Fewer buy-to-let investors remortgage loans

The number of landlords who decided to remortgage their buy-to-let loans using the services of a financial adviser declined by 9 percent during the final months of 2009, in comparison to figures released for the third fiscal quarter. Paragon Mortgages found that only 30 percent of landlords turned to a financial advisor in order to remortgage their buy-to-let loan, while this figure stood at 39 percent three months earlier. John Heron, Paragon’s managing director, predicted that the number of landlords who decide to remortgage will likely continue to decline, until signs of life return to buy-to-let lending and new, competitive loan products begin to appear. One of the key reasons why so few landlords are considering the option of remortgaging their loan is because the reversion rate is often more beneficial than the relatively few remortgaging options currently available.

While the number of buy-to-let products remains far lower than before the start of the financial crisis in autumn 2008, Paragon reported that more landlords seeking to expand their portfolio of properties are now able to secure loans. The Financial Times published statistics which suggest that 52 percent of landlords who sought to extend their portfolio were successful in receiving a buy-to-let loan. This figure represents a modest increase from the 48 percent rate, which characterized the third quarter of 2009. Additional statistics also suggest that the number of first-time landlords seeking the assistance of financial advisors in obtaining loans increased during the final months of 2009. But the continued lack of buy-to-let products remains a concern for landlords. Observers agree that the rental sector’s future growth prospects rest in large part on the availability of new loans.

Source

Legal & General launches two-year fixed rate products

Legal & General Mortgage Club is to launch three exclusive two-year fixed-rate mortgage products with Accord Mortgages.

Advertising

The new products, with rates starting from 3.49 per cent, are available to a maximum 75 per cent loan-to-value (LTV) and an arrangement fee of £995.
There is a two-year fixed rate product available at 3.49 per cent, a 3.59 per cent remortgage deal with valuation fee refunded on completion and free legal fee, and a 3.59 per cent deal with valuation fees refunded and £250 cashback on completion.
Martyn Smith, head of mortgage products at Legal & General, said: "The mortgage market is hotting up and competition is increasing.
"These are really competitive fixed rate deals and will be very attractive to anyone worried by the recent news on inflation."
Iain Smith, sales director of Accord, said: "We are committed to working with our key lending partners to provide them with great products and when we couple this with first class service from our dedicated case managers we think we have the winning formula."


Source

Skipton's U-turn signals mortgage rates are on the rise

HOMEBUYERS will this weekend be reeling at the clearest signal yet that mortgage costs are set to rise, after the Skipton reneged on its home loan guarantee, pushing monthly repayments up for its borrowers by 40 per cent.
Its 100,000 borrowers were guaranteed that the society's standard variable mortgage rate (SVR), which homebuyers move to when their "special" deals come to an end, would never be higher than three per cent above base rate. Currently, 29,000 customerADVERTISEMENT

s are paying a competitive 3.5 per cent. However, a further 35,000 are shortly due to join them, reverting two-thirds of customers on to an unprofitable deal.

The society says it can no longer operate on this basis, and is invoking an "exceptional circumstance" clause to wriggle out of the promise.

From 1 March, the SVR will rise to 4.95 per cent, pushing up monthly repayments on a £50,000 interest-only loan by £60, from £145.83 to £206.25; on a £100,000 loan by £145.84, from £291.66 to £412.50; and on a £150,000 mortgage by £181.25, from £437.50 to £618.75.

The society claims it is only falling into line with many of its competitors, who have been charging around 5 per cent or even higher for some time. Yorkshire Building Society's SVR, for example, is 4.99 per cent, and its broker subsidiary Accord has recently upped its rate to 5.99 per cent. The Scottish is charging 5.29 per cent.

However, the Council of Mortgage Lenders estimates that the average is 3.74 per cent, with organisations such as Nationwide, Lloyds TSB Scotland and the Cheltenham & Gloucester, which had 2 per cent base rate guarantees, charging 2.5 per cent. Nationwide has upped its SVR to 3.99 per cent for new borrowers, but has no get-out clause for other customers.

The worry for borrowers is that not only must they absorb this hike but many more to come, not least given last week's news of rising inflation.

Darren Cook of Moneyfacts said: "Lenders are going to have to concentrate on repairing their balance sheets and that will not be completed in 12 months. The credit crunch will take years to recover from."

