Catch up on Mortgage Strategy’s most popular stories this week. HSBC extends maximum borrowing term to 40 years and Further mortgage rate cuts from Nationwide. Read more below:
HSBC extends maximum borrowing term to 40 years
HSBC has officially expanded its maximum borrowing term from 35 to 40 years, effective starting tomorrow. These criteria changes apply to all lending categories, encompassing purchases, remortgages, and additional borrowings. For residential applications with capital repayment (cap rep), borrowers can now access a maximum term of up to 40 years, whereas the term for interest-only loans remains limited to 25 years.
Lenders have ‘moral obligation’ to keep tenants in their homes
The CEO of Generation Rent, Ben Twomey, believes that lenders should feel a “moral obligation” to prevent tenant displacement as an increasing number of landlords face repossession due to arrears. In an open letter addressed to the chief executives of four lending institutions, he is urging them not to evict tenants residing in properties owned by landlords who have defaulted on their mortgage payments.
MPC must ‘see job on inflation through’: BoE chief economist
The Bank of England’s Chief Economist, Huw Pill, emphasized the importance of persevering in the mission to reduce UK inflation, even though it carries the risk of causing “unnecessary harm to employment and economic growth.” Speaking at a research conference organized by the South African Reserve Bank, Pill stated, “The crucial aspect is that we, as members of the Monetary Policy Committee, must remain committed to the task and secure a durable and sustainable return of inflation to the 2% target.” This was reported by Reuters.
Further mortgage rate cuts from Nationwide
Nationwide Building Society will be lowering rates on specific fixed and tracker mortgage products by as much as 0.15 percentage points. These updated rates will come into effect on Friday, September 1, 2023.
Borrowing down almost a third in Q2: UK Finance
According to recent data from UK Finance, borrowing for house purchases in Q2 of this year decreased by almost one-third compared to the corresponding period in 2022. Specifically, first-time buyer purchases declined by 28%, and home mover purchases dropped by 30% in Q2 2022 when compared to the same quarter last year.
Mortgage approvals take a dive in July
In July, mortgage approvals took a nearly 10% dip, reflecting persistent affordability hurdles for prospective homebuyers. The latest data from the Bank of England’s Money & Credit report indicates a drop in net mortgage approvals, falling from 54,600 in June to 49,400 in July. However, approvals for remortgages saw a slight uptick, moving from 39,100 to 39,300 over the same period.
Mortgage approval boost expected for autumn
Despite a challenging year for the property market, there is an expectation of increased activity in the upcoming autumn months. This insight comes from Octane Capital, a specialized property lender, which has analyzed mortgage approval trends spanning the past 60 months to provide a clearer outlook.
Santander tightens BTL interest cover ratio calculations
Starting August 30th, Santander for intermediaries will be implementing adjustments to its lending policies. Specifically, the interest cover ratio calculations for landlords with a higher tax band will become slightly stricter, increasing from 145% to 140%. At the same time, other lending policies for both buy-to-let and residential lending will be relaxed by the bank’s broker-only arm.
NatWest cuts buy-to-let stress rates
NatWest has made significant adjustments to its buy-to-let stress rates. Specifically, the bank has lowered its two-year fixed rates from 8.6% to 8.15% and its five-year fixed rates from 7% to 6.78%. Additionally, rates for comparable remortgages within their product range have been reduced from 8.21% to 7.55%.
Coventry for intermediaries to cut resi and BTL rates
Coventry for intermediaries is set to reduce a selection of new business residential and landlord fixed-rate mortgages on Friday, September 1st. The lender will withdraw the current offers at 8 pm on August 31st and introduce the new deals at 8 am on September 1st, as outlined in a communication to brokers.
