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The number of fee-free deals available to those seeking a fixed rate mortgage has more than doubled over the past year, rising from 556 in November 2015 to 1,162 today. This means that 40.7% of the 2,854 fixed rate mortgages available are entirely fee-free.
The cost of the average five-year fixed rate mortgage has fallen significantly over the past year, with many providers launching their lowest ever rates. As a result, this competition has seen the average five-year fixed mortgage rate fall below 3.00% for the first time on record, with the figure now standing at 2.98% – down from 3.30% a year ago, and a notable drop from the 4.68% recorded in November 2011.
Independent Mortgages Direct NE has been selected to pilot the new Mortgage Trust/Castle Trust 85% Buy To Let purchase product as follows:-
The product is a combination of a standard buy to let mortgage via Mortgage Trust up to 70% LTV and a Castle Trust equity loan up to 20% LTV (joint maximum 85% LTV) over a maximum 10 year term and is available for property purchases above £75,000 to experienced landlords with five properties or more and a combined earned income over of £25,000 excluding rental income.
There are no monthly payments payable on the 15% equity loan, instead 30% of the capital appreciation (i.e. double the equity loan) is repaid to the equity lender at the end of the term or when the property is sold, whichever is the earlier. In the above scenario the landlord borrows 85% of the purchase price but only pays interest on 70% leading to a much improved cash-flow. Furthermore, with the rent to interest cover calculated only on the main mortgage, this product allows you to sensibly borrow more on lower yielding properties – ideal for those high value/low yielding prime properties.
The pricing on the main buy to let mortgage is competitive with two options available, both having a free valuation and £150 Application Fee as follows:-
3.99% Fixed until 31/01/2017 with a 1.5% Arrangement Fee
4.25% Fixed until 31/01/2018 with a 1.0% Arrangement Fee
This new product is great news for landlords looking to expand their portfolios, if would like to discuss a particular purchase in further detail give us a call on 0800 0350095.
February’s Halifax House Price Index, released yesterday, confirmed that house prices are continuing to accelerate at a rapid pace, increasing by 2.4% over the month. This puts the average UK property at Â£179,872 with prices having now risen for 11 consecutive months, while on an annual basis they’re rising even faster by showing an increase of 7.9% year-on-year. Rising prices are being fuelled by the distinct imbalance between supply and demand as the level of housing stock hasn’t been enough to accommodate the increasing number of new buyer enquiries, with this demand being largely driven by a combination of reduced unemployment, low interest rates, increased consumer confidence and a better economic outlook overall, as well as Government initiatives such as Help to Buy. There are signs, however, that continuing pressures on household finances and the boost in housing starts last year (an increase of 24% on 2012’s total, according to figures from the Department for Communities and Local Government), could constrain upwards pressure on house prices, with supply and demand potentially starting to balance out to reduce the possibility of excessive rises in the medium-to-long term.
A leading Bank of England policymaker has said the base rate is likely to rise in “spring 2015” in unusually revealing comments made this afternoon. Martin Weale, one of the Bank’s nine Monetary Policy Committee (MPC) members, said to Sky News families and businesses should prepare for a rate hike that may come before the general election, scheduled for 7 May 2015. That follows the Bank’s latest inflation report, issued earlier this month, which said the BoE will not increase rates “for some time”, and predicted the base rate would stand at 2% by 2017. Though the eight other members of the committee may disagree with him, Weale’s comments appear to offer clear guidance on when borrowing costs in the UK can be expected to rise from their current all-time low of 0.5%. He told Sky News: “I think it is very helpful if we try and explain that the most likely path for interest rates is that the first rise will come perhaps in the spring of next year. And then the path is likely to be relatively gradual.” However, if average earnings rise more quickly than expected, Weale does not rule out the possibility of a rate hike at an earlier stage. Yet he does not see rates rising anywhere near the 5% mark, considered normal in the past, in the foreseeable future.
The latest Monthly House Price Index from Nationwide has revealed that house prices rose by 0.7% in January to reach £176,491, a year-on-year rise of 8.8% (up from Â£162,245 in January 2013) and posting the 13th successive monthly increase. Despite this, average house prices are still around 4% below the peak levels seen in 2007. All regions in the UK saw annual price growth although London continues to lead the way, showing an increase of 15% in Q4 2013. However, figures from the Land Registry’s House Price Index, also released yesterday, reveal a slightly different picture – although this Index also shows that prices are rising, it’s calculated a less significant annual increase of 4.4%. The average house price in December 2013 stood at Â£167,353, up from Â£160,291 in December 2012, while also being 1.1% higher than in November. The figures again show that London saw the greatest rate of annual growth, posting a year-on-year increase of 11.2%. The improvements to the housing market are thought to be on the back of increased employment, record low mortgage rates and improved confidence in the sector, however experts warn that with an increase to base rate expected in the future it could mean affordability becomes a burgeoning issue.
The Bank of England’s Monetary Policy Committee has maintained base rate at 0.5 per cent and the size of its programme of quanitative easing at £375bn. The MPC has held base rate at a record low level of 0.5 per cent since March 2009. QE has remained unchanged since July 2012 when it was raised by £50bn.
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Independent Mortgages Direct NE is Authorised & Regulated by the Financial Conduct Authority – Registration 301727
Sole Trader: Gary Robert Howe