Mortgage Strategy Top 10 Stories This Week:
This week’s top stories feature Paragon Bank’s increased range of buy-to-let mortgages and rate cuts announced by HSBC and Gen H. Explore these developments and more below:
HSBC and Gen H announce cuts across ranges
HSBC has announced mortgage rate cuts effective 3 December across its residential and Buy-to-Let product ranges, including reduced rates for fixed-term products at various loan-to-value (LTV) tiers and tailored options for energy-efficient homes.
The changes reflect a steadier market and aim to benefit first-time buyers, home movers, and remortgage clients. Similarly, Gen H has reduced high-LTV rates to support borrowers with smaller deposits, effective 2 December. These developments, though not indicative of a “price war,” are welcomed as positive steps towards more affordable mortgage options.
Paragon launches limited edition BTL rates from 4.74%
Paragon Bank has introduced a limited edition range of five-year fixed-rate buy-to-let mortgages at 65% loan-to-value (LTV), with rates starting at 4.74% for energy-efficient Single Self-Contained properties and higher rates for less efficient properties or those with lower fees.
The range also covers Houses in Multiple Occupation (HMO) and Multi-Unit Blocks (MUBs), offering options for individual and limited company applications. Product manager James Harrison highlighted that these deals, available with varying fee structures, aim to support landlords by offering greater choice and attractive rates for those able to provide larger deposits.
UK house prices rebound strongly over month: Nationwide
UK house prices rose by 3.7% year-on-year in November, the fastest growth in two years, according to the Nationwide House Price Index. Prices also increased 1.2% month-on-month, with values now just 1% below the summer 2022 peak. Despite stretched affordability due to high interest rates and elevated house prices, housing activity remains resilient, with mortgage approvals nearing pre-pandemic levels.
Experts suggest upcoming stamp duty changes may temporarily boost transactions, but rising living costs could temper demand. Confidence in the market is supported by stabilising mortgage rates and inflation, with further rate cuts anticipated in 2025.
Santander delays resi affordability rate cuts
Santander has delayed planned cuts to its residential affordability rates, initially set to go live on 4 December via its online broker calculator, citing a temporary delay with a revised launch expected by the end of the week. This follows rate reductions from other major lenders, including Barclays and HSBC, amid heightened competition as lenders aim to meet year-end targets. While these cuts may marginally lower average mortgage rates, they are unlikely to affect the most competitive deals, according to industry experts.
Charman replaces Sinclair to lead Ami
The Association of Mortgage Intermediaries (AMI) has appointed Stephanie Charman as its new chief executive, succeeding Robert Sinclair, who steps down in February 2025 after 16 years of service. Charman, currently group partnerships and propositions director at Sesame Bankhall Group, brings 25 years of experience in mortgage distribution and will assume her new role on 24 February 2024.
AMI chair Andrew Montlake praised Charman’s passion for the industry and commitment to intermediary-led advice, while Sinclair commended her as a capable leader to guide AMI into its next phase. Industry figures welcomed her appointment, highlighting her expertise and dedication to addressing brokers’ and advisers’ needs.
BoE’s Bailey expects four rate cuts next year as pressures on economy ease
Bank of England governor Andrew Bailey anticipates four 0.25% interest rate cuts in 2024 if inflation continues to ease, following its drop from 11.1% in October 2022 to 2.3%. Speaking at the FT Global Boardroom conference, Bailey noted inflation has declined faster than expected, though services inflation and wage growth remain key concerns.
Current borrowing costs stand at 4.75% after two cuts this year, with the Monetary Policy Committee planning “gradual” rate reductions under its central forecast. However, the OECD warns that fiscal stimulus and wage-driven pressures may keep inflation above target through 2025-26.
The Mortgage Lender expands limited edition BTL product range
The Mortgage Lender has expanded its buy-to-let range with new fixed-rate products, including two two-year fixed options at 75% LTV with rates of 3.94% and 4.94%, featuring 3.00% and 5.00% completion fees respectively. A five-year fixed-rate product at 4.93% has also been introduced for the multi-loan range, available via selected distributors and specialist brokers.
Chief commercial officer Steve Griffiths highlighted the additions as part of efforts to offer landlords greater choice and meet growing demand for shorter-term fixed-rate products.
BBVA ‘neutral’ on possible TSB sale
BBVA remains undecided on whether to retain TSB if its €12bn hostile takeover of Sabadell succeeds, with CEO Onur Genc expressing a “neutral” stance on TSB’s future role in a combined banking group. The European Commission has cleared the takeover, but Spain’s antitrust regulator is conducting a phase 2 review, potentially delaying a decision into next year.
The merger would create a major player in Spain’s financial services sector. Meanwhile, TSB has appointed Marc Armengol, Sabadell’s COO, as its next CEO, succeeding Robin Bulloch, who retires after leading TSB since 2021.
Leeds BS unveils Income Plus for FTBs
Leeds Building Society has introduced its Income Plus mortgages, allowing first-time buyers with a minimum household income of £40,000 to borrow up to 5.5 times their earnings, compared to 4.5 times under standard lending.
This could increase the average borrowing capacity from £290,000 to £356,000. Available up to 95% loan-to-value (LTV), including for new build homes, these five-year fixed-rate products also incorporate a green affordability benefit for energy-efficient properties.
Aimed at addressing affordability challenges, the mortgages are accessible through intermediaries and include options with fees, cashback, or no product fees.
Half of mortgage holders face higher payments: BoE
The Bank of England’s latest Financial Stability report highlights increased risks to the UK economy due to geopolitical tensions and pressures on government debt, but notes that mortgage arrears remain low historically.
While around half of UK mortgage holders face higher payments as they refinance at increased rates, with some seeing rises exceeding £500 a month, about a quarter are set to benefit from falling rates.
Mortgage approvals are nearing pre-pandemic levels, house prices continue to rise, and first-time buyer activity has hit its highest share since 2005. Falling interest rates may ease repayment burdens for many borrowers in the coming years.