Interest Rate Reductions

ID 10067230

There have been a number of new mortgage products and reductions in interest rates this week.
First to announce cuts was the Post Office with new deals available on its buy-to-let, fixed rate and tracker mortgage products. First time buyers will be attracted by the 90% Loan to Value (LTV) products and can take advantage of the lower rates that will be effective from today.

Buy to let products have been reduced by up to 0.64% on the three and five year fixed rate options and the lifetime tracker has also been reduced if the LTV is less than 75%.

The Post Office has also launched a new 65% LTV two year fixed rate mortgage at 2.85% or 3.94% for the 85% LTV product. The Post Office also claims that customers benefit from a good rate when they come to the end of the deal and revert to the standard interest rate.

The new HSBC low fee lifetime tracker that had been introduced as a two week special offer has been extended for an unspecified time but a spokesperson said it will definitely be withdrawn by September 5th. This tracker is offered at 1.69% above the bank of England Base Rate with low arrangement costs and no early redemption fees, it has been seen by many to be a very good option. However the product is still only available to customers who are able to provide a 40% deposit making it inaccessible to many borrowers.

And HSBC is proud to claim that it approves four out of five mortgage applications – this is in contrast to some stories in the press last week that the major lenders are turning away more customers than they accept.

Head of mortgages at HSBC , Martijn van der Heijden, said “We have extended the offer to enable as many customers as possible to get it. The low costs together with no tie-ins has proved a real winner, borrowers can take advantage of the low rate now and once base rates start to rise, switch into a fixed rate with no exit or redemption charges.”
The Nationwide has also reduced its rates by an average of 0.15% with some products benefitting from a cut of 0.20%. The bank believes that its two year fixed rate products are particularly suitable for customers who would like to re-mortgage and have at least 30% deposit available from the equity in their current home – the new rate will be 3.39%.
Existing customers can also benefit from a £300 cashback deal if they swap from their current product to a new Nationwide mortgage deal and first time buyers may be eligible for a discount of up to £500 on the arrangement and product fees.

The bank also offers a three year fixed rate mortgage at 4.09% for up to 70% LTV and a two year fixed rate at 4.29% for up to 75% LTV.

For potential new buyers, including buy to let investors who have been turned down by the high street banks Kensington are willing to consider applications without using a credit score system. Whilst they do make use of credit reference agencies they are willing to consider applications from customers who may have minor defaults on their credit payments or CCJ’s that have been settled within the last two years.

The maximum loan size has been increased to £500,000 and the LTV is now 75%. Obviously these products incur higher interest rates –
A three year fixed rate with 75% LTV is currently 6.69%
A three year fixed rate with 70% LTV is currently 6.29%

Head of sales and product development at Kensington, Charles Morley, said “These enhancements to the criteria on our residential products will help even more of those customers who have been left out in the cold by mainstream lenders, find a mortgage to suit their circumstances”

Some mortgage lenders seem to be vying for extra custom by introducing new products and taking a less strict attitude toward potential property buyers. It may be that the summer period has encouraged providers to re-assess their criteria as applications dwindle but it is also a sign that the market is becoming more competitive after a very slow period of mortgage lending.