Lenders Standard Variable Rates
Lenders Standard Variable Rates
Buy-To-Let Landlords Prefer Variable Rates
Variable-rate mortgages are becoming more popular among buy-to-let landlords, according to Legal & General Mortgage Club.
L&G’s recent survey found that although fixed-rate mortgages remain a favourite with residential homebuyers, landlords are more comfortable with taking on an element of risk.
An estimated 64% of buy-to-let mortgages taken out between December and February were variable, compared to 57% of residential buyers opting for the safety of a fixed rate. The average loan to value of buy a buy-to-let property over the same period was 76%, compared to 66% for a residential property.
Steve Smith, director of housing at Legal & General, said: “There is a distinct difference in attitude to risk between residential and buy-to-let borrowers. Owner-occupiers continue to require the peace of mind that a fixed-rate mortgage provides, whereas landlords feel more comfortable on variable rates.
Some Mortgage Lenders may have failed to comply with the Financial Services Authority’s (FSA) conduct of business rules surrounding mortgage arrears, according to the FSA.
The FSA’s mortgage conduct of business rules are designed to encourage mortgage lenders and brokers to set business standards for various aspects of their relationships with customers. The second part of the FSA’s Effectiveness Review investigated the effectiveness of the rules in the sub-prime and lifetime mortgage markets.
The FSA’s research into how mortgage arrears were handled, indicated that not all lenders and/or brokers, were in compliance with the conduct of business rules that apply to mortgage arrears.
Richard Farr, director of the Association of Mortgage Intermediaries, said he was disappointed that the FSA has found areas of non-compliance by firms with the arrears rules.
He said: “We are calling for all lenders to invest in their arrears management process, and consider involving the original intermediary. In times of financial crisis, we believe it is important for lenders and intermediaries to work together to help borrowers.
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What is the point of interest cuts?
The bank of England are cutting rates again I hear. My mortgage doesn’t go down though. I am on a standard variable and my lender never pass the advantage on to me. I missed out in December and will again. The Govt need to be more stricter with these mortgage companies. I really could do with the lower payments at the moment. As last May my discount rate ended and my payments went up by 250 pounds in one go!. Then my mortgage lender would not let me take out a new fixed rate deal. These lenders are creeps. As soon as interest rates go up your mortgage does. When interest rates go down the mortgage never does.
When the BOE cuts interest rates, your lender is not mandated to pass on that cut to you. Yes, I know it seems unfair and conversely lenders are all too quick to pass on an increase immediately. Essentially, a cut by the BOE is aimed at business and not the individual . . . it hopes to create a certain amount of cheaper borrowing for companies to invest in capital equipment, job creation and the likes. When the economy slows, as it is doing, the BOE/Government must try to counteract that slowing in order to keep things on an even keel and promote growth. In the short term, you may not benefit but the emphasis is on the bigger picture. I know it can be difficult and we all suffer a little, but interest rates even at what they are today are historically low, so if you find yourself in difficulty in the short term, you have to reconsider your options with either other lenders or even economise for the short term. I hope everything works out for you.
Everything You Have To Know About Different Types Of Mortgage