Nevertheless, some borrowers will feel aggrieved and complain to the Financial Ombudsman that they are being treated unfairly. As the "exceptional circumstance" clause was included in their mortgage agreement, their only grounds would be that the phrase was never defined.

Mortgage brokers are advising borrowers to think seriously about remortgaging elsewhere, not least because the Skipton is offering them a 90-day window to exit their loan, during which it will waive all charges including a £120 admin fee. Being able to easily remortgage will depend on the amount of equity you have in your home. Those with less than 15 per cent to put down will struggle to better 4.95 per cent and will have to stay put.

Otherwise, Punter Southall mortgage adviser John Postlethwaite says: "I think there are strong arguments for locking into some of the five- year fixes currently on offer. There are various offers around 5 per cent, and when you think that the long-running average for base rate is 5 per cent, then it's hard to see how these won't offer good value over the coming years."

HSBC will fix your rate at 4.73 per cent for five years with a £999 fee, if you have a 40 per cent deposit. Yorkshire will fix at 4.99 per cent with a 25 per cent deposit and £495 fee.

But if you believe that the base rate will take some time to reach 3 per cent, then you should explore a tracker. If you can put down 35 per cent, you can track at 2.08 per cent over base with a First Direct lifetime offset tracker which has no early redemption charges.

This would cut your monthly repayments on a £50,000 loan to £107.58, saving £98.67 from March; save £198.36 with a £100,000 loan, costing £215.14; and finally, save £296 monthly with a £150,000 loan, costing £322.71 monthly.

However, you will have to pay remortgaging costs, including a survey, although First Direct will give you £400 towards legal bills.

The Woolwich has a similar deal, tracking at 2.13 per cent over base, although it has early redemption penalties during the first two years.

However, you only need a 30 per cent deposit, and the bank will pay your legal and survey remortgaging costs.


Source

Is it time to fix your mortgage?

Homeowners kicking back and enjoying sustained low rates on their mortgage could be jolted into taking action sooner than they thought...

Recent figures have revealed the annual rate of inflation leapt from 1.9% to 2.9% in December, prompting some economists to say that the Bank of England base rate - which has been slumped at 0.5% since March last year - may start to rise again, sooner than anticipated.
Current state of play

Tracker mortgages - that mirror movements in the Bank of England base rate - are by far the most popular deals, according to brokers. This is because, not only are initial rates cheaper than their fixed rate counterparts, but there has been a consensus that the base rate would not climb any time soon.

"People who have even just a little slack in the budget have been taking a calculated risk and opting for a tracker as interest rates looked set to stay low," explained David Hollingworth at mortgage broker L&C Mortgages. "The best tracker deals are priced about 2.5% to 3.0% on a two-year term, while the cheapest fix for the same period will cost from 3.5%."

But if base rate starts to climb, so will the monthly outgoings of those homeowners on tracker deals - and this is causing a marked shift in sentiment.

According to recent research from Santander Mortgages, of the 880,000 homeowners due to remortgage in the next six months, only 13% say they will opt for a tracker deal compared to 33% two months ago. And the number of those likely to opt for a fixed rate has increased from 20% to 23% in the last month alone.

Phil Cliff, director of mortgage marketing at Santander UK, said: "With many commentators predicting a base rate rise this year, homeowners now seem more inclined to play it safe with a fixed rate deal."

Getting into a fix

But what's out there for homeowners who want to fix in their rate? Some lenders have actually been edging down the prices of these deals. Santander recently slashed the rate on some of its two-year fixes by up to 0.4%. The bank now offers a deal priced at 4.99% in return for a 20% deposit and £995 fee.

Yorkshire Building Society was quick on its heels, launching a two-year fixed rate mortgage priced at 3.29% for borrowers with access to a 40% deposit. This represents the lowest two-year fix available direct to consumers, says the mutual - but be warned as the deal also comes with a hefty £1,195 arrangement fee.

And the end of last week saw Legal & General launch a range of two-year fixes in conjunction with Accord Mortgages. It includes a two-year fixed rate priced at 3.49% for those with a 25% deposit and a £995 fee. "Competitive fixed rate deals will be very attractive to anyone worried by the recent news on inflation," said Martyn Smith, the company's head of mortgage products.


Source