TSB, NatWest Cut Mortgage Rates as Swaps fall, more 100% LTV options

Further rate cuts from major lenders and the expansion of more low/no deposit borrowing options is starting to open a lot more doors for borrowers. We expect more lenders to follow suit as they eye up business and are boosted by falling swap rates, which are the key to mortgage pricing.

NatWest and TSB cutting rates within 24 hours of each other tells you swaps are feeding through but this isn’t a rate war just yet. NatWest trimming by up to 0.20% across purchase, remortgage, green and BTL is meaningful. It shows confidence that funding costs are easing. But the fact lenders aren’t sprinting to slash further suggests margins are still tight and much of the recent swap improvement is already priced in. This feels like a slow, steady glide down, not a freefall. Melton BS launching a UK wide 100% LTV is also notable. It signals continued appetite to support first-time buyers, albeit from a smaller lender. Encouraging? Yes. Reckless? Not necessarily, but underwriting will matter. More repricing likely this week, but expect it to be measured rather than dramatic.

First-time buyers are having a field day right now, with lenders large and small clearly keen to target this type of borrower. It's shaping up to be a busy spring period and swap rates continue to head south, which should further improve pricing.

This is exactly what tenants need to hear - another more accessible mortgage! Melton expanding its 100% LTV mortgage nationwide is a genuine milestone. For a lot of the tenants I work with, the deposit barrier is the biggest obstacle to homeownership. That upfront lump sum when coupled with unavoidable buying costs is sometimes just too much for them.

Melton is doing what building societies were created to do, and a simple check using our ‘rent vs buy’ calculator will help the individual see if paying the 5.99% rate makes good sense for them, or not. If you're a tenant, talk to a whole-of-market broker, because you could be closer to owning than you think.

The deposit gap isn't a character flaw, it's a structural problem. And it's great to see Melton helping to close it.

There have been a number of fat carrots dangled in front of the borrowing public in the last few days. Hopefully enough to tease the spring market into action. Notably, Melton BS offering a previously limited 100% mortgage, to the wider nation. Let’s hope the market becomes more of a stallion rather than making an ass out of the hopeful first time buyer.

All the recent moves by lenders have been very positive for those looking to remortgage, those on tracker rates and first time buyers in particular. Lenders are increasing their loan to income ratios and for those with certain eligibility factors can also consider 100% mortgages.
However, keep an eye on the political situation as the Prime Minister will remain under pressure going into the May local elections. If bond yields start edging up again which they are likely to do if Angela Rayner and Ed Milliband get close to taking power, this will put then pressure on swap rates leading to higher mortgage rates once again. Irrespective of whether the economy needs lower rates or not, the political situation may lead the Bk of England to reconsider it's current lowering stance