Money Insider: Act quickly as mortgage tide may be turning
Saturday 17 March 2012
Is the tide starting to turn in the mortgage market? You've probably already heard the outcry following the decision by Halifax, Clydesdale Bank, Yorkshire Bank and Bank of Ireland to increase the standard variable rate on their mortgages. It's too early to say if this is just the tip of the iceberg with other lenders soon to follow suit, but even though base rate remains at 0.5 per cent, where it has held fast for three years, it does seem that the ultra-low mortgage era that many have been enjoying may be coming to an end.
People have questioned the need for lenders to increase SVR while base rate remains at rock bottom. However, unless you have a base-rate tracker mortgage, it seems that the base rate has much less bearing on the cost of providing mortgage finance these days.
Some lenders have had to rely less on borrowing from the wholesale money markets with regulatory pressures seeing them turn more towards the retail savings market as a source of funds. While this change of focus may have proved successful to the extent that it has been possible to attract new customer savings balances, it seems that it has come at a price.
For example Clydesdale Bank and Yorkshire Bank launched a range of extremely competitive fixed-rate savings bonds in early November last year which stormed to the top of the best-buy charts across the board, from terms of one year at 3.6 per cent through to five years at 4.7 per cent. Having to pay a premium price to attract new money will have had an impact on the banks' margins and no doubt was a contributory factor in the decision to increase its SVR from May.
It's not just SVRs where we've seen mortgage rates increasing. In the past week alone; there have been price rises on a range of fixed and variable rate products for new customers from Chelsea Building Society, Woolwich, Leeds Building Society, Santander and First Direct. We're not talking about huge rate increases at this stage, with most being around 0.1 per cent or 0.2 per cent.
There are still some excellent deals to be had with a three-year fixed rate of 3.79 per cent and £495 fee available up to 85 per cent loan to value from Yorkshire Building Society or just 2.99 per cent if you've got a 25 per cent deposit.
For a five-year fixed rate you can get 4.19 per cent and no fee with the Co-operative Bank up to 85 per cent LTV or 3.49 per cent with £495 fee from Yorkshire Building Society at 75 per cent LTV.
It's certainly not all bad news and we're still seeing the odd new best buy hitting the shelves as we did this week with a new base rate tracker from Norwich and Peterborough Building Society. The new customer rate is 1.99 per cent above base rate for two years (current pay rate 2.49 per cent) with a £795 product fee and is available up to 75 per cent LTV.
If you are currently sitting on your lender's SVR or thinking about signing up for a new fixed or discounted deal, it may be worth checking out the deals available now and making your decision sooner rather than later.
NewBuy may bring old problems
Nationwide, NatWest and Woolwich this week launched 95 per cent LTV mortgage products as part of the government's NewBuy initiative aimed at helping first-time buyers.
The scheme plans to help up to 100,000 borrowers to buy a new-build property with just a 5 per cent deposit, with the government and housebuilders putting up security for the loan.
The idea is to enable more buyers to get on the housing ladder, support the flow of new housing development and boost the wider economy. there are potential pitfalls, the main one being that some economists are predicting lower house prices over the forthcoming 12 months.
New-build properties have a reputation for being overpriced and this with a fall in property prices could see buyers faced with negative equity and saddled with a mortgage on a property they are unable to sell.
This move looks more like an attempt to kick-start the construction industry than purely concern for first-time buyers, otherwise the government would have surely looked at refurbishing the thousands of homes standing empty rather than building more.
Andrew Hagger – Moneynet.co.uk
Malaysia Airlines MH17 crash: Vladimir Putin is given 'one last chance' to end hostilities in Ukraine
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
The truth about conspiracy theories is that some require considering
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: Massive rise in sale of British arms to Russia
Malaysia Airlines MH17 crash: victims’ bodies bundled in black bags and loaded onto trains
iJobs Money & Business
£350 - £400 per day: Orgtel: PMO Analyst - Banking - London - £350 -£400 per d...
£300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...
£35000 - £40000 Per Annum plus 23 days holiday and pension scheme: Clearwater ...
£475 - £525 per day: Orgtel: Test Lead, London, Investment Banking, Technical ...
Day In a Page
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar