The past week has seen some new discount mortgage products launched that have reduced interest rates for both new and existing homeowners, this is despite news that the Monetary Policy Committee (MPC) this week discussed raising the Bank of England base rate.
There is some concern amongst many lenders that the record low interest rates will rise in the coming months so these new products offer an opportunity for borrowers to fix their monthly payments and be secure in the knowledge that they will not be facing rising costs over the next two, three or five years.
Northern Rock has reduced both its everyday and buy to let interest rates by up to 0.5%. A five year fixed rate discount mortgage with a 30% deposit can be agreed at an interest rate of 4.39%. Product fees are low at £995 and are available for both new purchases and re-mortgages. Alternatively a two year fixed rate product can start at 3.15% and the product fee remains the same at £995.
Buy to let investors who have their mortgage agreement with Northern Rock have also seen reductions in the variable interest rate of up to 0.5% depending upon the product they have chosen and the deposit that they were able to provide. A two year fixed rate product when the customer is able to provide a minimum 30% deposit can be arranged from 5.69% and the product fee will be 2.0% of the loan amount.
The online property listing site Rightmove.co.uk has reported an increase in the number of properties to sell- in some areas the increase has been over 45% – compared to the same period last year. Up to 30,000 new listings appeared every week during June giving rise to speculation amongst some commentators that house prices will fall over the coming months as too many properties come on to the market. It is generally agreed that initial asking prices are too high and that mortgage lenders will not cover the inflated valuations.
If you have found the home of your dreams and have a large deposit then you will have a number of lenders to choose from. If however you are buying your first home with limited up front funds and deposit available then you should consider negotiating the asking price and remind sellers that house prices are inflated when taking into account the number of mortgages that are being approved.
First time buyers are still struggling to find a discount mortgage product that will cover more than 85% of the property value. Some mortgages are being promoted that will cover up to 95% but customers should be aware that the interest they will be charged is going to be much higher that the average mortgage product and their credit history will be taken into account.
Current best rates for first time buyers include the popular Lloyds TSB discounted variable rate at 0.49% followed by just 2.5%. Monthly payments on a £100,000 mortgage when a large deposit has been provided can be as low as £355. Both the Royal Bank of Scotland and Nat West Bank are offering a two year introductory variable rate discount mortgage at 2.19% followed by 4.25% for the remainder of the loan term.
Customers who would like to re-mortgage and have substantial equity available have a wide choice of lenders to choose from – HSBC, C&G and Lloyds TSB are all offering a two year discounted variable rate mortgage from 1.99%. The Co-operative bank has a 4 year variable rate available at 2.49% rising to 4.24% at the end of the deal period. Other lenders are working hard to reduce up front product or valuation fees, reducing the initial house purchase cost.
It seems that the market is constantly changing as lenders take note of both worldwide and UK economic conditions, announcements from respected estate agents and mortgage lenders are followed closely and can mean that special offers are withdrawn or introduced with short notice. Your mortgage advisor will be able to give you the most up to date information and be aware of the latest discount mortgage offers available.