Mortgage bulletin for week commencing Monday 2 September

Posted 3 September 2013 by Keith Osborne

Every week, we bring you the latest news from the UK's residential mortgage market: new mortgage products for homebuyers and investors, the latest rates and up-to-date market analysis.

Confidence is returning among homebuyers, with mortgage borrowing rising by 11% according to figures released by the Bank of England. Lending on home purchases rose to nearly £11bn in July, from less than £10bn in June, with more than 120,000 new mortgages being agreed.

The first-time buyer market was particularly strong in Northern Ireland, up 36% year on year, and in Scotland, up 33% on last year and the highest since 2008. Rises were smaller in Wales and London, though the number of first-time buyer loans was at its highest for six years. Across the UK, house prices rose by an average of 1%.

The news was welcomed by Bob Pannell, chief economist at the Council of Mortgage Lenders, who says: "A monthly increase of over £1bn in house purchase lending reinforces the picture of a housing market that is firmly in recovery mode."

HSBC has launched a new range of 90% loan-to-value (LTV) mortgages for first-time buyers, pledging that its rates will be the lowest on the high street for 90% LTV two- and five-year fixed-rate mortgage deals. Its ‘First for first-time buyers' range is available until 3 November 2013, to HSBC current account customers at a fee of £999. Non HSBC current account customers will pay a fee of £1,499, all with a 10% deposit.

Rates for a two-year fixed rate are 3.59%, rising to 4.39% fixed for five years, and HSBC says it will match rates with booking fees of up to £999 at 90% LTV offered by Barclays, Woolwich, Halifax, Lloyds TSB, Nationwide, NatWest, Royal Bank of Scotland, Santander, but excluding any of their subsidiaries or other trading names. Offer applies to house purchases only, and the maximum loan size is £400,000.

Peter Dockar, HSBC head of mortgages, said: "We have consistently shown our commitment to helping first-time buyers take their first step on the ladder and by promising the best rate on the high street we are taking away the hassle out of searching for a mortgage."

The popularity of five-year fixed-rate mortgages in underlined in figures released by Yorkshire Building Society. The lender has reported an increase of 25% in the number of five-year fixed-rate loans in the past two years, which they are currently offering at 2.79% for mortgages up to 65% LTV, with a £345 fee and £500 cashback; and at 3.89% for mortgages up to 85% LTV, with an £845 fee.

Yorkshire Building Society product manager Brendan Gilligan, says: "We've seen a rise in the popularity of longer-term fixed-rate mortgages with borrowers for some time now, and this shift has escalated during 2013. While the base rate has remained at its historic low many borrowers want to lock in to as competitive a deal as possible to protect themselves against potential rate rises in the future."

Coventry Building Society has launched a new five-year fixed-rate mortgage deal at 4.75% with a loan-to-value (LTV) rate of 90%. This broadens Coventry's range of fixed-rate deals which start at 2.79% fixed for three years on an LTV of 65%, and for two years with rates 3.09% at 80% LTV and 3.35% at 85% LTV. The new deals, launched on 30 August, have no arrangement fee, but are subject to a £199 booking fee and variable early repayment charges (ECR) dependant on the length of the fixed-rate period.

Colin Franklin, sales and marketing director at Coventry Building Society, says: "Given the current low base rate environment, fixed-rate mortgages are a popular option amongst borrowers who are keen to lock into a low rate. With this in mind we have launched a range of highly competitive residential two-, three- and five-year fixed rates, many with no arrangement fees."

Specialist buy-to-let lender Kensington has overhauled its range of mortgage deals, cutting rates by up to 0.5% and offering customers the choice between a reduced completion fee of 2% or a flat fee of £1,999. Kensington's new Buy to Let range includes two-year fixed-term rates ranging from 4.14% at 70% LTV to 5.24% at its maximum 80% LTV. Three-year fixed-term deals are also available.

Charles Morley, head of distribution at Kensington, says: "This month we have seen, for the first time in many years, house prices increasing in every region of the country, which is good news for property investors. And our new Buy to Let range provides them with more good news. Not only have we cut our rates and completion fee, but our Buy to Let mortgages boast no minimum income for experienced landlords and no overall portfolio limit."

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