by Mark Johnston
Natwest’s intermediary arm, Natwest Solution has launched a brand new mortgage aimed at first time buyers and those with little equity in their mortgage. The new home loan has a 90% loan to value so only a 10% deposit is required and is 6.19%.
The Bank has also launched a five year fixed mortgage at 4.49% which has a 60% loan to value. At the same time they also reduced some of their rates by up to 0.8% on its mortgage range to entice new customers.
They reduced their 5 year fixed rate mortgage which has a 90% loan to value. Originally it was priced at 6.99% but the bank has reduced it down to a competitive 6.99%. They also reduced the rate on their two year fixed rate mortgage from 5.29% to 4.49%. The loan has a 80% loan to value so a average priced home would require a £30,000 deposit or the equivalent in equity.
Lastly Natwest Intermediary Solutions reduced their two year fixed rate mortgage from 3.64% to 3.54% which has a loan to value of 75%.
Head of sales, Mark Bullard said: “The two new purchase mortgages will give intermediaries more choice at the different ends of the LTV spectrum. The new 90 per cent LTV product now means that brokers can offer first-time buyers a choice of a two or five year fixed rate mortgage.”
At the end of last year Natwest have decided to pull their interest only mortgages offered by their intermediary arm. The bank recently made the decision to stop offering interest only mortgages to first time buyers following a review.
The decision was probably brought about by the financial services authority’s mortgage market review which may force lenders to stop offering interest only mortgages altogether. The draft regulations by the FSA look like they will require lenders to make sure that borrowers have a realistic and sustainable plan in place to pay off capital on interest only mortgages. Many believe that this not a viable option to either evidence or administrate and think that it is the FSA’s way of outlawing these types of mortgages as they will become too difficult to manage once the regulations come into effect.
This change will take immediate effect so any first time buyers applying for a mortgage from either NatWest Intermediary Solutions or the wider RBS group will only be able to choose a capital repayment option. That said, this looks only to be the end of first time buyer loans as other types of customers can still get interest only mortgages so long as they have at least a 25% mortgage as all other existing mortgages have a loan to value of 75%.
Natwest aren’t the only ones who are looking to drop some of their more riskier products. The state owned Northern Rock, Lloyds Bank and even Coventry Building Society.
A spokesperson for Natwest said: “As a responsible lender, it is prudent for first-time buyers to build up equity in their property by reducing their capital from day one, particularly in times of economic uncertainty.
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