Banks are re­leas­ing their stran­gle­hold on mort­gages at last

Yorkshire Post - Property - - PROPERTY - Franz Muelthaler

QUES­TION: Should I be­lieve the me­dia re­ports that the mort­gage and hous­ing mar­ket has shifted into more ac­ces­si­ble realms for those of us ea­ger to buy? An­swer: If you read the pa­pers it would ap­pear we are see­ing signs of a re­turn­ing con­fi­dence in the hous­ing mar­ket. The Bank of Eng­land re­ported that the num­ber of mort­gages ap­proved for house pur­chases in the UK in­creased to a three-month high in April.

The mort­gage mar­ket has once again be­come com­pet­i­tive, rates are at an all-time low, and the mar­ket is as set­tled as it’s ever go­ing to be. Movers feel more se­cure in their de­ci­sion, and mort­gages are more ac­ces­si­ble if you con­sider the re­cently launched Govern­ment Help to Buy schemes.

Gen­er­ally bor­row­ers are see­ing a tempt­ing list of new mort­gage prod­ucts to choose from. The low­est rate by far is a two-year tracker mort­gage of­fered by Chelsea Build­ing So­ci­ety at 1.69 per cent which could po­ten­tially drop to 1.49 per cent. Mean­while, last week the Post Of­fice an­nounced a two-year fixed loan at 1.7 per cent which could drop to 1.5 per cent. Tesco Bank have also re­cently launched three new fixed rate mort­gage prod­ucts rang­ing from a two-year mort­gage deal at 1.74 per cent, a three-year prod­uct at 2.29 per cent, and a five year fix-rate at 2.49 per.

How­ever bor­row­ers must re­mem­ber to look at the small print and pro­ceed with cau­tion. Non-re­fund­able ar­range­ment fees and high de­posits can quickly make a tempt­ing deal ex­pen­sive.

There are prod­ucts with lower fees. For ex­am­ple, Nor­wich and Peter­bor­ough has a two-year fixed rate prod­uct at 2.24 per cent with a fee of just £295, a free val­u­a­tion, and free le­gal work for re-mort­gages.

Tesco has also cut rates on its tracker mort­gages. The rate on a two-year tracker up to 80 per cent LTV will be 2.25 per cent over the Bank of Eng­land base rate, with an £800 prod­uct fee, or there is the op­tion of 2.75 per cent on a prod­uct with a £195 fee. A non-re­fund­able book­ing fee of £195 will be charged on both prod­ucts with an added in­cen­tive for Club­card hold­ers who are be­ing of­fered one point for ev­ery £4 on their monthly mort­gage re­pay­ments.

Na­tion­wide Build­ing So­ci­ety re­cently joined mort­gage providers Wool­wich, Hal­i­fax and NatWest in of­fer­ing Help to Buy mort­gages. The build­ing so­ci­ety is of­fer­ing three prod­ucts: a twoyear fixed-rate for up to seven per cent LTV at 2.54 per cent with a £900 ar­range­ment fee – first­time buy­ers pay a re­duced fee of £400. A fee-less two-year prod­uct with an in­ter­est rate of 2.94pc, and a three-year prod­uct is also avail­able.

Bar­clays are cur­rently slash­ing rates and have a num­ber of of­fers. A 2.09 per cent two-year fixed rate is down from 2.18 per cent, a 70 per cent LTV deal has been cut from 2.33 per cent to 2.23 per cent, while prod­ucts at 75 per cent and 80 per cent have been cut from 2.49 per cent to 2.43 per cent and 3.15 per cent to 3.13 per cent, re­spec­tively. Th­ese prod­ucts all have £999 fees or £499 for loy­alty bor­row­ers.

Be­fore get­ting car­ried away con­sider the re­sources you have avail­able. We can’t ig­nore things are still tough out there and that day-to-day fi­nan­cial pres­sures can still have a bear­ing. If you must have that new car then you are sim­ply low­er­ing your af­ford­abil­ity for a mort­gage with ev­ery pur­chase you make.

So with all this con­sid­ered, you could say the mar­ket is pos­i­tive, good prod­ucts are there, lenders are sign­ing up to the Help to Buy scheme, and the in­cen­tives are com­pet­i­tive, but it’s how that re­lates to the re­al­ity of house­hold bud­gets. As al­ways it is vi­tal to take ad­vice from the pro­fes­sion­als and speak to an in­de­pen­dent mort­gage ad­viser.

Franz Muehlthaler is a mort­gage ad­viser who works for Hol­royd Miller Properties, Wake­field and Dews­bury, in as­so­ci­a­tion with Reach 4 Mort­gage So­lu­tions.

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