4 June: Building Societies Pulling High LTV Deals
HSBC has increased the cost of selected fixed-rate mortgage deals across its residential and buy-to-let ranges, writes Jo Thornhill.
Its new remortgage rates, available direct and through brokers, start from 4.99% for a two-year fixed rate (60% LTV) with a £999 fee and 4.54% over five-years.
A number of the bank’s product transfer deals (rates available to existing HSBC customers looking to switch), have also been increased.
Brokers are braced for more lenders to increase rates this week. This is due to rises in swap rates, the rates banks use to lend to each other, as hopes fade for a cut to the Bank of England Bank Rate in June.
The reduction – from the current rate of 5.25%, probably to 5% – is now expected in August.
A number of smaller lenders, including the Hanley Economic, Principality, Saffron and Vernon building societies, have withdrawn selected mortgage deals at higher loan-to-value ratios, such as 90% LTV and 95% LTV.
David Hollingworth at broker London & Country Mortgages does not consider this will become a wider trend: “These deals may be another casualty of higher swap rates, but the overall product withdrawal numbers are tiny so it is nothing to get too spooked about.
“The smaller mutual building societies tend to focus more on higher loan-to-value deals as they can’t compete at the lower LTV end of the market. They may have taken enough business or need to review their rates if funding costs are shifting.”
UK Finance has published figures showing that, while the number of borrowers taking out long-term mortgages dipped slightly in the first three months of the year, the overall number remains at a historically high level. The trend for mortgages at 35 years has grown as a way of making monthly mortgage payments more affordable.
The trade body’s figures show 21% of first-time buyers took a mortgage at 35 years in quarter one of 2024. This compares to less than 10% in 2022.
Bank of Ireland is increasing rates across its full range of fixed rate residential mortgage products up to 95% loan to value. Among the new rates for purchase and remortgage, available from tomorrow through brokers, is a five-year fixed rate at 4.95% (75% LTV) with a £995 fee. It is offering a five-year fixed rate at 5.05% (85% LTV) with the same fee.
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