Newbury Building Society
Is now the right time to be considering variable rate mortgages?
According to data from UK Finance, 96% of all new residential mortgages in the UK are on a fixed rate[1]. We all understand the benefits of fixed rates, offering security for customers and giving them control over what will probably be their biggest monthly outgoing.
But it hasn’t always been this way. Between 2005 and 2013[2], new residential variable rate mortgages accounted for 37% of new lending with it reaching over 50% in 2010[3]. The bank base rate reductions in 2008 and 2009 made variable rates extremely attractive for customers.
With inflation easing and lots of commentary predicting that we could see interest rates fall in August or September, is now the right time to be more seriously considering variable?
Part of the reason customers might not, is because variable rates are a bit more difficult to get your head around. Is it a tracker, is it a discount, is it the standard variable rate, does it or does it not come with an early redemption charge, somebody said I could overpay more, and why are you talking to me about floors and ceilings…it’s just all a bit too much when compared with the simplicity of a fixed rate.
However, if you look past the Ronseal of a fixed rate and get through the detail and decoration of a variable rate, customers might find it’s exactly what they’ve been looking for. Lenders have often had a more flexible approach to switching out of a variable product early, and anecdotally, customers tell us when interest rates go up, they feel they are more manageable on a variable rate. Customers can absorb the increases as they go rather than the sudden demand and payment shock of coming off a fixed rate.
The other thing that has made variable rates attractive to customers in the past is the differential in interest rates, where customers can visualise one, two, or maybe even three 0.25% bank rate changes before they get to the price of a fixed rate. We are not in this position necessarily today, but it might only be a matter of time until we are.
Ultimately, whether a variable rate mortgage is right for a customer will depend on their personal financial circumstances, and mortgage brokers and mortgage advice have a significant role to play here. Even if they are not right for some customers, it is clear variable rate mortgages have the potential to make savings for customers when interest rates fall, and it feels like we are on the precipice of that moment now.
A bank base rate cut will likely be the jolt customers need to consider variable more seriously. Only time will tell whether some customers move before the bank rate does.
Dean Scott is the Director of Proposition and Distribution at Newbury Building Society
[1] UK Finance new residential lending by type and length of deal rate report (April 2024)
[2] UK Finance new residential lending by type and length of deal rate report, averaging April 2005 percentage to January 2013.
[3] UK Finance new residential lending by type and length of deal rate report, proportion of variable rate mortgages all over 50% (53,54,54,55,54,52,50).
Mansfield Building Society
Buy to Let lending now available in Scotland
Our Buy to Let lending is now available in Scotland* for first time buyer landlords and portfolio landlords with up to 10 properties. Lending areas include:
- Regulated Family Buy to Let
- Expat Buy to Let
- Consumer Buy to Let
- Capital raising, including for property refurbishment
- Top Slicing, using earned income or personal wealth to support affordability
*Buy to Let lending in Scotland excludes Limited Company Buy to Let, Holiday Lets and properties located in the Outer Hebrides, the Orkney Islands, Shetland Islands and postcodes IV41-48, IV51-56, KA27, PA20-49, PA60-78, PH41-44.
For more information about our products and services, including our affordability calculator and applying through our online portal, visit our website at mansfieldbs.co.uk/intermediaries.
Lendinvest Mortgages
LendInvest Mortgages simplifies Residential Mortgage products and reduces rates up to 35bps
LendInvest Mortgages, announces the launch of a streamlined range of residential mortgage products, delivering simpler and faster options for homeowners.
This enhancement follows the introduction of improved criteria in June and includes significant rate reductions, making LendInvest’s mortgage offerings more competitive and straightforward.
Highlights:
- Streamlined product range: LendInvest has simplified its residential mortgage products to provide more straightforward options for brokers and their clients.
- Rate reductions: Up to 35bps off 2-year fixed-term products and up to 30bps off 5-year fixed-term products, offering more competitive rates to customers.
