by Mark Johnston
Mortgage Deals On The Market in 2013.
It seems we are in the middle of a “high-street mortgage war”, according to a recent report from the Financial Times.
Although with funding still scarce lenders are increasingly competing for credit worthy borrowers with large deposits.
According to some recent research the ‘battleground’ in the mortgage war is as always for those consumers who have at least a 40 per cent deposit or equity, a decent job and of course no credit issues.
Therefore, as the cost mortgage deals continues to fall the majority of these reductions will only apply to those who have significant equity in their home or a high deposit to put down.
Many experts believe that The reasons we are seeing these record low rates starting to appear are down to a combination of lower swap rates, a fall in London Interbank Offerd Rate (LIBOR) and the introduction of the Government’s Funding for Lending Scheme.
The competition for these customers combined with record low base rate and the funding for lending scheme has now led to some of the cheapest rates in history.
Barclays has reduced the cost of some its fixed term mortgage by up to 1 percentage point. However only those with at least 40 per cent equity or a 40 per cent deposit will be able to access a cheaper rate as a result of these changes.
Borrowers with a 40 per cent deposit can now take a two year fixed rate at 2.39 per cent with a £999 fee, while at 70 per cent loan to value (LTV) the three year fixed rate has come down to 2.89 per cent with a £499 fee.
Yorkshire Building Society launched an offset mortgage deal recently which is available at 2.19 per cent and comes with a £995 product fee.
Abbey has recently launched a two year fixed deal at a rate of 2.24 per cent on a 60 per cent loan to Value (LTV), with £250 cashback for purchases, free valuation and legal service, but with an arrangement fee of £1,995.
The Natwest is another major lender to launch a mortgage deal with a rate below 3 per cent but again only for those borrowers that that have a 40 per cent deposit.
Their deal is another two year fix at a rate of 2.29 per cent and it too comes with £250 cashback and a hefty fee of £1,995.
While first time buyers are still not seeing the benefits of the rate cutting war, which is so far about banks going after people with plenty of equity, there are however predictions that this could change.
Hopefully, as more providers make use of the Funding for Lending scheme we’ll see better deals across the full spectrum of mortgages, otherwise there will be little positive impact on the mortgage market and a wasted opportunity to boost the wider economy.
Nevertheless many indusrty experts still believe that the mortgage market is not about to ‘explode in to life just yet!
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