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Private Finance's Weekly Mortgage Memo - 2nd June 2021

This is our take on what is currently happening in the mortgage market. Our views are often cited in several national publications, including; BBC News, The Times, Telegraph, City AM, FT Adviser and Daily Mail, as well as a number of key trade publications, so this should keep you ahead of the curve. If you have any questions on any of these stories, or would like further information, please do not hesitate to get in touch.

  • 2-year fixed rate mortgage launches at 0.95% as the competition hots up
  • 95% LTV rates coming down with government guarantee scheme in full swing
  • Purchase business remains strong

2-year fixed rate mortgage launches at 0.95% as the competition hots up

This Wednesday, the 2nd of June, Platform will be launching a market leading 0.95% 2 year fixed rate, a further fall in the 2-year fix which we predicted in our recent memo. However, this has come out faster than we initially expected, having thought previously that lenders would slowly bring rates down to compete with TSBs and Hinckley and Rugby’s 0.99% rate it looks like we have a new competitor in the space pitching for market share. It is likely that this product will come with a £1,499 fee and only be for the highest of quality business at 60% loan-to-value or below and potentially have a minimum loan size (likely £350k+).

  • Lenders have capital to deploy which they can borrow very cheaply, this and other recent rate reductions shows confidence in the housing market, but also illustrates that lenders are battling for new business and potentially that demand for new business is slowing, curtailed as it by supply in the housing market and increasing prices…
  • We suspect we will see more competition in this space and possibly even as low as a 0.90% rate in the not too distant future.

95% LTV rates coming down with government guarantee scheme in full swing

Good news for first time buyers as the 95% LTV space becomes increasingly competitive. When rates were initially introduced they were around the 4% mark with many lenders not doing 2 year fixed deals. However, the best available rate in the market is 3.39% on a 2-year fixed term with other options around the 3.5% mark, with many more 2-year deals on offer than previous. Lenders are taking little risk on this product with the vast majority now backed up by the governments mortgage guarantee scheme so fighting for this business makes sense.

  • ​Again, this highlights increased competition from lenders and confidence in the market. At 95% LTV it would not take a huge shock to house prices or interest rates for people borrowing at this level to be in a bit of a difficult situation, something lenders really do not want…

Purchase business remains strong

May was another strong month for new purchase mortgage business for us, outstripping any other business type including remortgaging. This shows how strong demand is in the property market currently, despite the end of lockdown, which we believe may cause demand to subside considerably as people enjoyed their new found freedoms. These figures are boosted by a large increase in BTL purchases, as well as second homes and holiday lets. We suspect the “race for space” as it has been dubbed by some commentators will subside and that city centres will see renewed demand in the coming weeks and months.

  • With house price growth at record levels, 10.9% increase for the last year, the question is how sustainable is this growth and will it continue? We believe it will, especially over the summer and into the Autumn months – due to a combination of supply remaining constrained and as lenders increase their affordability criteria and decrease rates borrowers can in simple terms afford more…

Private Finance's Weekly Mortgage Memo - 2nd June 2021

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© Private Finance Limited, 2021. Private Finance provides independent mortgage advice and arranges individual mortgage solutions for clients. Private Finance is a trading style of Private Finance Ltd, 29 Lincolns Inn Fields, London, WC2A 3EG, registered in England no. 3855776 and its Appointed Representatives. Private Finance Limited is authorised and regulated by the Financial Conduct Authority (FCA registration number 310566).

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