05.11.09 by Andrew Montlake
Base Rate Held As Competitive Products Return
This month’s decision on the Bank of England Base Rate itself was never
going to be the main talking point, it was of course held, but rather
whether more cash would be pumped into the system via the Quantitative
Easing (QE), programme, and if so, how much?
As it turns out, a further £25 billion on top of the £175 billion
already flushed through has been announced in order to stimulate the
economy further.
There has been much discussion about the effectiveness of the QE
policy, which is supposed to increase the amount of money in
circulation and encourage banks to lend more to individuals and
businesses. Many critics are yet to see evidence it is working and
accuse banks of holding onto the cash to strengthen their balance
sheets rather than lending it out.
However, in the mortgage market we have actually seen some significant
movement by lenders in recent weeks, by way of the introduction of not
only more competitive products, but also a welcome rise in the
loan-to-value ratios they are offering.
A new product war raged on last week as lenders reduced rates further,
especially where fixed rates are concerned, with Abbey leading the way
with 3.59% fixed until 02/02/2012 and just a £995 Arrangement Fee,
(4.2% APR).
The newly competitive Northern Rock still holds its own over 3 years at
4.39%, (4.7% APR) and 5 years at 4.99%, (4.9% APR) with lower fees than
its competitive and unique flexible features.
The return of products this low means that many who have held off remortgaging may find now is a good time switch finally.
On the tracker side of things, for those who do believe rates will stay
low for a while yet, Woolwich still win the lowest initial rate price
with their tracker that starts at just 1.98%, albeit for just one year,
(3.0% APR). The best tracker prize goes to Northern Rock again with an
initial rate of 2.59% for 2 years, (4.4% APR).
Woolwich also have the best offset product at 70% Loan-to-Value which,
at 2.97%,(3.1% APR), is proving more popular with savvy buyers who have
money on deposit to play with. In fact for those who would be cash
buyers, keeping their money on deposit to be used if needed rather than
sinking all their cash into a property is a great idea.
The good news for brokers and agents alike is that lenders have also
started to increase their loan-to-value bandings, with Nationwide once
again looking at 90%, albeit for existing bank account holders who will
pay in at least £750 per month.
Monty’s Mortgage Blog
29.07.10
House Prices & Lending To Individuals
The frustration felt by many individuals that banks still do not seem to be lending in sufficient quantities is still evident in the latest Lending To Individuals figures from the Bank of England, which explains the frustration felt by many would-be borrowers.
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