Black says: “The Coventry is one of the most active lenders in the residential mortgage market with its annual report and accounts stating that its net mortgage lending of £1.7 billion in 2011 was equivalent to 18.3 per cent of all net mortgage lending in the UK.
“At the same time it has remained a friend to the broker community by offering similar deals through both its direct distribution and its intermediary channel.
“With two-year fixed-rate mortgages making up 30 per cent of currently available mortgage products, the Coventry’s latest offering is targeting a crowded area of the market, and especially so given its stated maximum LTV of 65 per cent. At this undemanding LTV, it is squarely aimed at the highly prized low risk sector, which is where the majority of lenders are only too happy to play.
“The two -year fixed-rate mortgages specifying a maximum LTV of 65 per cent charge an average interest rate of 3.43 per cent together with a £653 arrangement fee. This puts the Coventry among the leading pack and the market leader of those available through intermediaries. However, there is much stiffer competition among the direct-only offerings and three of these currently trump the Coventry.
“Bank of Ireland offers a 2.78 per cent deal with a £799 fee and First Direct weighs in with two to beat the Coventry – one at 2.89 per cent with a £499 fee and the other at 3.19 per cent with no arrangement fee.
“There are even some direct-only mortgages at higher LTVs which give it a run for its money. At 70 per cent LTV the Chelsea has a 3.04 per cent rate for remortgages with an £895 fee; at 75 per cent LTV the Market Harborough charges 2.69 per cent with a £1,595 fee and the Cumberland comes in at 2.89 per cent with a £699 fee.
“Prevailing sentiment is that we’re unlikely to see any increase in the Bank of England base rate any time soon, with many suggesting that it may remain at 0.5 per cent until 2014 or even 2015. Such sentiment may prove to be wide of the mark, but it does beg the question whether those looking for a new mortgage are being wise to contemplate a two year fixed. It could be that available mortgage rates are considerably higher when the two-year fixed rate ends and, with shorter-term deals, there is also the issue of having to pay arrangement fees on a more frequent basis
“The Coventry should see a reasonable level of demand for its 3.18 per cent fixed rate with the majority being introduced through intermediaries.”