Welcome to another week of the madness that is the mortgage and property industry.
This week the Bank of England are writing to banks and lenders to see if they are ready for a potential zero or negative interest rate environment. There is so much debate over this and whether the actual pain in planning for this will be worth the effort. Some think it will do nothing to really stimulate the economy further.
And all those potential mortgage borrowers shouldn’t get too excited either. It is very unlikely we will see any lender offering a negative rate and most now have a collar, (a level beyond which their rates cannot fall) on their mortgage loans to avoid this.
We have also seen that a low or even negative Bank of England Base Rate does not stop lenders from increasing rates as they have done in recent weeks, especially at high Loan-to-Values, with 85% plus products now considerably more expensive than they were at the start of the year.
In general, it has been another busy week, with loads of lenders changing their rates as they try to manage demand, and as usual, there are movements both up and down.
Thankfully, we are seeing some of them start to get to grips with their service levels, although they still vary dramatically between lenders. Our own research shows that Scottish Widows and Nationwide lead the way with an average of 10 days from Application to Offer, whilst others are at 25 days.
As a company, we average 13 days which has kept consistent across the board since lockdown began.
This shows why a broker is so important in this environment. It is not just about the interest rate, but lenders’ service which can be critical in securing the property the buyer is dreaming of.
Have a great week.
In terms of mortgage rates, for standard residential mortgages, borrowers can obtain 2-year fixes at 1.20%, (3.30% APRC) and 5-year fixes from 1.43%, (2.90% APRC) whilst variable tracker rates are around from 1.69%, (3.40% APRC).
Those looking at Buy-To-Let can now obtain products from 1.22%, (4.80% APRC) for 2-year fixed or 5-year fixes are available from 1.62% (3.77% APRC).