Mortgage Strategy’s Top 10 Stories of the Week:

This week’s top stories feature NatWest’s controversial sub-4% direct deal and Barclays’ aggressive 3.83% offering. Brokers are feeling the pressure as competition intensifies. Read on for the full details and analysis.

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NatWest’s sub-4% direct deal frustrates brokers

Price war hots up as Barclays undercuts rivals with 3.83% deal

Barclays is the latest major UK lender to introduce sub-4% mortgage loans, following NatWest and HSBC. Barclays has confirmed that its Premier five-year fixed-rate mortgage with a £899 product fee, 60% LTV, minimum loan of £5,000, and maximum loan of £2 million will decrease from 4.03% to 3.83%. Additionally, its five-year fixed-rate mortgage with the same fee, LTV, and loan amounts will drop from 4.04% to 3.84%.

HSBC joins price war with sub-4% loan offer

HSBC has launched a 3.92% mortgage, available through both brokers and direct channels, undercutting both NatWest and Nationwide. This new five-year fixed-rate loan, at 60% LTV with a £1,499 fee, is cheaper than NatWest’s direct-only deal at 3.97% with a £1,495 fee. Nationwide’s five-year fixed-rate mortgage is set at 3.99% with a £1,499 fee and is available through both brokers and direct channels. NatWest’s sub-4% deal has sparked frustration among brokers, as it is 6 basis points cheaper for direct customers than its best intermediary rate, raising concerns about dual pricing.

‘Sham broker’ and rentback scheme to repay £4m

The High Court has ordered a “sham” broker and rentback scheme operator to pay £4 million for exploiting vulnerable borrowers facing repossession. The defendants deceived two legitimate lenders, Together and Lendinvest, into believing they were financing buy-to-let properties. Operating under the name “LPI Emergency Property Finance,” a trading name of LPI, they offered desperate borrowers quick refinancing in an attempt to help them stay in their homes.

Halifax latest big lender to offer rates below 4%

Halifax has announced changes to its product range, effective from 9 August, offering rate reductions of up to 0.16% on selected products for home movers and first-time buyers. Notably, Halifax is now providing a five-year fixed-rate mortgage at 3.99% for up to 60% LTV and a two-year fixed-rate mortgage at 4.36% with a £999 fee, also up to 60% LTV. Commenting on the recent lender price war, Coreco Managing Director Andrew Montlake said, “Lenders, both large and small, are cutting rates daily. With Halifax joining in, these reductions are driving demand, making the prospects for the second half of the year very promising.”

Landlords face £11,000 higher CGT bill if rumours true

Research by Quilter has found that the average landlord would be £11,000 worse off if the Chancellor decides to align capital gains tax rates with income tax rates. Rachel Reeves is reportedly considering this move in her first Budget on October 30 to help address a £22 billion shortfall in the public finances. Capital Gains Tax receipts reached £14.4 billion in 2022-23, according to HM Revenue & Customs, even before any potential rate increase.

Chancellor fuels rumours of CGT hike in TV interview

The Chancellor has intensified speculation about a potential increase in capital gains tax by declining to rule out the possibility during a TV interview. Rachel Reeves, who was being interviewed by Bloomberg while visiting the US to attract investment to the UK, had previously acknowledged on the News Agents podcast that “we will have to increase taxes in the Budget,” although she did not specify which taxes would be targeted.

Buy-to-let purchases fall to lowest level for eight years

Purchases of buy-to-let properties and second homes have dropped to their lowest levels since 2016, according to analysis of HM Revenue & Customs data by accountants Lubbock Fine. The analysis, which focused on transactions subject to the stamp duty surcharge for additional properties, found that such purchases fell by 14%, from 224,700 in 2022/23 to 193,700 in the year to June 2024. This marks a significant decline from the peak of 287,200 purchases in the year to June 2021.

UK Mortgage Prisoners Action Group calls on Govt to take ‘urgent action’

The UK Mortgage Prisoners Action Group (UKMP Action Group) has urged the government to take “urgent action” to protect mortgage prisoners and address the rising number of repossessions and forced sales. The group has requested an earlier meeting with the UK Treasury, citing the mortgage prisoner crisis as being “at crisis point.” Data from the Bank of England and the Ministry of Justice reveal that in Q1 2024, the value of outstanding mortgage balances with arrears increased by 4.2% from the previous quarter.

Inflation rise expected next week, says Hargreaves

A modest increase in inflation is expected when July’s figures are released next week, but it is unlikely to impact the Bank of England base rate, according to Hargreaves Lansdown. Consumer prices index inflation has recently fallen to the Bank of England’s target rate of 2%. However, the investment firm predicts this may not last, as much of the recent decline is due to significant price increases from early 2023 dropping out of the calculations as 2024 progresses.

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