Andrew Hagger: Brokers still play key role for mortgage borrowers

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The Independent Online

There was some good news this week for mortgage customers with only a small margin of equity or a small deposit at their disposal as Barclays, through its mortgage arm Woolwich, launched some new 90 per cent LTV mortgages.

Being able to afford monthly mortgage repayments has not been an issue for potential homebuyers with interest rates at such competitive levels, but having to find a deposit of 15 or 20 per cent has proved nigh on impossible for many consumers.

It's good to see one of the UK's largest lenders supporting the first-time buyer market with these new products which are available for home movers or remortgages,but understandably not for debt consolidation.

The new Woolwich 3 year fixed deal is extremely competitive at 4.99% battling it out with Chelsea BS at 4.89% and £195 fee for the best buy product over this term. The 5 year fixed rate at 5.49% with £499 fee is not such a stand out deal with high street rivals HSBC 90% offering 4.89% with no fee. A 0.60% difference in interest rate may not sound too much in isolation, however on a £120,000 mortgage the Woolwich deal works out at £736.19 per month against HSBC at £693.84 so over the course of the five-year fix the HSBC deal is £3,040 cheaper (includingthe fee).

If you're looking for a 95% LTV mortgage these are still few and far between and you'll certainly pay a premium on the rate – for example Skipton BS is currently a 2 year fix at 5.99% with a £195 fee.

It's excellent news to see one of the big players of the mortgage market once again competing seriously for first-time buyer business. Unfortunately with the economy in a fragile state, the combination of job insecurity and ultra-cautious credit scoring may result in a limited take-up of these low-deposit deals.

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