Great news for mortgage advisors and homeowners, as it seems the mortgage price war is finally back on. Those borrowers with smaller deposits are at last going to benefit from cheaper mortgage as the competition on interest rates and mortgage deals between the lenders is beginning to heat up.
These last few months have been a bit of a Catch-22 situation for many, particularly for first time buyers, as they have watched property prices creeping down and yet the price of mortgages has not only remained high but mortgage lenders have been requesting around a 25 per cent deposit or even more as well as the ability to meet strict lending criteria for approval.
Since July, this trend has started to turn around as mortgage lenders have been reducing their cost of borrowing but the interest rate decreases has still only benefited those with the larger deposits. However, now at last the cost of mortgages for those with a10 to 25 per cent deposit is finally beginning to come down as mortgage lenders start to introduce some more competitive deals as their confidence returns and the cost of wholesale borrowing is reducing.
As discussed in yesterday’s article in more detail, the Abbey is reducing its interest rates tomorrow and the Halifax, the Nationwide and First Direct are also cutting their mortgage interest rates. Both fixed rate and variable rate deals are being reduced, and some arrangement fees are also being slashed, in some cases by up to £1,000 or even being scrapped altogether.
Other mortgage lenders, such as the Newcastle Building Society, the Yorkshire Building Society and the Co-operative have also been offering increasingly competitive deals over the last few weeks.
Ray Boulger, senior technical manager from mortgage broker John Charcol, said:
“A few weeks ago mortgages over 75 per cent LTV were expensive, but there is competition up to the 90 per cent market now. Lenders are seeing where they can find a competitive niche and, with prices falling, LTV is becoming a more important factor.”
An average two year fixed ate mortgage deal had peaked at 7.08 per cent back in early July, however, it is already back down to 6.39 per cent.
Although the mortgage market is still some way from returning back to how it was, those looking to borrow for a new mortgage or those looking for a good remortgage deal now have much better deals to choose from, all of which remains great news for those considering taking a CeMAP training course and become a mortgage advisor.