Posts with tag: first time buyer mortgages

Nationwide’s £1bn Lending to Benefit First Time Buyers

Published On: September 11, 2015 at 12:31 pm

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Nationwide is launching an additional £1 billion of lending over the next year for homebuyers with a 5% deposit.

The move is set to benefit first time buyers.

Nationwide's £1bn Lending to Benefit First Time Buyers

Nationwide’s £1bn Lending to Benefit First Time Buyers

The building society is now offering a selection of fixed rate 95% loan-to-value (LTV) mortgage deals, with rates starting at under 4%.

It says the mortgages will not be part of a scheme, such as Help to Buy, and are available to first time buyers and home movers.

Rates for the new mortgages start at 3.99% with a £999 fee for the two-year fixed rate deal. The three and five-year fixed rate deals start at 4.59% and 4.79% respectively.

Nationwide reports that first time buyers will continue to receive £500 cashback on all Nationwide mortgage deals.

Its Save to Buy scheme, where hopeful buyers commit to saving towards a deposit and in return receive cashback of up to £1,000 upon completion of the mortgage, will be available at a 0.2% discount.

Head of Mortgages at Nationwide, Henry Jordan, says: “Nationwide’s move significantly increases the society’s lending in the first time buyer market and widens consumer choice.

“It aims to build on Nationwide’s traditionally strong support for first time buyers by offering more mortgage options to those with smaller deposits and helping them to achieve their dream of purchasing a home of their own.

“Nationwide also offers tangible benefits to mortgage customers that go beyond the competitive headline rates. This includes Nationwide’s £500 cashback offer to all first time buyers, or more if they use our Save to Buy mortgage products.

“Our mortgage deals, combined with other support Nationwide provides, such as first time buyer events and independent guides, demonstrate how Nationwide continually aims to do more for its customers.”1 

1 http://www.propertyindustryeye.com/nationwide-launches-1b-of-lending-for-first-time-buyers/

Low Rates for Borrowers with Small Deposits

Published On: September 9, 2015 at 12:55 pm

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Mortgage lenders have launched a series of low rates for borrowers with small deposits.

Last week, HSBC introduced a 3.49% five-year fixed rate mortgage, with a £999 fee. However, this has since been beaten by Clydesdale and Yorkshire Bank, which released a five-year fixed rate deal at 3.39%, also with a £999 fee.

Low Rates for Borrowers with Small Deposits

Low Rates for Borrowers with Small Deposits

Head of Lending at the Mortgage Advice Bureau (MAB), Brian Murphy, says that although these deals are competitive, some borrowers may find that loans with slightly higher rates actually offer a better deal.

He explains: “Mortgage products with high fees but potentially lower rates are not a new phenomenon.

“Lenders often offer a range of combination products, as different product features will appeal to different borrowers. Some are comfortable with high set-up fees to secure a lower monthly payment, particularly if this guarantees a low rate for as long as five years.

“However, others will want to minimise their upfront costs but are more comfortable with a slightly higher monthly repayment. This allows them to utilise their available funds for other household expenditure, which can be considerable – particularly when buying for the first time.

“As with most things in life, no one size fits all. A mortgage broker will ascertain what is important to each client and advise them accordingly based upon their individual preferences, needs and circumstances.”1

Clydesdale and Yorkshire also announced details of a two-year fixed rate deal for borrowers with a 10% deposit, at 2.39% with a £999 fee, available for purchases and remortgages.

For first time buyers with a 5% deposit, Clydesdale and Yorkshire introduced a three-year fixed rate deal at 4.49%, with no fee, a free valuation and £250 cashback.

However, a five-year fixed rate deal from Tesco may be better suited to some first time buyers, which is also priced at 4.49%, with a £495 fee. Despite having no incentives, this mortgage gives more long-term security against rate rises.

1 http://www.propertyindustryeye.com/low-rates-launched-for-borrowers-with-small-deposits/

Mortgage Lending Rises

The amount of residential mortgage funds lent has risen by over 10% in the past year, according to new research.

Mortgage Lending Rises

Mortgage Lending Rises

The amount approved for residential mortgages in the second quarter (Q2) of 2015 was £59.3 billion, up from £47.2 billion in Q1 and an 11% increase over the year.

