Mortgages  

Nationwide’s Save to Buy scheme bolstered with 95% LTV additions

Daniel Liberto

The building society’s newly launched two-year fixed-rate mortgages start at rates of 4.89 per cent and have been made available through its Save to Buy scheme for first-time buyers and home movers.

Existing Nationwide mortgage customers will be charged 4.89 per cent for the loan, whereas new customers will be expected to pay a slightly higher rate of 4.99 per cent.

The product fee for the small deposit mortgages is £900, with a £500 discount available for first-time buyers. However, those who prefer not to pay a product fee can instead pay a higher rate of 5.39 per cent on the loan.

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Other features of these newly launched mortgages include a non-refundable booking fee of £99 and the possibility to earn a cashback amount of up to £1000, dependent on the level of savings.

Nationwide also announced that it has reduced rates on its other 95 per cent LTV products by 0.3 percentage points as it attempted to attract more applications into the increasingly competitive space of small-deposit mortgages.

A spokesperson for the building society said Nationwide was keen to play a key role in financing the housing market.

Since the second part of the Help to Buy scheme came into effect this year, an increasing number of lenders have entered the 95 per cent LTV space either independently or with funding from the government.

REACTIONS

Provider view

Tracie Pearce (right), head of group mortgages for Nationwide, said: “These new products at 95 per cent LTV are further evidence that Nationwide is strongly committed to playing a leading role in the financing of the housing market, by supporting both first-time buyers and home movers. We enable homebuyers with smaller deposits to access very competitive rates – nearly one in four of the mortgages we provide are to first-time buyers.”

Adviser view

Kim Barrett, director of Hertfordshire-based Barretts Financial Solutions, said: “I do not find those rates competitive and neither would I want to enter anyone into a two-year fixed rate. I do not sell many mortgages nowadays but have always insisted that the longer you can fix a rate, the better. It is not wise to second-guess the market, but we all know that interest rates are going up and I think two years is slap bang in the middle of the point where rates will be increasing. That will be a worry for anyone taking out this mortgage.”

CHARGES

£99 booking fee and a product fee of either £900 for new customers or £400 for existing ones, though this can be waived for a higher repayment rate.

VERDICT

The rates offered by Nationwide are some of the best so far in the rapidly expanding 95 per cent LTV mortgage market space, and the option to waive the product fee, though potentially costly in the long run, could prove very useful to homebuyers struggling to pay large sums upfront. However, some may be put off by the two-year fixed rate, particularly given that interest rates are currently at an all-time low and are expected to rise substantially within the next year. It would be worthwhile to consider how eager your client is to get a 95 per cent LTV mortgage immediately. The market already consists of decent offers like this one, but it could also be argued that, as more lenders enter the market, rates should become even more competitive.