savings rates and invest in the transformation of our business so we can deliver even further value to our customers. I look forward to supporting the society until the process for appointing a permanent chief executive officer concludes.”
Lenders react to base rate change
Yesterday, the Monetary Policy Committee (MPC) decided to increase the base rate from one per cent to 1.25 per cent as a means to curb inflation. Many lenders responded to the announcement by raising rates.
Nationwide will increase rates on its trackers products to reflect the base rate from 1 August.
It said it was “working through” what the change means for its variable reversion rates, Base Mortgage Rate and Standard Mortgage Rate, noting that it previously rose both to reflect the BoE’s May decision. At the time, these went up by 0.25 per cent each to three per cent and 4.49 per cent respectively.
HSBC’s tracker mortgages will see rate rises to reflect the 1.25 per cent base rate. Its residential and buy-to-let standard variable rates (SVRs) will remain unchanged.
Earlier this week and ahead of the rate rise, HSBC increased a number of two, three and five-year fixes between 60 and 95 per cent loan to value (LTV) for new and existing residential and buy-to-let borrowers.
All Santander’s tracker mortgages linked to the base rate will rise by 0.25 per cent from the beginning of July. The bank’s follow-on rate will increase to 4.5 per cent.
Mortgage products linked to the base rate issued by its subsidiary Alliance and Leicester will also see a 0.25 per cent uplift which will come into effect in the beginning of August.
Both brand’s SVRs will rise to 5.49 per cent from August.
Skipton Building Society has decided not to increase its SVR or mortgage variable rate. Despite the base rate rising by one per cent over time, the mutual has only increased its variable rates by 0.25 per cent since.
A Skipton Building Society spokeswoman said: “For our borrowers, the society will not be increasing its MVR or SVR, meaning for the bulk of mortgage customers – those not on base rate tracker linked products – there will be no increases to their payments as a direct result of today’s bank base rate announcement.”
The mutual will also withdraw its base rate-linked tracker products on 19 June, to replace them with repriced alternatives on 20 June to reflect the rate change.
Leeds Building Society made the decision to hold its SVR, which is currently 5.54 per cent for standard mortgages and 5.84 per cent for buy-to-let products.
Richard Fearon, chief executive at Leeds Building Society, said: “We work hard to balance the needs of our membership as a whole, whether savers or borrowers. So to support our borrowers, we’ve again agreed not to increase our standard variable rate following today’s MPC announcement.”
For Aldermore borrowers with mortgages linked to the base rate, pricing will rise by 0.25 per cent from 1 July for existing borrowers and 21 June for new business.
Its SVR, otherwise known as the Aldermore Managed Rate, will increase to 5.73 per cent from 1 July for existing customers and from 23 June for new borrowers.
Major UK banks can fail safely due to ‘robust resolution regime’ – BoE
According to an assessment by the Bank of England (BoE), which is the first undertaken, if a bank were to require resolution customers would still be able to access their accounts and business services as normal.
Additionally, shareholders and investors rather than taxpayers would be the first to bear the bank’s losses and costs of recapitalisation.
The banks involved in the assessment were Barclays, HSBC, Lloyds Banking Group, Nationwide, Natwest, Santander UK, Standard Chartered and Virgin Money UK.
Resolution is a way to manage the failure of a bank, building society or other financial entity to minimise the impact on customers, the financial system, and public finances. The BoE is the UK’s resolution authority.
During the financial crisis the UK did not have a regime to resolve banks without the use of public money, which meant the options were to let banks fail or bail them out with taxpayers’ money.
The BoE said that a “robust resolution regime” was in place following extensive work by UK banks and there were more choices if banks encountered “serious problems”.
Actions taken across the sector include holding more loss absorbing capacity, improving ability to monitor liquidity needs and use liquid resources throughout resolution; ‘resolution-proofing’ contracts and critical service arrangements; changes to group structure; better ability to plan at speed for “further restructuring changes to return the firm to long term viability”; and improved communication planning with the public.
However, it said that resolution was a “spectrum” and that it would always “likely to be complex to execute” so maintaining an “credible and effect resolution regime” was a “continuous process”.
Dave Ramsden, deputy governor for markets and banking at the BoE, said: “The Resolvability Assessment Framework is a core part of the UK’s response to the global financial crisis, and demonstrates how the UK has overcome the problem of ‘too big to fail’.
“The UK authorities have developed a resolution regime that successfully reduces risks to depositors and the financial system and better protects the UK’s public funds. Safely resolving a large bank will always be a complex challenge so it’s important that both we and the major banks continue to prioritise work on this issue.”
In its assessment the BoE evaluated banks on three themes: adequate financial resources, continuity and restructuring, and coordination and communication.
Shortcomings were identified in three firms, which the BoE said, “may complicate unnecessarily the Bank’s ability to undertake a resolution”. The firms were HSBC, Lloyds Banking Group and Standard Chartered.
HSBC’s shortcomings were around the production of resolution specific liquidity analysis and its plans to execute the restructuring actions in scenarios with a multiple point of entry bail-in.
Lloyds Banking Group and Standard Chartered also had shortcomings around production of resolution specific liquidity analysis, whilst for Standard Chartered the BoE identified issues around “identification and evaluation of all available restructuring options in a wide range of resolution scenarios”.
