Did you know that UK mortgage interest rates last peaked 22 years ago?
Is it a surprising coincidence to anyone looking for cheap mortgages that mortgage interest rates have been raised by the Halifax and other lenders this week?
Remarkably the timing of the announcements of Mortgage interest rate rises by Halifax, Santander and Royal Bank of Scotland had absolutely nothing to do with marking the anniversary of the last mortgage rate peak.
Mortgage interest rates last peaked in the UK more than two decades ago, as noted by another leading high street bank.
HSBC have pointed out that March 4th 2012 was the 22nd anniversary of the mortgage peak, when mortgage interest rates reached 15.4%
The bank also noted that March 3rd 2012 was also 3 years to the day since the Bank of England (BoE) base rate fell to its historic low of 0.5%.
March 4th 2012 marked the day when lenders decided that there was money to be made from UK property again as Halifax announced plans to increase its standard variable rate (SVR) from 3.50% to 3.99% on 1 May for around 850,000 customers.
Halifax is also increasing its Halifax Variable Rate 2 and Halifax Flexible Variable Mortgage Rate from 3.40% to 3.89%.
Also marking Mad March, UK publicly owned bank the Royal Bank of Scotland has increased the interest rate on two mortgage products – its RBS and Natwest Offset Flexible Mortgage and the RBS One Account Mortgage – by 0.25% effective from 1st March and 1st May respectively.
For the majority of the roughly 200,000 customers affected, the new rate will be 4% – the same as the banks’ standard variable rate, which RBS is keen to stress has not changed.
Santander increased the interest rate on four of their mortgage products on Friday 2nd March – the two-year fix and tracker deals at 60% LTV and 75% LTV sold though its Abbey Intermediaries channel – by 0.10%.
The increase, however, will only affect new customers – there will be no change to existing customers’ rates.
The UK mortgage market has seen many changes over the last two decades or so, including the average price of a house rising from £69,240 (GBP) to £160,907 (GBP) and the size of a typical home loan agreement escalating from £35,000 (GBP) to £120,400 (GBP). The highest standard variable rate for borrowing fell from 15.4% to 6% in the same timeframe.
Q. Why is anyone hiking anything with the Bank of England (BoE) base rate still so low?
Usually when a lender hikes its standard variable rate (SVR) it is in response to a change to the Bank of England base rate.
However, the BoE base rate has been at a record low of 0.5% for 3 years already and is expected to remain low until at least 2014 – more likely 2016, according to experts at the Centre for Economics and Business Research (CEBR).
So why are lenders hiking mortgage rates now?
- Other than the obvious answer of … Because they can!
UK property is still alive, well and is still producing a profit!
Property investors have always known this and now the banks are finally realising that there is money to be made from UK property!
Happy Anniversary!
Abbey has launched into the Buy-To-Let (BTL) market with a range of products aimed at smaller landlords.
The range is available for those with up to two Buy-To-Let properties (no HMOs) and who are aged between 21 and 70.
Applicants can also have a mortgage on their own home.
A minimum 25% deposit is required and rental cover of 125% or above is needed.
Abbey is offering a two-year fix at 4.29% with a £1,495 fee, available up to 60% LTV, and a two-year fix at 5.19% with a £1,495 fee available up to 75% LTV.
Both products are available for purchase and remortgage.
Director of retail assets at Abbey Phil Cliff, said: “The range is designed to meet the needs of new or small volume landlords adding a first or second buy-to-let property, and we expect to see strong interest”.
The products are available exclusively via mortgage brokers, and not direct, and will require a minimum property purchase price of £100,000.