- Redesigned rate guide: A newly designed rate guide further simplifies the mortgage offering, ensuring clarity and ease of understanding for brokers and customers alike.
Paula Mercer, Head of Sales at LendInvest, commented: “We are excited to bring these enhancements to our residential mortgage products. Our goal is to make the mortgage process as simple and efficient as possible for brokers and their clients. With these changes, we are confident that we can offer competitive rates in the market while maintaining the high standards of service our customers expect.”
For more information, please visit our Residential Mortgages Page or log in to our Customer Portal to discover the new products.
LendInvest Mortgages and LI Mortgages are registered trading names of LendInvest Loans Limited. LendInvest Loans Limited is authorised and regulated by the Financial Conduct Authority (FRN:737073).
LendInvest Loans Limited is a company registered in England & Wales (Company No. 09971600) and is a wholly owned subsidiary of LendInvest plc. LendInvest plc is a limited company registered in England No. 08146929. Registered office at: 8 Mortimer Street, London, W1T 3JJ.
Regulated lending is provided via LendInvest Loans Limited. Borrowing through LendInvest Loans Limited involves entering into a regulated mortgage contract secured against property. Your property may be repossessed if you do not repay your mortgage in full.
TEACHERS FOR INTERMEDIARIES
Case Study: How we cleared a re-mortgage on a pilot’s self-build for take off
The case:
Our client had recently completed construction of a bespoke self-build home using modern construction techniques, within commutable distance from their airport base. They now needed a re-mortgage solution to replace the bridging finance and loans used to complete their project.
The financial detail:
This high-flyer’s income included a substantial base salary plus a range of pilot specific financial allowances and what appeared at first glance to be an atypically complex car allowance. The client’s spouse worked in education, and they additionally owned a buy to let property.
The solution:
To redeem the bridging loan, and additional loans arranged to complete the self-build development, the client required a re-mortgage of six times income, which, by taking into account all elements of both clients’ income we were able to reach. To meet the clients needs the re-mortgage was offered on a part interest only basis over a 21 year term, with the client providing the required evidence of an agreeable repayment vehicle.
The difference we made:
We’ve all watched enough of the television self-build programmes to know what an epic challenge it is to build your own home, with unexpected twists and turns at every step. So once the hard work is done and you’ve moved the family in, sorting out a long term re-mortgage shouldn’t be a another huge and stressful challenge. TFI offers up to six times lending subject to affordability, and by looking at this clients allowances as well as base pay on a part repayment part interest only basis over a suitable term meant this case was plane sailing!
Ralph Punter, BDM at TFI said: “If you’ve got clients who have complex income, even in traditional jobs, or those who need to reach up to six times income for affordability get in touch to talk through the case.”
Standard Life Home Finance
Is your client eligible for £1,000 cashback?
Standard Life Home Finance are pleased to have launched a new proposition offering your clients a free Energy Performance Certificate (EPC) when they complete on a Horizon or Horizon Interest Reward lifetime mortgage.
Plus, your clients could qualify for up to £1,000 cashback following completion, if their property receives an A or B rating for energy efficiency.
Available for a limited time only. T&Cs apply.
Register now or login to create a KFI and offer your clients even more with Standard Life Home Finance.
United Trust Bank
Contractor and Self-Employed Customers are Welcome
Did you know?
There are now over 6 million self-employed and contractors in the UK, and as more and more people switch on to the benefits of flexible working, those numbers look set to keep rising. What this means for brokers, is an increasing number of customers are now falling outside of mainstream lender criteria and are requiring the specialist help of lenders like UTB. Whether you are a sole trader, contractor operating through your limited company or through a payroll umbrella, UTB will take a view and consider your application.
How we help:
Contractors
✓ Daily rate x 5 x 48 weeks
✓ Up to 85% LTV
✓ No minimum contract value required
(but minimum income requirements still apply)
✓ No specific profession requested
✓ Minimum 3 months remaining on existing contract upon completion
✓ Minimum 12-month evidence of contracting
✓ Umbrella Companies – 2 months’ payslips needed and income minus all pre-tax deductions.
