Type: Fixed rate mortgage
Fixed term: Two years
Fixed rate: Loans up to 95% of valuation – 6.95%, up to 90% of valuation – 6.45%, up to 75% of valuation – 6.25%
Minimum loan: £25,000
Maximum loan: Up to 95% of valuation subject to a maximum of £500,000, up to 85% of valuation subject to a maximum of £1m
Income multiples: Based on affordability
Conditions: Loan up to 95% of valuation for existing borrowers only
Flexible features: Overpayments up to £500 a month, underpayments, payment holidays, lump sum withdrawals, interest calculated daily
Arrangement fee: £599, £299 for first-time buyers
Redemption fee: 1.5% of the amount repaid in the first
Introducer’s fee: Refer to lender
This Nationwide two-year fixed deal comprises a range of rates depending on the maximum LTV, with the 95 per cent rate available only to existing borrowers.
London & Country technical manager Richard Morea says: “The rates on offer to homebuyers are 6.25 per cent for loans up to 75 per cent LTV, 6.45 per cent up to 90 per cent LTV and 6.95 per cent for loans to existing borrowers only up to 95 per cent.
“This latest range is unlikely to cause a stir as the recent reprice by Nationwide has placed the rates some way off the market leaders. However, in this fast paced market and with most lenders not having repriced recently, it won’t be long before they are more competitive,” he says.
Morea notes that these fixed rates all carry a reservation fee of £599, which is reduced to £299 for first time buyers, “However there is a separate range with higher rates, which carry no fee. The schemes are all portable but if this is not feasible, the early redemption charges during the fixed period are low at 1.5 per cent of the amount repaid.
Discussing the potential drawbacks of the Nationwide rates, Morea says: “Overall these are good products with a degree of flexibility from a good lender, but for the moment they are let down by the rate.”
According to Morea, there are a number of two-year fixed rates that will comfortably beat Nationwide on price. He suggests First Direct, which has a 5.49 per cent two-year fix up to 80 per cent of valuation. Loughborough at 5.75 per cent to 90 per cent LTV and RBS at 5.99 per cent to 75 per cent LTV are also seen as the main competitors. Morea adds that most of these deals have similar fees.
Morea concludes: “Further competition will come from longer term fixed rates as borrowers look for greater peace of mind, while they no longer have to pay a large premium to get it. “
Suitability to market: Good
Competitiveness of rate: Average
Adviser remuneration: Average