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News: Lenders compete to provide lowest ever UK mortgages

Mon, 04 May 15


A war is breaking out between banks in the UK, as lenders undercut each other to attract borrowers’ attention.

The mortgage industry slowed down last year, as the introduction of new, tighter affordability conditions (the Market Mortgage Review) attempted to steady the ship and prevent any future risky lending. In the run-up to the general election, uncertainty has also helped to cool activity, with gross mortgage lending in the first quarter of 2015 down 12 per cent on the previous three months.

Now, though, lenders are fighting to offer the best rates to stimulate lending once more.

Today, the Co-operative Bank launches a new 2 year fixed rate mortgage - the UK’s lowest ever, according to Moneyfacts.co.uk.

The new deal is fixed at 1.09% until 30/06/17 for mortgages up to 60% LTV. It is
available to new and existing borrowers and comes with an arrangement fee of
£1,499.

The mortgage market has reached a ‘watershed’ moment with the launch of the first five-year fixed rate below 2 per cent.

The launch follows a similar watershed moment this month, with HSBC launching the first five-year fixed rate mortgage below 2 per cent on Monday 20th April.

The mortgage is available at 60% LTV and has a booking fee of £1,499. HSBC is also launching a two year fix at 1.24%, and continues to offer its two year discount rate at 0.99%. Both are available at 60% LTV with a £1,499 fee.
 
Tracie Pearce, Head of Mortgages at HSBC, declared: "We are committed to helping customers take their first step onto, or move up, the property ladder.  With mortgage rates lower than they’ve ever been before, we’re proud to introduce the lowest ever five year fixed rate. We’re also offering £1,000 cash back to homebuyers and have refreshed our mortgage range to ensure that homeowners with a smaller deposit have access to our historically low mortgage rates."

Nationwide has since slashed its own rates in response, reducing deals by up to 0.20 per cent. As of 30th April, 2 year fixed rate deals with a £999 fee now start at 1.49 per cent, while 5 year fixed rate deals with a £999 fee start at 2.24 per cent. For those looking for longer term security the 10 year fixed rate product with a £999 fee starts at 3.14%. All these rates are for the 60 per cent loan to value (LTV) products and come with a £999 product fee, reduced to £499 for first time buyers.

Barclays has also introduced lower rates, with 2.59 per cent 5 Year Fixed deals with 70 per cent LTV  and £999 fee and a 2.69 per cent 5 Year Fixed product with 75 per cent LTV and £999 fee.

Barclays is introducing a new product too: a 3 Year Stepped Fixed at 85 per cent LTV, starting at a competitive 3.09 per cent for the first year, reducing to 2.99 per cent and 2.89 per cent in years 2 and 3 respectively.
 
Stuart Beattie, Head of Mortgages at The Co-operative Bank, comments: "With rates at record lows, it’s a great time for customers to consider taking out a
fixed rate product. We are delighted to offer the UK’s lowest ever 2 year fixed rate mortgage, which is ideal for borrowers with larger deposits. It complements our existing range of mortgage deals, designed to suit the needs of different borrowers."

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