Self-employed
✓ Latest year’s accounts considered for affordability
✓ 2 years’ proof required
News just in. Having listened to feedback about finding ways to assist with affordability for background buy to let portfolios, we have…
BTL
✓ Reduced the rent yield requirement for background buy to lets to 125% (previously 130%)
✓ When using BTL income to support affordability, we will only use the profit.
This means we need to take into account the mortgage payments which you will need to enter into our mortgage portal. This will affect DTI on these cases
✓ We now accept foster income
✓ On rare occasions ILA is required, we now accept this via video call
Full details can be found in our packaging guides available in the Document Library via our portal, and you can check us out on: www.utbank.co.uk/intermediaries/mortgages/
Alternatively, contact your local BDM or phone our team on: 0207 031 1551
Aldermore
Podcast feature and post-election thoughts
Our Managing Director for Property, Ross Dalzell this week featured in a FT Adviser podcast.
Alongside Ross was Kate Davies from IMLA, with the FT’s Chloe Cheung presenting the podcast What do mortgage lenders think of the new govt’s housing policies? – FTAdviser
There were a range of topics covered, including potential reforms to the planning system, the new Government’s housebuilding targets & supply side vs demand side interventions.
Our aim is to work alongside the new government to build a better, fairer housing market.
We have also recently published our post-election thoughts – Time for Optimism which can be viewed below:
Paragon
Next generation Landlord report 2024
Paragon spoke to 500 landlords with aspirations to develop property portfolios about what is driving them, their influences and how they plan to grow their property business.
It’s vital that the UK has a thriving private rental sector (PRS). Everybody who needs or wants to rent a home should have access to a good quality property at a reasonable price. Until recent years, the market has worked well. But in a post-pandemic world, we are experiencing a severe imbalance between supply and demand. Recent data shows that tenant demand is twice the level of pre-Covid, whilst supply is down by a third. Buy-to-let is coming up to its 30th anniversary and it is a UK success story. With approximately £300 billion in buy-to-let mortgages outstanding across two million loans, it is a mature financial product that has weathered many economic storms. However, those early landlord pioneers of the buy-to-let market in the mid-90s are now coming to an age where they may be looking to downsize their portfolios or sell entirely in retirement. Sadly, some are no longer with us. The PRS therefore needs a consistent flow of new landlords coming into the sector, those with aspirations to develop the portfolios of the future. Our analysis of industry data shows that over the past 10 years, the average age of landlords purchasing a buy-to-let property with a mortgage has fallen. This is encouraging as it highlights that property investment is still viewed as an attractive asset class by a demographic with so many investment opportunities competing for their capital. We spoke to some of those – landlords with between one and three properties – who have made their first forays into property investment and have an eye on future growth. We wanted to understand what is motivating them to build portfolios, what attracted them to property investment and how they operate their portfolios currently. It is clear there is a committed group of younger landlords who stand ready to take the mantle and provide the rental homes of the future. What they require is a regulatory and fiscal environment that encourages them to do so.
Richard Rowntree
Paragon Bank – Managing Director of Mortgages
For any new business enquiries, contact your local Business Development Manager or call 0345 849 4040.
Read the full report here
Just Adviser
Register to start the free vulnerability training
- The characteristics of vulnerability and the importance of creating a safe disclosure environment especially where the signs may not be obvious
- Where you can make changes in working practices to ensure clients receive the support and care to meet their needs
- How to ensure your clients, including those with the characteristics of vulnerability, receive consistently good outcomes in line with Consumer Duty.
Reliance Bank for Intermediaries
Key Mortgage Partner update – 22nd July 2024
Reliance Bank Ltd are excited to announce the launch of a new distribution partnership with Iress’s Tri Gold and X Plan sourcing platforms.
