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Fixed mortgage rates continue to climb above 6% as choice of products improves

Average fixed mortgage rates are continuing to climb, pushing up costs for borrowers.

Earlier this week, the average two-year fixed-rate deal topped 6% for the first time in 14 years and the average five-year fixed rate hit 6% for the first time in 12 years, according to data from

Moneyfacts said on Friday that, across all deposit sizes, the average two-year fixed-rate mortgage on the market is 6.16%, having edged up from 6.11% on Thursday and 6.07% on Wednesday.

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The average five-year fixed-rate mortgage is now 6.07%, having been 6.02% on Thursday and 5.97% on Wednesday.

Many deals disappeared from the market amid the fallout from the recent mini-budget. Bank of England base rate hikes in recent months, amid soaring inflation, have also had an impact.

Moneyfacts previously calculated that, based on Thursday’s rates, someone with a £200,000 mortgage, paying it back over 25 years could end up paying around £5,000 per year more for a two-year fixed-rate deal than they would have done last December.

Across the market, the choice of mortgage products is gradually increasing after contracting sharply last week.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Moneyfacts counted 2,533 products on Friday, up from 2,430 on Thursday.

The total is still significantly down from 3,961 on the day of the mini-budget.

Tom Bill, head of UK residential research at Knight Frank, said: “We may see mortgage rates fall to some extent if financial markets become more reassured by the Government’s economic plan, but the events of the last fortnight have been a reminder that the era of ultra-low rates is coming to an end.”

Source: The Impartial Reporter

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Coronavirus: what it means for your mortgage or your rent

We’re officially in lockdown and many of us are seeing the coronavirus crisis take its toll on our income. So, what happens about paying your mortgage? Here we answer all the big questions.

Can I stop paying my mortgage?

The government has announced that homeowners should be offered three-month payment holidays if they are struggling to make their mortgage repayments as a result of the coronavirus. But this doesn’t mean you can simply cancel your direct debit.

“Homeowners are unknowingly putting themselves into arrears by cancelling their mortgage payments without speaking to lenders first,” says Will Kirkman on This can have an impact on your credit score.

If you need to take a mortgage holiday, contact your lender before you stop repayments, but don’t rush to the phone. “Amid claims that borrowers are waiting up to ten hours on the phone to speak to someone, many lenders are now asking borrowers to submit applications online to free up their helplines, or to only call if they are vulnerable or facing immediate difficulty,” says Kirkman.

What happens to my debt if I take a mortgage holiday?

Any repayments you don’t make now will need to be made at a later date. “It is likely the lender will spread outstanding payments out over the remaining term of your mortgage, so borrowers will see an increase in their monthly mortgage payments,” says Patrick Collinson in The Guardian.

That means, for example, that someone with a £200,000 25-year mortgage at 2.6% interest who takes a three-month payment holiday would see their repayments increase from £907 a month to £920 for the rest of the term.

Alternatively, your lender may let you extend the remaining term of your mortgage, so your monthly repayments stay the same. You may also be able to make an overpayment later on to clear what you haven’t paid now.

What are the alternatives to a payment holiday?

Simply stopping your mortgage repayments isn’t the only option if you are struggling during the coronavirus outbreak. You could ask your lender about options to reduce your bills for a few months. This could be switching to interest-only payments, deferring your interest payments or extending your mortgage term.

Can my home be repossessed?

If you do fall behind with your repayments, you cannot lose your home. The Financial Conduct Authority (FCA), the City regulator, has instructed banks and building societies not to repossess homes during the crisis. Nor can they charge fees for payment holidays granted owing to the crisis, says Collinson.

Can I stop paying my rent?

Yes. The government has acted to protect tenants as well as homeowners. “Emergency legislation will stop social and private tenants being forced out of their homes for at least three months,” says Martina Lees in The Times. But the situation “does not mean you can live for free”, says Lees. “Arrears will mount up – you’ll have to repay [the money] eventually.”

The housing minister has said the government expects landlords and tenants to work together to come up with an affordable repayment plan once the crisis is over.

I’m a landlord. Can I stop my mortgage repayments?

The government advice on payment holidays includes buy-to-let landlords whose tenants can’t pay their rent due to coronavirus. If you need to stop making repayments on your buy-to-let mortgage you should speak to your lender.