The Bank of England (BoE) and the Financial Conduct Authority (FCA) released this data yesterday.

In total, 15.1% more was lent in Q2 this year than Q1.

The study also found that there were 200,273 house purchases in Q2 and a further 68,764 in July.

The amount of money lent for buy-to-let purposes also rose annually, up from £7 billion in Q2 2014 to £8.3 billion in Q2 this year.

Overall, the amount of residential loan money outstanding was £1.272 billion in Q2, up 0.8% on Q1 and a 1.8% yearly increase.

The proportion of funds lent at fixed rates grew from 77.6% in Q1 to 78.9% in Q2. The average interest rate on this money was down from 2.99% in Q1 to 2.83% in Q2 – the lowest rate since the BoE/FCA records began in 2007.

The value of residential loans approved for first time buyers rose over the quarter, from £8.9 billion in Q1 to £10.8 billion in Q2.

However, this is slightly down on the amount lent to first time buyers in Q2 2014, when it totalled £11.4 billion.

Highest Number of First Time Buyers Since Financial Crash

First time buyers are back, as the highest number has been reported since before the financial crash.

Estate agents Your Move and Reeds Rains stated that in July, there were 29,700 first time buyers, the highest level since 35,300 in August 2007.

Highest Number of First Time Buyers Since Financial Crash

Highest Number of First Time Buyers Since Financial Crash

The companies’ post-recession record contrasts with the National Association of Estate Agents’ (NAEA) report that the number of first time buyers dropped in July.

Your Move and Reeds Rains insist that the amount of first time buyers has been rising, up 5% on June.

Additionally, the firms released data revealing how low first time buyer levels were in the last four years, at just 12,300 in April 2012 after a Stamp Duty holiday ended.

This year began with around 19,000 first time buyers.

In July, the average first time buyer home cost £161,985, 8.9% higher than last year. The average mortgage had an 83% loan-to-value (LTV) ratio, but the required deposit was still £27,975, up 10% on last year.

The agents believe that first time buyers are rushing to get onto the property ladder before interest rates rise and the best mortgage deals are withdrawn.

Director of Your Move and Reeds Rains, Adrian Gill, says that many uncertain first time buyers are hurrying the process before costs increase.

He adds: “Some may have held back briefly when considering the rising deposit costs. But real wages have been growing too and first time buyers are able to shoulder the short-term burden of a slightly higher deposit to spare the risk of losing out on a good mortgage deal.”1

The average price of a first time buyer property varies massively across the UK, from £109,000 in the North East to £275,000 in London.

This causes the size of deposits required to differ greatly also, from £17,659 in the North East to £66,879 in the capital.

1 http://www.propertyindustryeye.com/theyre-back-first-time-buyers-at-highest-number-since-crash/

Mortgage Rates for First Time Buyers are at a Three-Year Low

Published On: June 2, 2015 at 9:07 am

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Categories: Landlord News

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Mortgage rates for first time buyers are at a three-year low, revealed research from MoneySuperMarket.

The comparison website found that that number of mortgage products for first time buyers is currently 2,776. This is partly due to the Government’s Help to Buy scheme, which has seen the amount double since April 2012, when the number was 1,324.

Furthermore, the average rate on a first time buyer mortgage has fallen by one percentage point in the last three years, to 3.26%.

Mortgage Rates for First Time Buyers are at a Three-Year Low

Mortgage Rates for First Time Buyers are at a Three-Year Low

The average loan-to-value (LTV) required for first time buyers has been stable since April 2012, 79% compared to 78%. This would require a high deposit of £31,500 on a £150,000 home.

However, a 5% deposit on the same property would be £7,500. And this is increasingly available to first time buyers, thanks to the amount of 95% LTV mortgages, which has grown recently.

There are currently 170 mortgage deals on the market at this LTV, as Help to Buy thrives. Since 2012, there has been a 448% rise in this type of mortgage, from 31 products three years ago. Additionally, the average rate on these deals has fallen by 1.04 percentage points, to 4.72%.

Head of Banking at MoneySuperMarket, Kevin Mountford, says: “The increase in the number of first time buyer mortgages, and the corresponding fall in interest rates, can only mean good news for those looking to get a foot on the ladder.

