"We are definitely seeing a pick up of purchase cases, mostly first-time buyers who see current property prices and falling mortgage rates as a good opportunity to buy."
- Justin Moy, managing director at EHF Mortgages
High street lenders are reacting to both competition and cheaper wholesale money costs, with major lenders announcing further mortgage rate cuts.
This morning, both HSBC and TSB announced cuts, following on from Virgin Money yesterday.
HSBC has launched new purchase exlusives at 65% and 75% LTV with two-year fixes starting at 4.97% and five-year fixes from 4.53%. Products come with a £1,295 fee and £500 cashback. Purchase exclusive fee-saver products with £300 cashback have also launched from 5.33% fixed for two years and 4.68% fixed for five years.
In HSBC's existing range, purchase exclusives at 85% and 90% LTV have reduced by up to 12bps and now start from 4.81%, while two and three-year core residential rates have reduced by up to 0.30%.
Purchase exclusive £1m+ fixed rates have reduced by up to 51bps to start from 4.95% and buy-to-let rates have reduced by up to 0.20%.
TSB has announced further reductions to residential fixed rate products for both home movers and remortgage customers. Its affordable housing range, which includes shared ownership and shared equity products, has seen reductions of up to 0.85%, while two, three and five-year purchase and remortgage rates have reduced by up to 0.30%.
Highlights from Virgin include a 4.99% two-year fixed remortgage up to 70% LTV with a 1% fee, and a 90% LTV five-year fixed purchase mortgage at 4.96% with a £1,295 fee.
Newspage asked brokers for their views.
Kylie-Ann Gatecliffe, director at KAG Financial, said: “Lenders are having to be more competitive than ever to stand out right now, as the rate reductions keep rolling in. These latest cuts are great news for those looking to get on the ladder, move or remortgage. It has been a rocky year so it's great to see it ending with a fiery rate war. Hopefully, it will continue into the new year, to allow more buyers to bounce back with confidence of a more affordable outlook.”
Justin Moy, managing director at EHF Mortgages, commented: "Following the lead from Barclays at the end of last week, other High Street lenders are heating up the market for both homeowner and remortgage cases, with cuts of up to 0.3%. We are definitely seeing a pick up of purchase cases, mostly first-time buyers who see current property prices and falling mortgage rates as a good opportunity to buy. This is especially the case in London and the South East, an area struggling with poor rental stock and high rents. Here, even people with a small deposit will pay less per month, and have the security of their own property, if they buy, and do not need to worry about their landlord evicting them at short notice as they exit buy-to-let."
Aaron Strutt, product and communications director Trinity Financial, said: “Competition has returned to the mortgage mortgage market in earnest with most of the big providers now consistently lowering their rates. They are actively undercutting each other and trying to offer the lowest deals after a prolonged period of avoiding the best buy tables. Lenders are increasingly offering more sub-5% deals but ultimately they need to be closer to 4% to get the market moving again. Unless the Chancellor announces something significant in the Autumn Statement tomorrow, lenders will have to do something pretty significant to get more mortgages agreed. Lenders know cheaper rates are the key driver to get people buying homes again.”
Darryl Dhoffer, director at The Mortgage Expert, added: "Once again, the biggest reductions are at the "safe as houses" end of the market, namely for those with a 40% deposit or a similar level of equity. Lenders need to put an end to the phoney war and drive down rates at higher loan-to-values, as that's the way to inject real life into the mortgage and property market. We need less PR and more of a concerted push."