As mentioned a few weeks back there are a few things going on at present that mean we are seeing some lenders starting to put their rates up, with all the main lenders increasing at the back end of last week.
Of course, all the talk from the Bank of England about rate rises over the coming months have not gone away, with representatives continuing to talk about this even whilst in Australia recently.
We have also seen the withdrawal of the Governments Term Funding Scheme which helped with £127 billion worth of cheap funding for banks which undoubtedly kept rates lower for longer. Those that used the fund, of which there were quite a few, will now need to find more expensive forms of funding to lend out which of course will be passed on to consumers.
All of this together has put pressure on the costs of funds generally and we are seeing higher rates as a result.
Meanwhile, innovation in the mortgage market has proved to be alive and kicking as the Post Office launch a total of three innovative products aimed at First-Time Buyers and older borrowers.
Their new “Family Link” product allows parents to help their kids get on the property ladder by offering a 90% loan to the First Time Buyer and then a further 10% loan secured on their own property, providing there is no other loan on it. This second loan is interest free.
So the parents do not actually have to pay out any cash, getting an interest free loan with the charge lifted after 5 years.
Meanwhile, their Post Office “Retirement Link” is available for borrowers over the age of 55 looking to release equity on their unencumbered property on a capital & repayment basis up to a maximum age 90 at the end of term, up to 50% loan to value. Interest only has a maximum loan to value of 30% LTV up to age 80 at end of term.
They can borrow up to a maximum loan of £500,000 and will be assessed against pension income affordability.
It is good to see a mainstream lender and a trusted brand providing exactly the type of product that is needed for those older borrowers who are able to continue servicing a mortgage and who do not want to, or are unable to, sell their existing property and move on. Extending the age limits to 90 on a repayment basis and 80 on an interest only basis gives borrowers in this sector a real option other than a potentially more expensive Equity Release loan that will eat into their equity.
This will give older borrowers more time to consider their options carefully and I know that the Post Office have taken time to research this area of the market carefully and listen to consumer needs. It is refreshing to see a lender take this kind of approach and sets down a marker for other lenders to follow suit.
Barclays also got in the act with their “Green Mortgage” initiative. For those borrowers looking to purchase an Energy Efficient New Build Property, Barclays have laid on some specially discounted rates to help drive a move to greener properties.
In the general rate world, 2-year fixes are available at 1.34%, (3.83% APRC) and 5-year fixes from 1.83%, (3.72% APRC) whilst variable discounted rates are around from 0.97%, (4.40% APRC).
Those looking at a Buy-To-Let can still obtain products from just 1.39%, (4.47% APRC) for a 2-year fix.