Abbey lowers product fee on 90% LTV deal
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Abbey for Intermediaries has lowered the product fee on its 90% LTV two-year tracker product from £995 to £195 and its rate had been increased from 5.49% to 5.79%.
The lender says the product change is a result of freedback from brokers who liked the high LTV on the two-year tracker but commented that customers would prefer a lower product fee.
A spokesman for Abbey, says: “By lowering this fee and raising the product rate we are not changing the overall cost of the mortgage, but are helping to stimulate the high LTV market by making the product more accessible to those buyers, in particular first-time buyers, who prefer lower up-front fees when buying a home.”
“For those customers who would like to pay a lower rate, Abbey also offers a range of alternatives such as the 85% LTV, two-year tracker mortgage at 4.74% with a £495 booking fee.”
Readers' comments (8)
Sheilpa Panchal | 17 Mar 2010 4:10 pm
That is good, however it would be nice if Abbey would pass an AIP in the first place!!
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Anonymous | 17 Mar 2010 4:19 pm
So Abbey are responding to brokers requests are they?
How many of these brokers also asked for the rate to increase I wonder. The comment that states that 'we are not changing the overall cost of the mortgage' is a strange one. If someone wants to borrow the maximum on this rate, the extra interest over the two years is around £1,500. I may not be a mathematician but I am pretty sure that this means the applicant will be worse off.
It is time for Abbey to at least treat brokers with respect as the above statement fails to do so.
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Anonymous | 17 Mar 2010 4:20 pm
It's a positive but at 4.99% + BBR, is that attractive to FTB's when it is heavily predicted the BBR will increase ?
Please do the same with the fixed rate offering at 90% to bring brokers more in line with the direct products.
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Anonymous | 17 Mar 2010 4:24 pm
100k over 2 years for each product works out as follows
5.49% & £995 fee £14,870.16 over 24 monthly payments on £100k over 25 years
5.79% & £195 fee £15,186.24 over 24 monthly payments on £100k over 25 years
and this assumes that the customer gets 24 monthly payments which they normally don't
so "By lowering this fee and raising the product rate we are not changing the overall cost of the mortgage" is a lie
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Dan McGeehan | 17 Mar 2010 4:53 pm
Positive step in the right direction especially as the fee has to be paid upfront. On a typical mortgage up to 90% of 150k the higher rate will actually save money over the 2 years. Ideally what we need as pointed out above is competitely priced fixed rates at 90% to cushion potential rate rises in the next 1-2 years for FTB's.
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Anonymous | 17 Mar 2010 4:59 pm
wonder if they will be increasing their direct deal BBR + 4.49% with a fee of just £495??
How many FTB's would prefer to pay £300 more in fees (£495 fee upfront) and save 0.80% on the rate on their direct deal?
just making it harder for us to get the business, or we might as well put out a sign that says free sourcing service - we tell you the lender and off you go!
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Paul Clifford | 17 Mar 2010 5:10 pm
The service from the Abbey is shocking ... The business managers just dont care about brokers ... Why would any sensible IFA / Broker choose to use the Abbey ?
Promise everything then deliver nothing but greif !!
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Anonymous | 18 Mar 2010 10:34 am
The saving in the product fee =995-195=£800.
Assuming a typical £150,000 mortgage over 25 years.
Assuming BBR=0.5% year 1
Extra interest year 1=0.3%X150000=£450
year 2=£450
Total=£900 (£100 more than £800 saving)
If BBR rises by 0.5%(as widely expected)in year 2, extra int =£1650 (£850 more than the £800 saving in product fee)
The BBR could well go up to 1% in year 2, extra int =£2400 (£1600 more)
This is what SANTA has in store for us and we are nowhere near the big day.I cannott imagine what will happen as we get closer and closer to the big day.
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