Money Insider: Mortgage rates tumbling for those with 40% or more deposit
Saturday 04 August 2012
Interest payments on fixed-rate mortgages are tumbling to record levels for those fortunate enough to have a decent-sized stake to put down, while borrowers with smaller deposits are being ignored.
This week, NatWest became the third major lender in the last fortnight to launch a five-year, fixed mortgage with a rate below 3 per cent, but only if you have a 40 per cent deposit. There is a massive fee of £2,495 payable, but despite this, if you're looking to borrow £100,000-plus it offers good value and the chance to fix your repayments at an unprecedented low level until the summer of 2017.
The NatWest deal follows similar launches from HSBC at 2.99 per cent with a £1,499 fee and Santander at 2.99 per cent and a £1,495 fee, although the latter is only available to existing customers. On Wednesday, Nationwide rushed out an ever lower rate - 2.89 per cent - but only for four years. Again, you'll need a 40 per centr deposit and the arrangement fee is £900.
The reasons we're seeing these record low rates starting to appear are down to a combination of lower swap rates, a fall in Libor and the imminent introduction of the Government's new Funding for Lending Scheme.
This latest, multi-billion initiative from Whitehall is designed to offer low-cost funding to banks and building societies to be passed on to businesses and individual borrowers. It's good to see lenders offering previously unheard of longer-term, fixed-rate mortgages, but we need to see rate cuts for those with a smaller deposit.
The housing and mortgage markets have been in the doldrums for over four years and need a boost from the bottom rung upwards. The NewBuy scheme was introduced by the Government earlier this year, but is restricted to specific, new-build properties.
If there's going to be any upsurge in the number of mortgage transactions, lenders need to apportion some of the new Funding for Lending cash towards the first-time buyer market.
The difference in interest rates between the haves and have-nots as far as equity goes is massive, and although additional risk and capital requirements have to be factored in by lenders, there needs to be a greater focus on the first-time buyer segment of the market.
While a borrower with a 40 per cent stake borrowing £120,000 at 2.95 per cent (assuming an overall, 25-year term) will enjoy repayments of £566 per month, the monthly commitment for those with a smaller stake, and frequently a tighter budget, is far more onerous.
For example, with a 20 per cent deposit, the leading, five-year rate is 3.99 per cent (with £195 fee) from Monmouthshire Building Society. The same £120,000 will cost £633 per month and if your equity is limited to 10 per cent, even the most competitive rate of 4.99 per cent from First Direct will mean paying £701 per month.
Admittedly the cost differential is not quite so stark once you take into account the £2,495 fee on the NatWest mortgage which works out at just over £41 per month over the five-year deal, but the gap still needs to be narrowed.
It appears some lenders are competing for "low-risk" customers with headline rates, while leaving the wider market under-serviced.
Hopefully, as more providers make use of the Funding for Lending scheme we'll see better deals across the full spectrum of mortgages, otherwise there will be little positive impact on the mortgage market and a wasted opportunity to boost the wider economy.
Free mobile broadband initiative from Samba
The mobile broadband market is dominated by a few major players, however, increased competition and advances in technology have seen costs fall sharply in the last few years.
Earlier this month, a new entrant, Samba, launched a service offering free on-the-go broadband for laptops, netbooks and iPads. Sounds too good to be true? Well, you're not going to get something for nothing, there is a trade-off, but one that should go down well with cost-conscious mobile web users. You pay a one-off, £5 fee for a SIM or £25 for a Dongle and SIM, and earn credit for watching video advertisements.
Watching 2.5 minutes of adverts per day earns almost 520mb of data per month, which could save £8-£10 compared with a conventional, mobile broadband contract. Samba uses the mobile-data network from Three and works on all popular browsers with the exception of Internet Explorer.
You choose when and what to watch, and while this service won't suit everyone, with around 7m adults using broadband on-the-go, there's unlikely to be a shortage of new customers.
- 1 This restaurant has misunderstood the concept of 'cheese and biscuits'
- 2 Delhi bus rapist blames dead victim for attack because 'girls are responsible for rape'
- 3 PornHub turns masturbation into energy in bid to save the planet
- 4 Have sex with your iPad thanks to the new sex toy no-one asked for
- 5 The 'sex selfie stick' lets you FaceTime the inside of a vagina
New theory could prove how life began and disprove God
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
This is what it's like to be dead, according to a guy who died for a bit
Ukip would cut billions from Scottish budget to fund English tax cuts
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
End of the licence fee: BBC to back radical overhaul of how it is funded
iJobs Money & Business
£20000 - £21000 per annum + uncapped commission: SThree: As a graduate you are...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
£15000 - £16000 per annum: Recruitment Genius: A Customer Service Advisor is r...
£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...
Day In a Page
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
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