Credit Crunch II with Lower Rate Mortgages, 100% Loans, High Cashbacks and Higher Multiples?

Many lenders are starting to cut mortgage rates, offer higher loan to values and even 0% deposit deals (100% LTV mortgages) as markets weigh up the impact of tariffs and a global recession likely to prompt the Bank of England the cut interest rates early.

Headlines in our email box this week with news and offers on mortgages and property in the last three days alone:

• Barclays launches zero deposit mortgages
• L&C launches exclusive 3-year fixes
• TSB reduces rates by 0.25%
• Tariff disruption raises chances of base rate cut and better mortgage pricing
• Nationwide cuts Helping Hand sole applicant minimum income limit
• Furness BS enhances residential and shared ownership products
• Halifax launches remortgage deals
• Buckinghamshire BS brings back two-year discounted deals
• Barclays launch sub-4% mortgage range
• Zephyr announces rate reductions across two and five-year mortgages
• ModaMortgages cuts rates on buy-to-let products by up to 20bps
• Keystone reduces rates on 2 and 5-year products by up to 10bps
• Mortgage product choice nears 7,000 five years post-pandemic
• UTB ups resi LTI to six and cuts rates
• MT Finance raises LTV for AVMs
• Paragon brings out 80% LTV range, cuts rates and removes select fees
• Average mortgage rates fall to 3.79%
• Accord launches £6,250 cashback range to offset stamp duty rise

(Note:  LTI =loan to income ration, LTV = loan to value ratio, AVM = automated valuation model, Helping Hand = higher loan to income ratios).

Comment

Some big lenders have made tentative moves to attract borrowers but as soon as a couple of big lenders with a number of subsidiary mortgage ‘brands’ like Lloyds and HBOS start making sweeping changes to their mortgage ranges, the mortgage market and then property prices could explode.

We are hopeful for the mortgage market and house price increases but the above headlines all look like the mortgage market in 2006/07 just before the Credit Crunch crisis in 2008 when many banks failed due to poor lending practices and toxic lending. 

We hope the FCA and the Bank of England keeps tighter control on lenders and capital adequacy to reduce any risk of a Credit Crunch II crisis.