October 29th, 2014
Nationwide will today be launching a selection of 10 year fixed rate options, in answer to demand for longer term interest rates. The recent spate of interest rate reductions has vastly reduced the margins offered by many lenders, with particularly attractive options available in the longer term market. As a lender that is a supporter of contractor and self-employed workers, the move will be welcomed by the sector.
The range encompasses a headline 70 per cent loan to value fixed rate at 3.49 per cent, with a £499 fee for first time buyers, and an increased fee of £999 for all other purchasers. For the higher loan to value end of the market, Nationwide will offer a 3.94 per cent 10 year fixed to 75 per cent LTV, and the 4.54 per cent iteration up to 85 per cent LTV.
The lenders range will compete directly with both Woolwich and Yorkshire Building Societies own market leading 10 year fixed products, offering much needed competition in a section of the market that most other lenders choose to not utilise. Nationwide’s director of mortgages and savings, Richard Napier, said yesterday that the decision to introduce these options came as a direct response to demand in the market for longer term security, with the high potential of a base rate increase looming on the horizon that would usher in wholesale interest rate increases.
He said: “At Nationwide, we’ve seen significant amounts of customers favouring longer term fixed rate mortgages this year. In September almost a quarter of new reservations were for our five year fixed rate products. Clearly prudent customers want to protect themselves against payment increases and so the introduction of a new ten-year fixed rate deal is a logical addition to provide for this trend.”
In other news, the Council of Mortgage Lenders has stated their collective belief that mortgage lending has levelled off in recent months, with no clear indication that any forward progress will be made in the near future. While the body released estimated lending figures for September that stated £17.8bn had been lent so far this year, an increase on the same period in 2013 when £16.2bn was advanced, the CML said that the period provided a dip on the previous month’s figures. In fact, the August figures provided the first evidence that market activity may be declining for the first time since Easter this year.
The chief economist for the CML, Bob Pannell, provided insight: “Uncertainty over when we will see the first increase in UK base rates is exacerbated by weaker growth prospects in several major economies, including the eurozone. Recent indicators and policy actions corroborate our view of a gentle easing in market conditions. There is growing evidence that mortgage lending activity, and the housing market, are sitting on a plateau.”
Also commenting on the matter, Dale Parry, a senior mortgage consultant for Contractor Mortgages Made Easy, said: “Fears of a market decline are understandable, given recent reductions in the level of activity for the market. However, lenders have been proactively reducing mortgage products across the board, in attempts to encourage a rise in business, so the trend is likely to be short term.”
Article By: Simon Butler, Senior Mortgage Consultant at Contractor Mortgages Made Easy
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