March 7th, 2013
The Bank of England have again maintained the base rate at 0.5%, now making it 4 years of record low rates in the UK.
Another positive trend that has continued in the mortgage space is the fantastic news that another contractor-friendly bank has dropped their rates. Clydesdale Bank this week reduced certain fixed rates by up to 0.4%. The rates are only available for those with deposits or equity of 25 – 40%, but still positive movement in the right direction. This follows the rate reductions that Halifax made in February for those with smaller deposits.
Even though the Funding for Lending Scheme has been criticised by politicians for not impacting the mortgage market quickly enough, lenders are upbeat about the scheme and state that the rate drops and mortgage product innovation are down to the Scheme.
A good example of this last point is the emergence of “Low Start” mortgage products, where the early years of the mortgage are interest only, then reverting to capital & interest repayment. This can work very well for contractors who know their contract rates will increase with experience, thereby allowing them to get onto the property ladder and keep the initial monthly payment very low.
To round off a very encouraging few weeks for those requiring a contractor mortgage, a new lender has also emerged with a great proposition that offers flexible underwriting for contractors.
Investec have recognised and understood more about contractors in the short time that they have been in the mortgage market than other lenders who have been around for much longer. Investec underwriters have already agreed to assess certain applications on contract rate as opposed to examining the remuneration vehicle, e.g. the limited company.
It has been a great first quarter to the year for contractor mortgages, with product innovation, reduced rates, and new lending options. The fact that a large investment bank like Investec recognise contractors as a good lending option bodes well for those looking to move or remortgage.
The optimists will say that the signs are there for the end of the mortgage drought, and the pessimists will call it a flash in the pan. The reality is probably somewhere in between the two.
Article by: Taj Kang, Operations Director at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager
Tel: 0844 44 88 80
Email: media@contractormortgagesuk.com