Octopus Property has cut its residential bridging loan rates to an all-time low, as part of a year-long plan to overhaul its product offering.
The lender now offers interest rates of just 0.6 per cent per month on a loan-to-value (LTV) of up to 50 per cent, down from 0.85 per cent previously.
For LTVs of 50.1 per centto 55 per cent, the new rate is 0.65 per cent, down from 0.95 per cent, while 55.1 to 60 per cent LTVs are down to 0.7 per cent, from 1.05 per cent previously.
On the higher LTVs, interest rates have fallen below 1 per cent for the first time.
Property bridging loans with an LTV of 60.1 to 65 per cent are now subject to a monthly interest rates of 0.75 per cent, down from 1.15 per cent, while 65.1 to 70 per cent LTVs are now 0.8 per cent, down from 1.15 per cent previously.
The new rates come into effect today (6 February).
Mario Berti, chief executive of Octopus Property, said that the price cuts are just the first in a line of product changes to be rolled out across 2017.
He said: “The overhaul of our product range that we will be announcing in 2017, starting today with our bridging loans, is the most significant since we started trading back in 2009.
“The sector has evolved considerably over the past eight years and we felt it was time to evolve our own proposition fundamentally in order to continue to provide a best-in-class offering.
“With these market-leading bridging rates, we want to send a clear message to the broker community that we are very much open for business.
"It goes without saying that, as well as some of the best rates available, brokers will also enjoy the service levels and flexibility that Octopus Property has always been renowned for.”
Independent financial advisers have welcomed the rate reduction, but queried the eligibility criteria, warning that many older borrowers may be unable to take advantage of the most competitive bridging loans.
“Interest rates are important but the other important thing is who they can lend to,” said Graeme Mitchell, managing director of independent financial advisory firm Lowland Financial. “You have people who are able to buy but don’t necessarily have the income to support it.
“Nowadays its quite dangerous to buy a property without having sold, because you might have to sell and you will be committed to buying the place.
"It is particularly risky if you’re in your 60s and not earning a salary, because lenders might not want to lend to you, even though the equity might be there.”
An Octopus spokesperson told FTAdviser that the only eligibility criteria is that the borrower must own another property asset.