“Even better, borrowers who can scrape together a 10% or even 15% deposit will find they are able to get their hands on more competitive deals.

“The introduction of the Government’s Help to Buy ISA, which will see the Government provide up to £3,000 towards a first time buyer’s deposit, could also help prospective homeowners get themselves into a new LTV bracket, thus helping them secure a more competitive deal.”

Mountford continues: “For anyone looking to buy their first home, it’s important not to be led by interest rates alone when comparing mortgages. Expensive fees can wipe out the potential benefit of a lower rate, so it’s worth doing the sums first to ensure you really are getting a great deal.

“Whilst mortgage approvals were up 7% overall on March, this doesn’t mean that lenders’ criteria is becoming more relaxed. After the introduction of the Mortgage Market Review, borrowers not only need to have a strong credit score, they also need to prove that they can afford the mortgage they’re applying for – not only at its current rate, but if rates should rise in the future.”

He concludes: “Finally, also think about whether you want a fixed or variable rate deal. Fixed provides security that your rate won’t change during the term of the deal. Whilst variable rates tend to be cheaper, you need to ensure that you will be able to afford your monthly repayments if and when interest rates do rise.”1 

1 http://www.propertyreporter.co.uk/finance/ftbs-have-never-had-it-so-good.html

 

 

Mortgage Lending Dropped by 16% in February

Published On: April 15, 2015 at 4:05 pm

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The amount of mortgages offered to first time buyers and those moving home dropped by 16% in the year to February, the Council of Mortgage Lenders (CML) found.

The CML says that the normal lending dip in the early part of the year has been worsened by the general election, which may have caused buyers to avoid moving until they find out who will be in power. An upturn in lending is expected in the summer.

Bucking the trend, lending to buy-to-let investors has increased yearly by 11% from February 2014. 15,900 loans were approved in February 2015 worth a collective £2.2 billion.1

Some estate agents believe that new pension rules, allowing over-55s to withdraw from their retirement savings, have encouraged them to invest in the buy-to-let market.

Yesterday, we revealed that buy-to-let investors have seen 1,400% returns. Read more here: /1400-returns-create-buy-let-landlords/.

Mortgage Lending Dropped by 16% in February

Mortgage Lending Dropped by 16% in February

The CML found that so far the rise in buy-to-let lending has “almost completely” been a consequence of remortgaging. Lenders have been cutting their mortgage rates recently, as they expect an increase to the Bank of England’s (BoE) base rate to not be until next year.

For those stepping onto the property ladder for the first time, 18,700 loans with a total value of £2.7 billion were approved in February. This is a 1% drop on January and a 16% decrease on February 2014.1

However, the CML said that this was the second strongest February for first time lending since 2007, behind only February 2014 levels.

First time buyers needed an average deposit of 19% in February, compared with 17% in January. As mortgages are fairly cheap, first time buyers’ repayments make up 19% of their income, down from 24.8% in December 2007.1

The Office for National Statistics (ONS) also revealed that the average price paid for a home by first time buyers in February was £205,000, a rise of 7.4% on the previous year.1

For people moving house, 21,900 loans were made at a total worth of £4.1 billion in February, a 2% fall on January and 16% less than in February 2014.1

Director General of the CML, Paul Smee, says: “Seasonal factors have played their part in dampening house purchase lending activity in February. This typical seasonal trend may also be exacerbated by uncertainty ahead of the general election, but we still expect to see an upturn in the spring and summer months.

“Buy-to-let, in contrast, has shown year-on-year lending increases, due almost completely to remortgaging which is typically strong in the buy-to-let market.”1

Chief Executive of mortgage brokers SPF Private Clients, Mark Harris, says that in March, the mortgage market picked up, as is expected in spring.

He explains: “Buy-to-let lending is up year-on-year, proving its enduring popularity. The relaxation of pension rules this month is likely to provide a further boost for the sector. A combination of cheap mortgage rates, easing criteria and poor savings rates are convincing many that investment property is a sensible home for their money.

“Once election uncertainty is out of the way, we expect to see a flurry of activity in the mortgage market. There will certainly be plenty of cheap mortgage rates to tempt buyers.”1

1 http://www.theguardian.com/business/2015/apr/14/mortgage-lending-dips-16-in-february