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Northern Rock launches 90% LTV fixed rate deals from 5.99%

Northern Rock is launching a new range of Everyday mortgages available up to 90% loan-to-value.

As part of a support package for first-time buyers, the state-backed lender is introducing a two-year fixed rate deal at 5.99%, a three-year fixed rate product at 6.49% and a five-year fixed rate at 6.59%, all of which have no payable product fees.

The products will be offered directly through Northern Rock branches as well as through Sesame Bankhall initially, before being opened up to all brokers once Sesame fills its quota.

Andy Tate, customer and commercial director at Northern Rock, says: “Our new products, which will be offered within our prudent risk appetite and only to customers with good affordability, should appeal to those who have lower deposits and first-time buyers.

“First-time buyers are important to the housing market. Having listened to those customers, we have developed a service that not only helps them to arrange the right type of mortgage that they can afford, but also supports them through the various steps in the process.”

The lender has also cut its interest rates across the rest of its mortgage range, reducing Everyday fixed rates at 75% and 70% LTV by up to 0.19%, Everyday trackers at 75% and 70% LTV by up to 0.3%, two-year fixed rate buy-to-let deals by 0.6% and longer-term BTL deals by 0.2%.

This is the first-time Northern Rock has offered LTVs higher than 85% since its high-profile collapse and government bail-out three years ago.

Nigel Lewis, property analyst at Findaproperty.com, says: “Northern Rock are offering these mortgages only because they must believe that the house price drops seen over the past two years are now over and that a more stable housing market will now follow – they wouldn’t lend at such high LTVs if they thought otherwise.

“This is good news for first-time buyers put off by the prospect of negative equity because at worst house prices are due to be flat for the next year or so with potential rises in areas of high demand.”

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  • Peter Ambrose 2nd March 2011 at 12:13 pm

    Chris,

    You are factually incorrect. The larger the remaining equity in the property the harder the borrower will fight to stay on top of the payments and to avoid repossession. I have seen the statistics based on tens of thousands of cases.

    Someone with a 50% LTV may be as likely to go into arrears as a 90% LTV mortgage but the 50 per center will try much much harder to repair the situation. If the current LTV of a property is 90% the proceeds of possession are unlikely to clear the debt so the Lender runs a risk in a flat market, let alone a falling one.

  • Chris Gardner 1st March 2011 at 9:59 am

    alex | 28 Feb 2011 10:50 am

    You dont know what you are talking about. 100% mortgage have been a feature of mortgage land for 25 years and many people have had them and enjoyed the benefits. Its not all about LTV its about making sure the credit worthiness of each case is assessed properly.

    a 50% ltv deal is just as likely to go pear shaped as a 90 ltv deal if not property underwriten.

  • Dan McGeehan 28th February 2011 at 7:55 pm

    This is good news which will hopefully lead to more competition and lower rates at 90%. Due to their strict underwriting which given their past mistakes is understandable i do not see them accepting a high percentage of applicants compared to other lenders.

  • Avenue & Co Private Finance 28th February 2011 at 7:08 pm

    The deal is: Repayment only, clean credit history, First time buyers and movers only and affordability based lending. Our company is one of few that can offer this to clients.

    Over 2 yrs its risky – as you move onto their SVR – currently (4.79%) which is only due to rise – and you may get a nasty shock after the fixed rate ends. Unless your property appreciates in value significantly and you have a good income, remortgaging will be hard. The 5 yr fixed rate is 6.59% and is on par with other deals fixed for 5 yrs at 90% LTV. For some borrowers the advice would be to save another 5% over 2 yrs and get a deal around 4.25% – the market is under pressure and house prices may fall further so could be worth waiting for. For others, it gets you in there with 10% – if you can afford it.

    The success will be in the take up – and many First time buyers may like it. Really, lenders need to reduce the pay rates for these 90% deals to make them take off – the 5 yr fix deal is akin to rates on a personal loan.

  • alex 28th February 2011 at 10:50 am

    Un true, cannot understand why these monkeys bailed out the banks with public money because of bad practice i.e leading way more then people can pay back and yet the greed again blinds them, you all wait and watch what happens if this goes ahead,it sounds like no one here understands RISK
    al trader