The Bank of England have revealed figures that show new homeowners who secured a new mortgage can now benefit from the lowest interest rates in 6 years! Fixed-rate home loans have fallen to their cheapest level for six years. The Co-Operative Bank, Northern Rock, and the Chelsea Building Society all revealed competitive deals recently.
On average a 2 year fixed-rate deal has fallen to 3.88% in February 2010, the lowest rate since summer 2003. As well as this, there was also a fall in the average cost of a 5 year fixed rate mortgage, falling to 5.49% from 5.56% the previous month.
The reason for the fall in interest rates is due to lenders competing to attract good-quality borrowers and encourage existing customers to remortgage.
New Homeowners and First Time Buyers
There has been the introduction of an innovative new range of guarantor home loans from part of the Nationwide Building Society group, The Mortgage Works.
The Mortgage Works allows parents or relatives to be financially responsible, for a proportion of the mortgage, therefore removing the risk of backing the entire loan. This is a welcome deal from young professionals that try to get on the property ladder, as we all know how hard it can be. The applicant must be able to afford at least 70% of the loan repayments, therefore the guarantor must be able to make up the remaining 30%, and requires a 10% cushion. A positive step for the housing market and relieves some of the stress on first time buyers when purchasing a property.
Halifax has taken a different approach, getting rid of the guarantor deals, and promoting another approach. Their “Lend a Hand” deal which allows first time buyers to borrow up to 95% of the value of a property with the backing of a parent or relatives savings is due to very strong demand for mortgages in recent times. This approach provides a different kind of service for borrowers.
People trying to get on the property ladder now have a choice in how they approach obtaining a mortgage for their home.
Another approach a first time buyer may take would be a shared equity scheme that can help when buying an apartment or house. The Hub in Manchester provides such a scheme, where you can buy a studio, 1 bed, 2 bed or 3 bed apartments in Manchester.
Before you buy an apartment or house, make sure you call The Hub to discuss there shared equity scheme, and call Sinead Jones for more information.