This new partnership further enhances the Bank’s commitment to focus on its Shared Ownership proposition to support social impact lending, this also enables the Bank to be visible to more mortgage advisers who use these sourcing partners but until now have been unable to utulise Reliance Bank beforehand.
Skipton Building Society for Intermediaries
Introducing the Skipton Group Home Affordability Index.
The Index reveals for the first time the stark reality of securing a home in Great Britain today. Created in partnership with Oxford Economics, it utilises data from across Skipton Group businesses, the Office for National Statistics, the Bank of England and third-party external sources to provide unique insight on the affordability challenges faced by renters, first-time buyers and homeowners by age, income, geography and family-type.
- Only 1 in 8 potential first-time buyers in Great Britain can purchase the average first-time buyer property in their area. This falls to just 1 in 100 for those earning £22,850 or less.
- Almost 80% of potential first-time buyers have insufficient savings for the deposit needed to get onto the property ladder in their area.
- 4 in 10 renters are spending 45% or more of their income on essential housing costs creating a major barrier to saving for a deposit.
- Wales, West Midlands and London identified as the least affordable areas in Great Britain.
You can see the Affordability Index here:
Skipton Group Home Affordability Index – Skipton Group
Market Harborough Building Society
Recent changes make it easy to say YES to your clients’ cases
As we continue to make it even easier to say YES to your clients’ applications, we’ve made two key changes to our range by:
- Extending our max loan to value (LTV) to 80% for residential and buy to let cases up to £2m
- Increasing our maximum loan size to £5m – available for residential applications, which benefit from a tiered structure
Our tiers are based on the level of case complexity and are designed to help you easily source the right solution for your clients, including those with more challenging circumstances.
And that’s not all… This news follows hot on the heels of our recent criteria enhancements:
✔ Earned income considered up to age 75
✔ 100% of an applicant’s income from their second job included
✔ ‘Sale and downsize’ interest only cases now available up to 75% LTV
Find out more about these great changes and how they could help you here – www.mhbs.co.uk/intermediaries/latest-news/new-products
And we won’t stop there! These are just some of the steps we’re taking as part of our commitment to supporting you. We’d love to hear your thoughts on how we can continue to make things even easier for you to place your cases and work with us. Why not chat to your nearest BDM, you can find their details here – www.mhbs.co.uk/intermediaries/contact-us/
Home Plus from E.Surv
Boost Client Trust and Your Reputation
Did you know that 42% of property surveys uncover potential issues with the property? (source)
Recommending a comprehensive house survey from e.surv goes beyond just ticking a box – it offers significant benefits for you and your clients.
By recommending comprehensive house surveys, you can enhance client trust and satisfaction while showcasing your commitment to their best interests.
Key Benefits for You
🤩Enhanced Client Trust
Demonstrate your dedication to clients by ensuring they are fully informed about the property’s condition, leading to increased satisfaction and loyalty. Recommending e.surv surveys highlights your commitment to their best interests, leading to positive referrals and repeat business.
📈 Professional Reputation
Position yourself as a thorough and diligent professional, gaining a reputation for excellence in client care. Referring quality surveys sets realistic valuations for clients, ultimately ensuring smoother negotiations with accurate property valuations.
⏳ Reduced Risk of Disputes and Delays
Help prevent post-purchase disputes by identifying potential issues early, reducing the risk of legal complications. Early identification of issues prevents delays and complications ensuring a smoother transaction process.
By integrating house surveys into your service offering, you can strengthen your relationships with clients and increase your chances of repeat business and referrals.
LATEST BLOGS:
Aldermore – Backing up Britan’s Contractors
TMA Club – Quality Protection everytime
Coventry for Intermediaries – How to prevent Mortgage Fraud: A brokers guide
TMA Club – June industry round-up
TMA Club – Busting the myths about specialist lending
First2Protect – Referring leads as a mortgage adviser
