The nation is back to work after the Christmas break, but the mortgage elves have been busy over the festive period, preparing a veritable sack of goodies for borrowers.
There have already been a large number of new deals launched – and not only are the New Year mortgages extremely competitive, they are also predominantly targeted at first-time buyers, or those with a small amount of equity.
Let’s hope this is a sign of things to come for 2013. Indeed a survey of lenders released this week by the Bank of England says that they expect to increase their lending at high loan-to-value ratios in the first quarter. In other words we will likely see more deals for those with smaller deposits or equity levels.
And that’s exactly what the mortgage market is crying out for.
HSBC kicked off the New Year of new deals with a range aimed squarely at first-time buyers (but available to any borrower with at least 10% upfront).
Plus, as a special offer to current account customers all of the lender’s 90% mortgages are currently fee-free. If you don’t hold a current account with the bank the fee is £599, which is still pretty reasonable.
It has launched a two-year fixed rate mortgage up to 90% of the property’s value at 4.19%, a five-year fix at 4.69% and a term tracker at 4.69%.
According to financial information provider Moneyfacts the five-year fixed rate is up there with the best buys for HSBC current account holders (who can bag the fee-free option), and the two-year fix is also alongside the market leaders.
But the rates can be beaten.
For example, First Direct has a fee-free, five-year fix at 4.59% up to 90% loan-to-value. And if you are prepared to pay a large upfront fee of £1,495 Chelsea Building Society has a two-year fix at just 3.89% for borrowers with a 10% deposit.
In addition to the new deals aimed at first-time buyers, HSBC has also launched a new three-year fixed rate at just 2.79% for those who can muster a 40% deposit. It comes with a fairly standard £999 fee.
Leeds plays the long game
Leeds Building Society has kicked off 2013 by chopping the rate on its ten-year fixed mortgage by 0.29 percentage points, to a market-leading 4.29%.
The deal is available to borrowers with at least a 25% deposit, but for those who only have a 20% deposit it also has a ten-year fix at 4.69%.
Both deals come with a standard £999 fee. Borrowers can also overpay 10% of the balance a year without penalty and the deals are portable if you want to move home within the deal period.
For those who want a long-term fixed mortgage these ten-year fixed rates are hard to beat, though it’s worth checking out the Co-operative Bank and Skipton, who have mortgages that come pretty close.
Focus on fixed rates
Norwich & Peterborough Building Society has focused on fixed rates in January, launching its lowest ever five-year fixed rate mortgage.
The deal is priced at 3.19% and is available up to 75% of the property’s value.
If you want to fix for a shorter period, N&P has also launched a three-year fixed rate mortgage at 2.84%, also at 75% LTV.
Both come with a £795 fee and are certainly attractive mortgages, but they can be beaten. For example, Yorkshire Building Society has a five-year fix at 3.14% up to 75% LTV with a £995 fee and Chelsea Building Society has a three-year fix at just 2.74% (albeit with a £1,695 fee).
Help for home movers
Nationwide has announced it is extending its Save to Buy scheme for first-time buyers to include home movers.
Customers can choose between two savings accounts, an ISA and non-ISA, both paying 2% AER. Once you have saved at least £50 a month for six months you have the option of accessing a Save to Buy mortgage, available up to 95% of the property’s value. Plus you can earn cashback based on the amount you have saved, up to £1,000 cashback if you have amassed savings of more than £10,000.
The scheme aims to help homeowners with a small amount of equity – sometimes termed mortgage prisoners – to move to their next home
Finally, Co-op subsidiary Platform has launched a new range – exclusively available through brokers – which includes a five-year fixed rate at 2.99% (up to 60% LTV) with a £950 arrangement fee and a fee-free, 60% LTV two-year fix at 2.95% - both competitive deals. Also on offer are a number of new products with a £250 cashback bonus including a two-year fixed rate at 2.62% with a £950 arrangement fee.
All deals come with a free valuation and remortgages also come with free legal fees.
As you can see, there has been a lot of activity already since the start of 2013, and the experts reckon that there is more to come in the shape of even better deals.
In fact some think 2013 will see the best mortgage rates ever becoming available, as the Funding for Lending Scheme enables lenders to offer more attractive rates.
If you are free to remortgage, or if you are looking to buy your first home, now could definitely be the time to start your search.
This article aims to give information, not advice. Always do your own research and/or seek out advice from an FSA-regulated broker before acting on anything contained in this article.
We tend to only give the initial rate of a deal in our articles, but any deal which lasts for a shorter period than your mortgage term may revert to the lender's standard variable rate or a tracker rate when the deal ends. Before you take out a deal, you should always try to find out from your lender what its standard variable rate is and how it will be determined in the future. Make sure you take all this information into account when comparing different deals.
Your home or property may be repossessed if you do not keep up repayments on your mortgage.