This relates to a bank’s availability of liquidity to support itself through a resolution.
The BoE has also identified “areas for further enhancement” for six firms, which are specific areas where continued work is needed to “enhance or embed capabilities in order to further reduce execution risks associated with resolution”.
The six firms were Barclays, HSBC, Nationwide Building Society, Natwest, Standard Chartered and Virgin Money UK.
The BoE said that it would repeat its assessment in 2024 and then every two years after that.
Serena Grewal joins Quantum Mortgages as key account manager
Grewal joins from Santander where she was a business development manager and is the third key account manager to join Quantum Mortgages.
She graduated from Kingston University with an economics degree in 2007 and began her career in financial services at Capstone Mortgages.
After finishing her CeMAP, Grewal worked as a mortgage adviser and later headed teams of advisers at both Natwest and Post Office Money.
In the last four years she has been a business development manger at Santander helping intermediaries secure both residential and buy-to-let mortgages in the south.
Quantum Mortgages is an intermediary-only specialist lender, aimed at fulfilling the funding needs of experienced landlords.
It launched earlier this year following a seed funding round which secured an initial £1bn with the backing of funds managed by CarVal Investors, a global alternative asset manager.
Quantum’s other key account managers include Harsha Dahyea and Paul Ormonde.
Spencer Gale, sales director at Quantum Mortgages said: “Serena brings many years of experience as a mortgage broker and subsequent business development manager role for one of the largest financial institutions in the UK to the business. Her enthusiasm and personality light up a room and I cannot wait to see how she develops over the coming months in the specialist sector bringing those skills to intermediaries across the south of England.
Grewal said she was looking forward to working with intermediaries. She added: “In the complex buy-to-let market, having the ability to discuss cases with underwriters and having a common-sense approach, which sometimes the high street lenders lack was a major part of the decision for me to join them. The journey Quantum Mortgages are on and the market space they have entered really excites me and I can’t wait to be able to find solutions for both experienced and portfolio landlords in the months ahead.”
Santander launches 95 per cent LTVs outside of mortgage guarantee scheme
The products will be available from 1 June and Santander’s lending policy on mortgages above 90 per cent LTV will remain the same. This includes a restriction on lending against new-build houses and flats.
The standard rates will also be equal to the existing mortgage guarantee scheme, currently, a two-year fix is priced at 3.34 per cent and a five-year fix has a rate of 3.39 per cent. These products come with no fee.
The mortgage guarantee scheme was launched in April last year and acted as a catalyst for lenders to return to the high LTV market, which was deemed too risky at the time and resulted in restrictions on lending.
Virgin Money, Natwest, HSBC and Santander were some of the first lenders to offer mortgages at 95 per cent LTV with the government’s support. This later encouraged other providers to offer mortgages at the same tier outside of the scheme.
So far, the scheme has supported 12,388 mortgage completions at a value of £2.2bn.
Applications for the mortgage guarantee scheme are set to end 31 December.
This update marks a another move towards pre-pandemic lending for Santander, as earlier this week it announced it would raise its lending limit to 90 per cent LTV for self-employed borrowers.
Top 10 most read mortgage broker stories this week – 27/05/2022
Discussions around interest-only mortgages, mortgage porting, changing rates and long-term fixes were also of interest to readers, as was Santander’s announcement that it would lend to self-employed borrowers up to 90 per cent loan to value.
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Aldermore’s Damian Thompson to depart – exclusive
Mortgage porting: ‘Sold as a benefit, yet sometimes, it’s the opposite’ – analysis
Longer term fixed mortgage deals will affect repeat business, so brokers have to adapt – Marketwatch
‘Fast changing rates are tough on both brokers and lenders’ – Skipton BS business leaders’ lunch
Mortgage brokers spared from FSCS levy as forecast drops to £625m
Santander ups max LTV for self-employed applicants to 90 per cent
Top-slicing and let to buy unexplored opportunities for BTL lenders, say brokers
Further mortgage innovation is not what borrowers need – Bamford
Landlords risk thousands mis-targeting green spending with out-of-date EPCs – Accord video
Santander ups max LTV for self-employed applicants to 90 per cent
The maximum LTV previously was 75 per cent and the limit for existing Santander mortgage customers moving home remains 95 per cent LTV.
The change comes into effect from tomorrow and its affordability calculator will be updated to reflect the change.
It follows on from changes to its self-employed criteria that it made in April. The bank takes an average of the last two years’ income figures or the latest year if it is lower, which compares to three years’ income before.
At the time, it also changes Covid-19 business impacted definition and said it would only capture details of outstanding support loans, such as Bounce Back Loans or Coronavirus Business Interruption Loans.
The lender added that it had simplified its income evidence requirements so applicants would only have to provide an accountant’s certificate rather than business bank statements.
In its latest criteria update, Santander reiterated that for limited company directors it would only accept an accountant’s certificate and it would use business year-end salary and dividends for income assessment from the certificate.
It also said that the income from the certificate should be checked in the affordability calculator before submitting an agreement in principle or full mortgage application to ensure the correct income and net pay figures are used.
Graham Sellar, Santander UK’s head of product proposition, said: “We are pleased to have increased our LTV to 90 per cent for self-employed borrowers. We’ve made some changes that help us process applications more effectively, and enable us to open up the market for more people, providing an even better service to our brokers and customers.”