If you have insurance, it should cover rent arrears. Alan Boswell, one of the biggest landlord insurers, told The Times that existing rent guarantee policies will cover missed rental payments caused by the economic dislocation we are experiencing.

Has my lender cut my interest rate?

Late last week the Bank of England cut the base rate to an unprecedented 0.1%. Unfortunately, many banks are failing to pass this cut on to customers. Research by found that just 13 banks and building societies out of 87 had trimmed the rates they charge borrowers.

Under normal circumstances, “a drop in the base rate will see a corresponding drop in a lender’s ‘standard variable rate’”, says Kirkman. But the majority of lenders have kept their standard variable rates at the same level as before the central bank’s original cut on 11 March.

If you have a tracker mortgage the rate drop should mean your repayments fall slightly. But anyone thinking about switching to a tracker could struggle. Nationwide no longer offers any tracker mortgages at all.

By Ruth Jackson-Kirby

Source: Money Week

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Leeds cuts rate for first-time buyers

Advisers have welcomed changes made by Leeds Building Society to its high loan-to-value product in a bid to help first-time buyers.

The society made a 0.4 per cent rate reduction on its 95 per cent loan-to-value mortgage.

The no-fee, 2.84 per cent two-year fixed rate mortgage comes with a free standard valuation, and a 1.25 per cent discount at the end of the fixed-rate period, for a further three years.

Matt Bartle, director of products at Leeds Building Society, said: “Our 95 per cent LTV mortgage has been designed with first-time buyers in mind, and this latest rate reduction will be very appealing to those looking to get onto the property ladder this year.

“With no completion fee, and free valuation as standard, we’re helping to keep costs down.

“We understand the importance of affordable housing, which is why we’re always looking for ways to help buyers with smaller deposits, alongside Help to Buy and Shared Ownership mortgages, which complement our range of deals at higher LTVs.”

Advisers called the building society’s mortgage rate changes “one to watch” and welcomed the move, although expressed caution in the uncertain economic environment.

Adam Hosker, founder of Bespoke Finance, said: “Leeds Building Society is always one to watch. A high street lender that is innovating on a solid product foundation. With further movements expected, the team is always eager to read Leeds’ updates.”

Martin Stewart, founder of London Money, commented: “It is a good rate and will get Leeds very close to the top of the best buy tables. Lenders are always tweaking their rates and sometimes they are up and other times down.

“We are still in a very benign interest rate environment so changes either way are often minuscule. It’s one thing having cheap money though and another thing altogether being able to borrow it.

“I have always been wary of high LTV products and even more so in the current environment where the Boris bounce could easily become a dead cat one overnight.”

Sebastian Reimann, mortgage, protection and equity release adviser for Libra Financial, agreed. He said: “This is great news although I see little demand for high LTV products. The sweet spot is probably at around 85 per cent LTV now, although I appreciate that’s not an option for everyone.”

By Simoney Kyriakou

Source: FT Adviser

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UK Finance: Mortgage market is still strong

Despite a backdrop of uncertainty, the mortgage market is still strong and competitive, UK finance chief executive Stephen Jones said at the regulator’s annual mortgage dinner.

He pointed to figures showing that gross mortgage lending will reach around £265bn in 2019, almost the same as in 2018.

Jones (pictured) said: “Our industry wants to focus on competitiveness, innovation, talent, tax, regulatory proportionality and coordination, and regulation fit for the future, all themes that underpin UK Finance’s work for our members.

“At UK Finance we seek to help our members, large and small, navigate change.

“A growing number of first-time buyers are entering the housing market, while existing homeowners are taking advantage of competitive products available in a low interest rate environment.

“The potential end of Help to Buy in 2023 presents a major challenge to growth in new housing delivery.

“We will continue to engage with governments across the UK on initiatives to support low cost home ownership and increase the new supply of affordable and social housing, and to ensure that housing association lending and investment continues to be attractive.”

He warned about the challenges that remain, for example 5-year fixed mortgages now account for nearly half of all fixed rate sales, a market where 2-year deals once dominated.

Jones added: “Longer terms will inevitably mean fewer remortgages in the coming years, which the industry must deal with.

“Our figures show that, despite challenging conditions in the buy-to-let market, lenders are continuing to support and work with landlords, to ensure sustainable and affordable finance is available for the private rented sector.”

