Accord Mortgages, Nationwide Building Society and Skipton Building Society are among the latest in a raft of lenders to cut the rates on their fixed rate mortgage products, while a new survey reveals that the average two-year tracker has increased, despite cuts to Bank Base Rate (BBR).
First up, Accord Mortgages has cut rates by up to 0.23% on its 90% loan-to-value (LTV) products.
The intermediary-only lender’s two-year fixed rate 90% LTV mortgage is now available to remortgage and house-purchase customers at a rate of 2.24%(5.14% APRC). A fee of £995 is attached to the product.
Accord’s five-year fixed rate 90% LTV mortgage is available at 2.96%(4.65% APRC), with a £995 fee. Remortgage customers are offered a free standard valuation and free legal fees, while house purchase customers can benefit from £250 cashback on completion and a free standard valuation.
Nationwide Building Society has cut its rates by up to 0.35% on selected fixed, tracker and shared equity products.
The lender is now offering a two-year 60% LTV fixed rate product at 1.34%(3.53% APRC) with a £999 fee, which it says is its lowest-ever fixed rate product. It is also offering the same product with no fee at 1.74%(3.46% APRC).
Its three-year fixed-rate mortgage deals offer rates of 1.64%(3.91% APRC) with a £999 fee and 1.94%(3.33% APRC) with no fee. Nationwide has also cut the rates on select five-year fixed rate and tracker mortgages, for those customers with larger deposits.
The two and five-year fixed rates in Nationwide’s shared equity range have also been reduced by up to 0.35%. It's 60% LTV shared equity mortgage is now offered at 1.54%(3.59% APRC) with a £999 fee or 1.94%(3.5% APRC) with no fee, and its five-year fixed rate products are available at 2.29%(3.39% APRC) with a £999 fee or at 2.49%(3.31% APRC) without.
Nationwide’s rate cuts follow the news that it has relaxed its income policy and has amended certain lending requirements.
In the instance where a client pays child maintenance, the lender now only requires the client’s latest three months’ bank statements, instead of six months as previously requested.
However, the client will still be required to provide a court order, CSA [Child Support Agency] assessment letter or written private agreement.
Changes to the building society’s lending policy mean that it will no longer accept all or part of a customer’s deposit gifted from a non-UK company.
Builder cash backs are acceptable on Shared Ownership applications, subject to the current builder cashback rules, but the lender will not accept the cashback payments on equity share applications.
All the changes take effect immediately and apply to all pipeline cases.
Following the Bank of England’s cut to the base rate, Nationwide has also reduced its stress rate for all residential affordability calculations to 6.74%. The new stress rate applies to all residential applications, including equity share.
Meanwhile, Skipton is another building society to make reductions to its fixed-rate residential products.
Slashing the rates on its two and five-year fixed-rate mortgages by 0.38%, Skipton now offers two-year deals from 1.09%(4.32% APRC) to 60% LTV and 1.79%(4.29% APRC) to 80% LTV, as well as a five-year fix at 1.89%(3.98% APRC) to 60% LTV.
All of the lender’s two and five-year fixed rate remortgage products offer a free valuation and free standard legal fees, and all purchase deals come with a free valuation.
These latest cuts to fixed-rate mortgage products come as Moneyfacts, a financial information provider, says that the average two-year tracker rate has increased by 0.07% in just one month, despite Bank Rate (BBR) being cut to 0.25% in August.
Moneyfacts has explained that this increase brings figures back to July 2016’s levels and therefore cancels out the cut in the base rate. The average two-year tracker rate was 2.01% in July. Following the August cut, it dropped to 1.94% but lenders have pushed it back up to 2.01% today.
Charlotte Nelson, finance expert at Moneyfacts, said:
“After the average two-year variable rate reached a historic low in September following the Bank of England’s cut to the base rate, a logical assumption would have been for the market to stabilise at this new low. Instead, it has increased back to the level it stood at shortly after the EU referendum. This increase has effectively offset any reductions that may have occurred after the base rate announcement on 4 August.
“This increase to the average two-year tracker rate reflects the uncertainty in the market. Providers are facing heightened risks as a result of the wider economic issues such as house price stability and a potential increase to the inflation rate, which may affect household expenditure. This has likely made the low level seen in September unsustainable.
“With the fixed-rate mortgage market highly competitive and lenders preferring to lock borrowers in for a longer term, there is no wriggle room to increase rates in this area. So, the variable-rate market is an easy target for increased rates.”
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14th October 2016