Just as many mortgage lenders are increasing rates in anticipation of a rise in the Bank of England base rate later this week, a few lenders are swimming against the tide.
Nationwide is cutting rates on fixed-term mortgages by up to 0.5% on deals at a range of loan-to-value (LTV) and lengths. The lender’s two-year 60% LTV product is being reduced by 0.15% and starts at 1.29% with a £999 fee and 1.69% with no fee, while the 90% LTV version is being reduced to 1.99% with a £999 fee and 2.39% with no fee.
Its five-year mortgage up to 60% LTV starts at 1.79% with a £999 fee and 1.99% with no fee while ten-year fixed-rate mortgages are being reduced by up to 0.50%, starting at 2.49% for the 60% LTV product with a £999 fee and 2.59% with no fee. Tracker rates and shared equity products are also being reduced.
Nationwide director of mortgages Henry Jordan said: “As the likelihood of a rise in the base rate increases, mortgage holders will be considering their options. The changes announced today offer improved choices across our range and are equally available to new customers and to existing members switching product with us.”
Meanwhile, in the buy-to-let sector, Metro has cut rates by up to 0.40 per cent and large loan prices by up to 0.30 per cent. The firm has also launched a large loan range and launched a cut-price residential five-year fixed rate at 90 per cent LTV. Buy-to-let loans under £2m have been cut by up to 0.40 per cent.
Rates now start from 2.69 per cent at 75 per cent LTV for a two-year fix and 2.89 per cent for a five-year fix at 75 per cent LTV. Buy-to-let loans from £2m-£3m now start from 2.79 per cent for a two-year fix at 70 per cent LTV. A five-year fixed is now 2.99 per cent and a two-year tracker is 2.54 per cent, both also at 70 per cent LTV.
In its residential range Metro has cut its five-year fixed loan up to 90 per cent LTV by 10bps to 2.54 per cent for residential mortgages under £2m.
Metro Bank mortgage distribution director Charles Morley says: “We’re here to support everyone, whether you’re a first-time buyer looking to get your foot onto the property ladder through our joint-borrower sole-proprietor mortgages; a landlord wishing to benefit from our use of top-slicing; or a customer needing a choice when it comes to obtaining a larger loan.”
Elsewhere Platform has loosened some buy-to-let remortgage stress tests from 145 per cent to a minimum of 128 per cent of rental cover. The intermediary arm of the Co-operative Bank will continue to apply a notional interest rate of 5.5 per cent. The move will help landlords who took out mortgages before new PRA affordability rules came into effect in January 2017.
The lender will let this group access pound-for-pound remortgages without any extra capital raising, while other buy-to-let applications will continue to be stressed at 145 per cent at 5.5 per cent.
The Co-operative Bank and Platform head of mortgages and insurance Paul Norcott says: “We have been closely following developments in the buy-to-let market since the new PRA guidelines were published, and we know that buy-to-let remortgaging has been more difficult for some landlords since the market adopted those guidelines.”
According to the information company Moneyfacts, the latest rule changes have had an unwelcome impact on mortgage products, with the number available to smaller landlords falling noticeably. This month saw another significant change in the buy-to-let mortgage market, with lenders now required to apply stricter underwriting criteria to portfolio landlords.
Since introducing the portfolio lending rules Moneyfacts said it had seen the buy-to-let mortgage market shift away from landlords with three or fewer properties, with a 13% drop in the number of products available to this group since.
Moneyfacts also noted that since 1 October the average two-year fixed rate had increased by 0.05% and was on target to return to the rate seen in September, before the latest set of regulatory changes came into effect. So far 18 individual providers have upped their rates since the start of September.
Charlotte Nelson, finance expert at Moneyfacts, said:
“This portfolio change may have had a more practical effect on rates as well, with lenders not just being a little more cautious; some lenders may have had to change their process behind the scenes to accommodate the new rules, and this extra cost may be impacting these providers’ pricing activity.
“With all the changes and now the rising buy-to-let rates, it is going to be more difficult for individual landlords to make a profit that is worth their efforts. Landlords will have to weigh up the costs to figure out what their best possible option may now be.”
Nelson added that it had been a turbulent time for the buy-to-let market.
“While a 0.05% increase appears insignificant, it marks a turnaround in the buy-to-let sector, so landlords are now faced with not only more hoops to jump through but higher rates as well.”