By Michael Lloyd

Source: Mortgage Introducer

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Could a no deal Brexit affect your mortgage? This is what the experts say

Is the reaction of the markets to a threatened no deal Brexit – or even an orderly Brexit – worrying you? How might it affect your finances, your mortgage repayments or even your chance of securing a new mortgage from your lender?

Some good news: the Bank of England has just announced that it will be holding the interest rates at 0.75 per cent for now. But if you are home owner, or only just looking into getting a mortgage as a first-time buyer, what does this announcement mean for you?

Martijn Van Der Heijden, Chief Strategy Officer at online mortgage brokerage Habito, comments on the implications of the decision for both first-time buyers and those already with a mortgage, ‘Interest rates remain relatively low which will be welcome news for those looking to get a good deal on their mortgage. This “wait and see” approach from the MPC (Monetary Policy Committee) is something we also see reflected in our own data with a surge in buyers choosing fixed deals for five years or more as they try to “Brexit-proof” their mortgage and lock in the same rate until 2024 and beyond.

‘We have also seen positive figures recently on the take up of buy-to-let and first time buyer mortgages, something which has led to lenders offering more competitive products to support people moving.’

A no deal Brexit could mean a sharp rise in inflation and the fall of the pound, which would mean that the Bank would need to reconsider interest rates, either raising or lowering them depending on what’s needed to support the economy.

So, it looks like now could be the time to consider securing the best fixed-rate mortgage if you are buying your first home or remortgaging. Doing this now could make particularly good sense given the stark warning the Bank of England has issued about the potentially detrimental effects of Brexit on the UK economy. And it will give you certainty. No bad thing in these uncertain times.


Source: Real Homes

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Mortgage lending rose by 7.6% in July

Gross mortgage lending rose by 7.6% to £24.6bn in July 2018 year-on-year ahead of August’s base rate rise, UK Finance figures show.

Mortgage approvals by the main high street banks fell by 0.8% year-on-year, though remortgage approvals rose by 2.8%.

Peter Tyler, director at UK Finance, said: “July saw steady growth in gross mortgage lending, driven largely by remortgaging as homeowners locked into attractive deals in anticipation of the recent base rate rise.”

Jeff Knight (pictured), marketing director for Foundation Home Loans, agreed that the rate rise was behind the increase.

He said: “The anticipation of a rate rise certainly would have encouraged a spike in activity, and while the purchase market is still less inflated – particularly for first-time buyers – it’s remortaging activity that is helping to maintain momentum and overall growth.

“This is certainly the case in buy-to-let as landlords choose to maintain the size of their portfolios, waiting for a more opportune time to build on it.”

Some expect the remortgage market to continue its strong activity in the coming months.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Lenders remain keen to lend and offer competitive products, particularly in the remortgage space.

“With other incentives such as cash back increasingly being offered to those remortgaging, combined with fears of further potential rate rises, we expect this area of the market to remain particularly strong in coming months.”

However some disagree.

Richard Pike, sales and marketing director at Phoebus Software, said: “The market has been propped up recently by the continuous buoyancy in remortgaging but, with few people now left on variable or tracker rates, this too is likely to slow.

“As we approach the deadline for Brexit even the threat of a no deal is likely to weigh heavy across our economy, how that will manifest itself in the housing market is difficult to predict, but it could bring along a period of stagnancy while people wait to see what happens.”

Source: Mortgage Introducer

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Second charge volumes up 8% in April – but they ‘should be higher’

There were 1,771 new second charge mortgages issued in April 2018, an increase of 8% year-on-year – but London Money director Scott Thorpe reckons “they are a long way off where they should be”.

The Finance and Leasing Association found that in the 12 months leading up to April, there was a rise of 9% in new agreements from that last year.

The value of new business was £83m in April, up by 2% year-on-year,though lending reached was £1.025bn in the 12 months leading up to April, a rise of 11% from that last year.

But Thorpe said: “I actually think these figures should be a lot higher The market should have expanded greater and faster since MCD than it has.

“The reason why that hasn’t happened is down to the same old barriers – high fees and brokers being able to access to lenders directly. Both these issues are stopping the market growing.

“What we are seeing is a gradual upturn in second charge lending. The numbers are a long way away from where they should be but all forward progress is good progress.”

He added: “I really think the industry should be concentrating on making sure the consumer is given the best advice regardless of the secured options.

“We need to see the end of advisers and packagers being able to opt out offering full advice. Do that, curb fees and open up distribution and we will be talking about double digit growth for the sector for many years to come.”

