Connells has stolen a march on competitors by announcing a 95% mortgage, exclusively available through its branches and aimed at first-time buyers.
The announcement comes hot on the heels of Northern Rock unveiling the launch of a 90% mortgage.
The Connells mortgage is being made available through its parent company, Skipton Building Society.
The two-year fix for the 95% loan is not cheap, however, at 6.49% – more than 12 times current base rate.
A new 90% two-year fixed deal is also offered, again exclusively through Connells, at 5.89%.
Connells has almost 500 branches and is the UK’s second largest estate agency group after Countrywide.
It is the first time since the credit crunch that a 95% mortgage product has been available to buyers via a leading mortgage network.
Skipton said both products are being launched in response to a clear market need from buyers who are struggling to raise the large deposits required to secure a mortgage.
Both mortgages have an application fee of £195. The 95% deal has no completion fee, but the 90% deal has a completion fee of £995.
Both have early repayment charges of 3% and allow over-payments of up to 10% annually.
At the end of the two years, both revert to bank base rate plus 4.45%.
Ross Bowen, group mortgage director for Connells, said: “I am delighted with this ground-breaking initiative, which will see Skipton drawing upon Connells’ market-leading mortgage services.
“First-time buyers are the lifeblood of the housing market and, with purchase transactions still languishing at less than half the level seen in 2007, I hope that we will see more initiatives like this aimed at helping to get more people into home ownership.”
Paul Darwin, Skipton’s head of intermediary lending, said: “This is the first time Skipton has offered a 95% LTV product specifically aimed at helping first-time buyers via the intermediary channel since 2007.”
He hinted that Skipton may similar products available across the broader industry, saying: “This limited tranche of funds will enable us to gauge appetite within the intermediary market, with a view to expanding our product range to more intermediaries in the future, and is very much in line with our plans to increase lending in a controlled way during 2011.”
Comments
this will be available to all ifa's whole of market in a few weeks........as advised by a Sequence employee....today. Sequeleaks!!
Cashback? SHC, etc all ideas that cream more £££ of the buyer/Seller but at a cost.
This'll end in tears but - as always - caveat emptor.
"Prices UP prices DOWN these are OPTIONS for people who wish the take that gamble......."
Here in lies the problem. People should look to purchase a home for stability, not "gamble" on a property.
The problem I have is uncertainty. The BoE is NOT following its remit to control inflation. If it comes out and says it doesn't care, so be it, then I know what to expect with a mortgage. If the BoE decide they do care to control inflation, getting this 95% mortgage will bankrupt people when rates rise to just normal levels - a situation that impacts you for 6+ years.
Mmmm remember the Sequence My Choice Home Buy?? or My Choice Home Scam as their mortgage advisors used to call it. That was another great (NOT) success that went wrong for them.........this looks like another
Actually Ric, you may be of service to me.
I presume your'e one of the resident EAs?
If so (and without knowing your patch and the average price of your properties), how many of the vendors currently on your books do you think would accept an offer of 10%-15% under asking?
NOTHING BUT GOOD NEWS!.......
90% or 95% you dont have to take these deals out if you do not have confidence in the prices! and many people wont get them anyway! Do we really think this will be on self certs and 6 to 7 times salaries.....different mortgage world in 2011 me thinks to 2006/2007
The Banks and Building Societies are clearly growing in confidence......SBC as I said yesterday perhpas NOW is the time to try and get your 10% off as the more 90% and 95% mortgage deals become available the stronger the market WILL get!
As for the 6% plus rate! Mortgages/Loans Car finance whatever it is you borrow, the more you put in the better the rate the less you put in the higher you pay! This is no different! (all be it the current gap between BR and these deals is high! BUT all the banks are doing is allowing for the 2% or whatever rise which will be applied over the next year or two on the BOE! to aid their own pockets (they are a business afterall) So back to yesterdays debate of what will the SVR be in 2 years! who knows.....so if you worry the SVR will be too high DONT BUY! Wait 2 years and have the very same worry then!
