Anticipating a base rate rise from the Bank of England, several lenders including TSB and NatWest have increased rates on their fixed-rate residential and buy-to-let mortgages.
TSB has increased fixed rates by up to 0.20 per cent on some two- and five-year fixed rate remortgages, and increased rates by up to 0.20 per cent on two-year fixed loans up to 85 per cent LTV with a fee of £995. It has also raised rates by 0.15 per cent on five-year fixes up to 60 per cent LTV.
On five-year fixes between 60 to 75 per cent LTV, with a £995 fee, TSB has raised rates by 0.10 per cent. This follows a rate increase in August of 0.05 or 0.10 per cent across all its remortgage products.
From today NatWest has increased interest rates on its core range purchase mortgages and remortgages. This is the second increase in less than a month, and will hit residential and buy to let two- and five-year fixed-rates.
The lender said it was matching the rest of the market, whose anticipation of a base rate rise from the Bank of England has pushed Swap rates higher. However it is far from certain that rates will be increased at the next Monetary Policy Committee meeting in November.
NatWest head of sales Mark Bullard said:
“We have repositioned our portfolio to reflect the current market environment. We continue to offer a very broad range of attractive deals for brokers and their customers and an appetite for buy-to-let business.”
But it’s not all bad news for home buyers. Newcastle Intermediaries is also offering a rate of 3.99 per cent for a fee-free option with free standard valuation and £200 cashback. Remortgagers can pick free legal fees rather than the cashback.
Newcastle Intermediaries head of product development Ben Smith said:
“We’re committed to supporting new buyers on to the property ladder and I’m pleased we can offer a reduction in our rates to help them do that.”
On the buy to let front, the news is even more positive. Fleet Mortgages has cut rates and fees across its standard, limited company and HMO ranges. The lender is now offering a standard buy to let five-year fix at 3.49 per cent, down from 3.79 per cent.
Fleet Mortgages chief executive Bob Young said:
“This backs up our continued commitment to those advisers with portfolio landlord clients, who are increasingly likely to be looking for limited company purchase and refinance options, and potentially higher yielding HMO opportunities.”
Meanwhile Skipton International, an offshore bank, has increased its buy-to-let remortgage offerings for UK expats, offering a five-year fixed rate remortgage BTL product, for £300,000+ loans at a 3.99% interest rate, or at 4.49% for loans over £100,000. Skipton customers can also release equity based on a reduced pay rate.
The Guernsey-regulated bank already offers an existing portfolio of buy-to-let mortgages, and has reduced the fixed application fee for all remortgage products to £999, which includes valuation and legal costs with no further product fee.
In principle decisions can be provided over the phone and the bank says that remortgages can be processed in as little as 16 days from receipt of application.
Ian Gray, senior partner at Kinnison, thinks that specialist lenders are offering expat focussed products because the market allows for higher rates:
“Specialist lenders like building societies don’t have the clout of big banks to buy money in, so they lend from their own savings book. And because their funding model is quite traditional, they have to find a niche in the market to charge a higher rate.”
“We’re seeing specialist lenders offering products for expats because it’s a market where you can charge more.” Gray continued, “There are a few more players in the market, and these few players are really taking in a huge margin — because there isn’t much competition and expats know there’s not much else to choose from.”
“The normal high street lenders are still not engaging because their appetite for risk is still extremely low after the credit crunch, and there’s still enough demand for normal domestic mortgages which are lower risk,” Gray added.