Top marks to GE Money Home Lending for offering a helping hand to first-time buyers and while Chelsea’s 10-year fix might provide stability, a word of warning is needed on likely ERCs
Swaps had a mixed week, with shorter-term money edging down a little and longer-term rates increasing for the third consecutive week. Three-month LIBOR is unchanged at 0.88%
1-year money is down 0.03% at 0.94%
2-year money is down 0.01% at 1.26%
3-year money is up 0.03% at 1.43%
5-year money is up 0.09% at 1.91%
My first reaction when I saw GE Money Home Lending had launched a number of first-time buyer products which required a 25% deposit was that it wouldn’t be busy.
But I am sure there are plenty of first-time buyers who have scraped together a decent sized deposit but been turned down by picky high-street lenders who turn their noses up at any hint of risk.
So it is great to see a non-bank lender supporting first-time buyers.
I am sure GE won’t be the first port of call for many borrowers but it will help some who otherwise wouldn’t be able to get a mortgage. Unlike some other non-bank lenders, GE has supported the market even in its darkest days.
Barclays has joined the list of lenders offering special rates for a limited period.
These are available until September 20 and include an excellent, two-year offset tracker at base plus 1.88% for loans up to 70% LTV with a £1,499 fee. At 75% LTV there is a two-year offset tracker at base plus 2.38% with a £999 fee.
There is also a lifetime-offset tracker at base plus 2.48% for loans up to 70% LTV with a £999 fee. With savings rates at pitiful levels and no sign of the base rate increasing, offset deals look great value.
When I saw Chelsea had launched a 10-year fixed rate at 3.99% I did not realise it would grab so many headlines, but it was widely covered in the personal finance sections of the weekend newspapers.
Sadly, I think the amount of coverage will be in inverse proportion to the number of 10-year fixed rates sold.
I am sure a few people who were considering remortgaging to get some budgetary stability will have snapped it up, but the thought of first-time buyers taking out a 10-year fixed fills me with terror.
How many first-time buyers know where they will be in five years’ time, let alone 10?
Substantial early repayment charges for 10 years is a major worry. No matter how long you spend discussing it, people forget about ERCs until they end up paying them.
It is good to see Platform has completed £250m of lending in the first half of the year and even better that it intends to lend more in the second half so it at least matches last year’s £600m.
Nationwide has trimmed its already low five-year fixed rate so it is now even lower. It has dropped 0.1% to 3.69% for loans up to 70% LTV and comes with a £900 product fee and a £99 booking fee for purchases and remortgages.
Heroes & Villains
Hero of the week is Northern Rock for launching good fixed rates that are available just for one week exclusively through brokers. It is great that some lenders support intermediaries and demonstrate it so proactively.
Villain of the week is UK Asset Resolution which has been secretly credit scoring its customers. This is apparently to prevent them from getting into financial trouble when rates rise. Maybe setting the SVR at a more sensible level is a good place to start.