In recent weeks & months, borrowers looking to secure finance at higher LTV’s have benefited from forces beyond gravity as Banks & Building Societies have looked to ‘sharpen the pencils’. The ‘Mortgage Guarantee Scheme’ introduced via UK Government from April 2021 has buoyed the marketplace with a raft of lenders falling over themselves to participate: Barclays, HSBC, NatWest, Virgin Money, Halifax etc. Perhaps an unintended consequence of ‘Mortgage Guarantee Scheme’ is the downwards pressure this initiative has placed on rates/products at 85% LTV & 90% LTV. As it stands, it is possible to secure two year fixed-rates at 2.29% (90% LTV) - approx. 1% lower than rates seen during the height of the Global Pandemic!
In addition to lower rates at the higher LTV’s, there has been more good news for first-time-buyers as we’ve seen Nationwide BS expand their allowable ‘income multiples’ to approx. 5.5x current levels of basic salary (minimum £35k) - the only caveat is the requirement to opt for a longer-term fixed-rate product/structure. Nationwide BS are one of the latest lenders to join the ranks of providers willing to offer ‘5.5x income multiples’ to borrowers: Metro Bank, CYBG, Barclays, Santander, Newcastle BS, Platform Intermediaries - certain providers only look to offer enhanced income multiples to borrowers classified as ‘Professionals’ i.e. Doctors, Lawyers, Accountants etc.
And who can forget the headline-grabbing products/options currently on offer for borrowers able to maintain at least 40% equity in their property? Rates at the lower LTV’s are now at levels never before seen in the UK! Halifax Mortgages & Nationwide BS are clearly eager to snap-up their share of the market as they’re offering five year fixed-rate products less than 1% (with ERC’s/Penalties of up to 5% of the loan amount it is worthwhile reading the fine-print when it comes to products with extended fixed-rate periods!). Money has definitely never been cheaper and undoubtedly this will help to keep the property market humming despite the recent changes to Stamp Duty Land Tax (30th June 2021).
Fortunately, we’ve also seen a greater willingness from lenders/providers to accept a higher proportion of ‘non-guaranteed’ income into consideration for affordability purposes i.e. annual bonus income, commission etc. Providing borrowers can evidence ‘non-guaranteed’ income on recent payslips & P60’s –payslips or P60’s received during the COVID period – there are a number of providers that are happy to provide finance/borrowing against this income.
The ‘trifactor’ of more options/products at higher LTV’s, lower interest rates & improved criteria will be music to the ears for anyone looking to secure mortgage borrowing in the foreseeable future.