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Gearing up for a competitive year

The end of one year and the beginning of the next is always an interesting time in the mortgage world as lenders’ thoughts turn to hitting the targets in the new year.

Although some lenders will have spent the last quarter of 2006 looking to get business on their books in an attempt to make up lost ground on targets, many will already have been thinking about pipelines for the new year.

Winter can be an exciting time for product and criteria changes and this year looks no different. On the product front, HSBC has decided to splash out with its January sale as it did last year. This time it is knocking the 499 arrangement fee off its five-year fixed rate at 5.17%.

It has also added a green tinge to proceedings and will make a donation to its nominated charities for every sale product purchased.

Other lenders have also elected to hold sales including Leeds, which has improved its three-year fixed rate with a reduction in arrangement fee and addition of free valuation and free legal work for remortgages.

NatWest has also joined in with improvements to its lifetime tracker product, dropping it from 0.59% above base for the life of the loan to 0.39% above base rate as well as cutting the arrangement fee by 100 to 495.

Of course, like any sale there is the potential for customers to buy something unsuitable simply because it’s in the sale. While improvements to products are welcome, these deals do not necessarily top the tree and customers could be surprised when standard products are held up against some of the sale bargains.

Woolwich has been quick to launch fresh deals and has added a two-year no-penalty tracker at 0.01% below base rate reverting to 0.17% above base for the remaining term and a five-year fixed rate at 4.98%.

The downside of both these products is the large arrangement fee of 1,495. Although Portman’s five-year fixed rate is at 4.99% and is an annual interest calculation, the lower fee will more than compensate.

Cheltenham & Gloucester looks like it plans to have itself an interesting year with its move into the sub-prime market. Although this is likely to be something of a learning exercise, a lender of this size will be aiming to make an impact in the specialist market. It is also making a positive move with fast-tracking, applying this to all applications up to 95% LTV with top credit scores.

It is encouraging to see these early signs of an aggressive market for the coming year and we should see more lenders tinkering with their products as they gear up for the fight. It should be good timing for those borrowers whose resolution was to finally sort out a better mortgage.

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