Lenders cut more mortgage rates

If you have the money for a large deposit, some rates are below 6% Another round of rate cuts has been announced by the Halifax, one of the UK's biggest mortgage lenders. Several of its most popular fixed or tracker-rate deals are being cut by an average of 0.25%, for borrowers who can put down a deposit of at least 25%. The changes apply to deals arranged through mortgage brokers. The new rates highlight the trend of recent weeks in which many lenders have made a succession of small reductions to cut headline rates to 6% or less. "We are simply passing on the recent cut in swap rates [the cost of borrowing between banks]," said a Halifax spokeswoman. Wider range In the past week, other lenders, such as the Newcastle building society, Yorkshire building society and the nationalised Northern Rock, have also reduced the cost of some of their deals. "Most lenders have been cutting selective rates rather than everything," said Ray Boulger of mortgage brokers John Charcol. Other lenders, such as the Bristol & West, Woolwich and the Coventry building society, have also started to widen the range of mortgage deals they offer. For instance, the Coventry, and also the Britannia building society, now offer their best deals to customers who can put down a deposit of at least 50% of a property's value. Mr Boulger said lenders now appear to have become a bit more relaxed about lending than they were earlier in the year, with the cost of loans where customers put down a 10% deposit also becoming cheaper. "More lenders will come in with cheaper fixed rates in the next week or so," he predicted.   BBC August 2008

 

Better outlook for mortgages (July 2008)

The outlook for mortgage rates has improved thanks to a dramatic fall in swap rates over the last month.

Rrecent news that Nationwide is to cut both tracker and fixed rates could be a sign of things to come. For far too long, the status quo of the mortgage market has been increasing rates and misery for most borrowers. The crunch has seen liquidity in the market all but dry up, but news from Nationwide that they are cutting both tracker and fixed rates will come as a huge relief for all borrowers.

Swap rates have dropped by 0.7% from a peak a month ago. As lenders use these rates to determine the price of their fixed-rate mortgages, it should allow them to offer better priced products, as Nationwide has. I would hope to see other lenders follow suit soon bringing some much needed competition to a market that has been depressingly bereft of vying lenders.

The good news does not stop at just fixed rates either. Nationwide has also reduced the price on its tracker mortgages with the most significant movement on its lifetime tracker, coming down an impressive 0.36% to Bank Base Rate plus 0.98% for those with a 25% deposit – albeit with the introduction of a modest £599 arrangement fee.

With the Base Rate likely to fall soon, according to industry experts this deal should be good value for borrowers happy to sacrifice the security of a fixed rate. Yet, with the ability to drop into a fixed rate at any time, this does offer the added security that some people will crave.

Borrowers could save money by using a broker

Borrowers could save up to £1,830 per year if they went to a mortgage broker instead of going direct to a lender, according to the Association of Mortgage Intermediaries (AMI).

The figure reflects the difference between the average cost of a Standard Variable Rate (SVR) mortgage – most frequently offered by lenders – compared to a fixed rate, which is the most popular choice offered by mortgage brokers or intermediaries.

According to AMI, the average annual saving achieved from getting a mortgage through a broker is £962 per annum. With just under 1.36 million intermediary mortgage sales in the 2006/07 financial year, the savings achieved by brokers for their clients amounts to between £1bn and £1.2bn per year.

Chris Cummings, director general of AMI, said: "Intermediaries are able to identify the most suitable product for the consumer at a competitive price. Independent research suggests intermediaries could save consumers £1,830 per year compared with going direct to lenders. In these difficult times it is more important than ever for consumers to access good financial advice.”

A fully flexible mortgage

Lloyds TSB has launched what it claims is the first fully flexible and fee-free full-term discount mortgage.

The 'Easy Living' mortgage allows customers to make overpayments; pay off their mortgage early; switch between repayment and interest-only or change their term, at any time throughout the life of the mortgage and without paying a fee. Indeed, the bank claims customers have peace of mind knowing they can apply to borrow more with the same discount without paying a fee, or switch to another product, whenever they like as there's no lock in period. And with none of the usual product fees, valuation fees, legal fees or closing administration fees applying either.

The loan - now available through all Lloyds TSB branches to customers borrowing between £25,000 and £1.5 million on a maximum LTV of 95% - has a 1% lifetime discount on SVR (Standard Variable Rate) up to 90% LTV, giving a current rate of 5.75%. Or a 0.5% discount for up to 95% LTV, giving a current rate of 6.25%.

The bank's own research has found that a quarter of people with a fixed rate mortgage don't even consider the likely costs of re-mortgaging when deciding on a short term fixed rate mortgage.

The research also reveals that the average length of time between switching mortgage products is just 3.5 years - four times more often than the average person moves house. Anyone switching their mortgage every 3.5 years over a 25 year period could typically spend £4,000 on mortgage fees. Furthermore, 9% of people are unaware that they will have to pay these fees.

29% are also unaware that they will have to pay for the cost of Local Authority, Land Registry, Environmental, Drainage and Bankruptcy searches each time they change their mortgage, which can cost up to £494, according to various sources cited by the bank.

31 August 2006 © Moneyextra.com