THIS IS GOOD NEWS for the MARKET & SOME BUYERS. People who can not afford to buy a house or perhaps dont want to buy a house should maybe try and put themselves in the position of a person who earns a good monthly wage but has a limited deposit! before they moan about these deals!
Prices UP prices DOWN these are OPTIONS for people who wish the take that gamble.......and when you weigh up what drives a market......
I see a lack of Quality new instructions coming to the market, a constant demand for property and many who would buy if they could borrow with less deposit! ....guess what the vehicle has just arrived on the forecourt! the 50k to 130k market across the land will be delighted with these deals and subsequently every person moving upwards, so on and so forth will benefit from the vast number of sales this will add to the market!
Okay.......roll on the onslaught from "thou shall not be happy clan"
Ian - Its not just estate agents who post on here.
It's good to hear the thoughts of outsiders, who have at least a reasonable understanding of the property market.
It is a decent option that will suit certain sectors of the FTB market. It won't suit all of course, but it provides an alternative to stimulate movement amongst the others.
Jeez......I must be some sort of prophet for I have foreseen the posts....do you lot really want to continue trading as Estate Agents!? Lets take it as a positive step in the right direction. Talk it up when dealing with Joe Public and we may well see transactions increasing.....Just a thought eh?
Is it not AMAZING that someone has at least got half of the main problem right?
Some of us have been banging on saying that the main problem has been no 10% (5% not so sure) deposit deals at a reasonable interest rate have been available.
Unfortunately the greedy lenders are charging 5.89% to 6.49% fix, with Bof E base at 0.5%, this in my opinion NOT reasonable. It with help some but it could be much better at something around 4.5 - 5.0%.
6.49% interest on a 95% mortgage when house prices fell 0.9% this month and interest rates going back up. It does increase choice but only adds a suicidal choice. I feel sorry for the poor suckers who go for this.
"...can't wait for all the "negative equity" quotes to come rolling in and how this will only bring house prices down even further blah blah blah...negative negative negative....yawn."
I think one would be hard-pressed to argue that such lending would bring down prices. The property boom years were only made possible by lax and easy credit. The only thing such products can do is help maintain an overheated property market.
However, it all depends exactly how much money Skiptons have set aside for these two products (95% & 90% LTV). I doubt very much.
Secondly, it would be absolute folly to discount the issue of negative equity. The Halifax report for February (out today) even ceded that they expect single digit price falls this year. By the time this two year fixed comes to an end they 'will' go on to the lender's SVR. Their SVR is base rate + 4.45%
The big question is, what will BoE base rate be in two years time? It's anyone's guess but i'm expecting base rate to be 2% by the end of 2011 alone. Let's say worst case scenario base rate hits 5% that would then mean these poor saps paying out 9.45% interest.
This'll end in tears but - as always - caveat emptor.
I think these further two products introdcued are a great idea, again, its another CHOICE for buyers who don't have a large deposit.
And If a buyer feels they can comoftably afford the mortgage payments, why shouldn't they go for it.
The Interest is always going to be higher against a smaller deposit, but if a buyer buys a house at the right price for them, and looks it over a longer term, they will be fine.
I personally think these rates are high, but the other option is sit back and wait for some other lenders to come into the market, Skiptons rate is already more competitive than NR (although I haven't read all the small print.
hahaha...very good Neil...also can't wait for all the "negative equity" quotes to come rolling in and how this will only bring house prices down even further blah blah blah...negative negative negative....yawn.
Me personally think that this is a positive move and WILL help stimulate the housing market. (As previously quoted). If you think it won't that maybe consider changing your career path....our job as Agents is to install confidence....??
Oh God no. I can see another 60-post thread coming...
Sceptic - I agree. 90% is one thing, but I don't think the market is right for me personally to risk a 95% mortgage, especially with those fees and interest rates.
Give it a year, and I may be singing a different tune (badly no doubt).
Oh dear, to help First time buyers get into trouble sounds like suicide. Come on in reality buyers should be at least be able to scrape together 10%. Will Connels take the blame if all goes wrong?? Mmmmm look at the fees is this really a good deal??