Mortgage bulletin for week commencing Monday 16 September

The fear of a house price ‘bubble' is causing a rift between Ministers over the government's Help to Buy scheme. Business Secretary Vince Cable wants a re-think of the scheme which he believes threatens to create price rises that will disadvantage homebuyers in the longer term and fuel the house price bubble. On the other hand, Chancellor George Osborne, a champion of the Help to Buy scheme, believes it is helping first-time buyers get onto the housing ladder and is seeing more new homes developments being built.

Today (Monday 16 September), Santander UK is re-launching its mortgage range, which includes Help to Buy, a new range of no-booking-fee products including; two- year fixed-rate at 3.24%, five-year fixed-rate at 3.44%; and a two-year tracker at 3.24%.

The new range includes mortgages with no early repayment charge (ERC), offering customers the freedom to pay off their mortgage early or have the freedom to switch to another mortgage product without incurring an additional fee. ERC-free products, available from Santander on mortgages up to 75% loan-to-value (LTV), are; Lifetime Tracker at 2.49% and £495 fee, two-year fixed-rate at 2.84% and £995 fee, three-year fixed-rate at 3.29% and £995 fee, and their Flexi Offset at 3.59% and £495 fee.

Phil Cliff, director of Santander Mortgages, says: "Our ERC-free range offers customers freedom not normally associated with mortgage products. Our two- and three-year fixed rates provide customers with the stability of knowing what their monthly payment will be but with the added freedom of being able to overpay and flexibility to switch to another mortgage dependent on their needs or change in circumstance, with no additional fees attached."

Meanwhile, the Norwich & Peterborough Building Society is the latest to offer fixed-term mortgages at under 2%. The society's new two-year fixed-rate best-buy rate of 1.99% is available on loans up to 65% LTV, with a product fee of £295. Richard Barker, product manager at Norwich & Peterborough, says: "In addition to the best-buy rate, the fee is low and the mortgage comes with added incentives such as a free valuation, and free legal fees for borrowers remortgaging or £200 cash back for homebuyers, to keep down upfront costs for borrowers.

For those with a 10% deposit, Chelsea Building Society has launched a new two-year fixed-rate mortgage at a rate of 3.54% at 90% LTV and 2.94% at 85% LTV, continuing a long-term fall in the cost of its fixed-rate mortgages. Chelsea's other fixed-rate mortgages include a five-year, 85% LTV deal at 3.84%. Each product carries a fee of £1,545.

Chelsea Building Society product manager Sadie Costello says: "The short-term fixed-rate mortgage at a market-leading rate gives borrowers the security of knowing what their monthly repayments will be for the next two years to help them better plan their finances for the future."

The Post Office has reduced the cost of new mortgages, with its two-year fixed-rate dropping from 1.7% to 1.63% at 60% LTV with a £1,995 fee. Other products include a three-year fixed-rate reduced from 2.99% to 2.75% at 75% LTV, and a five-year fixed-rate mortgage reduced from 4.39% to 4.29% at 85% LTV.

John Willcock, head of Post Office Mortgages, remarks: "We are committed to helping our customers move up the ladder which is why many of our rates have been reduced, and some deals are free of arrangement fees. The diversity of our range means we have deals for everyone from first-time buyers through to those looking to move home or remortgage."

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