Fiona Hoyle, head of consumer and mortgage finance at the Finance & Leasing Association (FLA), said: “The second charge mortgage market reported new business growth of 2% by value and 8% by volume in April, compared with the same period in 2017.

“In the three months to April 2018, the number of new second charge mortgages was 5,339, unchanged on the same period in 2017. This versatile product continues to prove popular with customers.”

Source: Mortgage Introducer

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Second charge lending falls

Second charge mortgage performed poorly in March, falling by 10% year-on-year with £86m of lending.

There was £1,023m of second charge lending in the 12 months leading up to March, an increase of 15% from that of the previous year.

Figures from the Finance & Leasing Association (FLA) also found there was £244m second charge mortgages in the three months leading up to March, with no percentage change year-on-year.

Tim Wheeldon, chief operating officer at Fluent for Advisers, said: “I don’t think some of the headlines I have read so far, highlighting the monthly fall in volumes, is the real story here.

“One month’s figures are not representative of a trend and while the month-on-month comparison shows a drop, the first quarter shows that the sector is ahead of last year’s figures.

“Our own experience at Fluent is that over the same period, we are registering record months with increasing volumes from our intermediary business.”

Source: Mortgage Introducer

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Portfolio landlords find it harder to secure mortgage finance post PRA rules

Seven out of ten portfolio landlords have found it more difficult to secure a mortgage since changes were introduced by the Prudential Regulatory Authority (PRA).

According to figures from Foundation Home Loans, based on research by BDRC Continental, 70% of UK landlords with four or more buy-to-let mortgages said they had found obtaining finance a challenge since the regulation came into effect on 30 September 2017. Half (51%) owning between one and three buy-to-let mortgages felt the same.

All the figures are based on feedback from 817 landlords that have applied for a mortgage or remortgage since the changes came into effect.

The PRA regulation means lenders must introduce changes to the way in which buy-to-let mortgage applications are underwritten for portfolio landlords. Borrowers with four or more mortgaged properties will be classified as portfolio landlords and subject to the new standards, such as a requirement to submit a forward-looking business plan.

As a result, almost half (48%) of landlords aware of the PRA changes think they will slow down the process of securing a mortgage.

Two thirds of those who own 11 or more properties believe the range of mortgage products available to them will be reduced. Furthermore, 28% believe the changes will make it more likely for their mortgage application to be rejected.

Jeff Knight, marketing director at Foundation Home Loans, said“Whether these figures are to do with a natural period of adjustment or become the new norm remains to be seen. Nonetheless, in order to make this as smooth a transition as possible, brokers and lenders must work together to ensure things do not become unnecessarily challenging.

“Our research last year proved that, at the end of the day, brokers and landlords are after pragmatic and straight forward processes. Considering the significant take-up from this group, we devised a proposition to make application as simple as possible – for example, with no need for evidence of a business plan.”

Source: Mortgage Finance Gazette

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First time landlords’ appetite for property proves buy-to-let remains popular

Seven percent of a mortgage lender’s new business in 2017 came from first time landlords – despite regulatory and tax changes that may have acted as a deterrent.

The stream of new landlords peaked in November when 11 per cent of the lender’s applications came from first timers, says buy-to-let lender Accord Mortgages.

The figures are proof that buy-to-let remains a popular option for people who are looking to safeguard their financial future, despite recent moves from government to suppress the market.

And 57 per cent of Accord’s buy-to-let applications received last year were from landlords affected by new changes, with one third (32 per cent) of that cohort, coming from those with four or more properties.

Another 18 per cent were from landlords classed as consumers – that is, single property landlords where they or their relatives have previously lived.

Chris Maggs, commercial manager at Accord, said: “2017 was a year of remortgaging for landlords who reaped the benefit of some exceptional mortgage rates, and 2018 is likely to be no different.

“Last year Accord, like many other lenders, adapted its mortgage offerings to meet the changing needs of the market.

“Equally, as new regulation was implemented landlords have begun to adapt to ensure their business withstands the changes.

“This doesn’t negate the fact that things are still tough for landlords, and hopefully 2018 will give them some breathing space to take stock of the changes.

“However, landlords have demonstrated resilience when presented with challenges in the past, and I’m sure that will continue into 2018.”

Source: Simple Landlords Insurance