John Charcol has also noted that UK three month LIBOR has fallen back to 6.25 per cent, with more conservative product ranges entering the market - showing signs that the crisis is beginning to level off.
However Katie Tucker of John Charcol has stated that the non-conforming market is "growing into its new skin of lower LTVs and higher pricing" leaving borrowers stuck with rates edging into double figures.
Tucker stated: “The last minute withdrawals of rates have slowed this week, with lenders announcing more conservative ranges and some competitive fixed rates, however this calm is unlikely to be maintained: two-year swap rates leapt 10 points from 5.83 per cent on Tuesday to 5.93 per cent on Wednesday following Mervin King’s speech on Tuesday stating he would not reduce Bank rate purely to shield lenders, and that his priority is to keep inflation close to 2 per cent.
"The temporary fall in swap rates had allowed a few lenders to enter the market with sub-six percent fixed rates, but these now are unlikely to last long so existing good deals should be snapped up quickly. Nationwide Building Society reflects the current market well, having moved the pay rates on their discount variables and trackers up by 0.2 per cent, but reduced all two, three, five and ten year fixed rates by between 0.05 per cent and 0.2 per cent."
Speaking on the non-conforming market, Tucker added: “Kensington’s “HighAnd” range is only available to 75 per cent LTV now, down from 85 per cent, and the two year tracker remortgage rate is 10.50 per cent. Alternatively, BM Solutions offers a tracker for borrowers with comparable credit history to Kensington’s, at Bank rate + 1.89 for two years, so a pay rate of 7.64 per cent. As many non-conforming lenders re-set their three month LIBOR on 1 October based on 1 September three month LIBOR of 6.4 per cent, they may need to keep their LIBOR tracker margins higher to make up for the last two months’ higher cost of funding.”
What is available for borrowers now?
Tucker continued: “For the borrowers who like to budget by fixing their mortgage payments, Woolwich and Britannia still dominate the top of the best buy tables for two, three, five and ten year rates: Woolwich’s 5.59 per cent two year fix comes with free valuation and free legals for remortgages, for a fee of £995. Britannia offers a ‘no frills’ five year fix at a very competitive 5.39 per cent, for a fee of £999.
“Many lenders already have the long term fixed rates which Alastair Darling feels would protect borrowers. Woolwich’s very competitive offerings also extend to a ten year fix at a 5.59 per cent, with a flat £995 fee, making it very good value as it comes with free legals and free valuation on remortgages, and additionally, is fully flexible. However, as with other ten year fixes, it is the onerous Early Repayment Charges for ten years which are the deal breaker for most borrowers, Woolwich’s standing at 6 per cent during the ten years.
“Discount and tracker rates continue to offer best value for those who wish to take advantage of any possible fall in Bank rate in the near future. Saffron offers a two year discount of 2.40 per cent from its SVR giving a pay rate of 5.19 per cent.
"This product has no Early Repayment Charges which makes it ideal for borrowers who want to take a good rate now but be free to remortgage to a fixed rate even within the next two years. The 1.5 per cent arrangement fee means that it is better for the smaller loan, but it comes with a refund of valuation and free legals on remortgages.
"For larger purchases, Nationwide’s two year tracker is good value with its flat fee of £1,499 for a sub-Bank rate of 0.27% under Bank rate for two years, giving a pay rate of 5.48 per cent.
"Additionally this mortgage is fully flexible, allowing overpayments, underpayments and borrow-back, so is ideal for borrowers who may wish to use bonuses in the New Year to bring down their payments or the mortgage term, then use them for payment holidays or home-improvements later in the year.
“For borrowers with a non-conforming mortgage, it is vital this year they make all of their mortgage payments in full and on time, and re-prioritise to reduce the loan-to-value of their mortgage if possible by paying extra whenever possible. High loan-to-value, heavy adverse remortgage options from now on will be slim, and in some cases, non-existent.”
