Mortgage Strategy’s Top 10 Stories of the Week:
This week’s highlights include the start of the first ‘mortgage prisoners’ court trial and Nationwide’s return of sub-4% home loans. Dive into our detailed overview for the key updates shaping the mortgage landscape.
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First ‘mortgage prisoners’ court trial starts tomorrow
Mortgage prisoners are poised to claim up to £30,000 each as the first group legal action begins at the High Court tomorrow, involving TSB’s Whistletree subsidiary. Harcus Parker estimates that successful cases could enable thousands of former Northern Rock mortgage prisoners to file claims, with average payouts projected between £20,000 and £30,000. The law firm is managing the group claim for 2,500 TSB Whistletree mortgage prisoners under no win, no fee agreements.
Nationwide brings back sub-4% home loans  
Nationwide is reducing rates by up to 25 basis points on two-, three-, and five-year fixed-rate mortgages, with new rates starting at 3.99%. This makes it the first major lender to offer sub-4% mortgages. Effective from tomorrow (24 July), notable changes include five-year fixes at 60% LTV dropping to 3.99% and 4.24%, and five-year fixes at 85% LTV at 4.55%. Additionally, rates for switchers up to 95% LTV will start from 4.24%.
Freeholders face £480m action over secret commission
Freeholders are facing a class action from leaseholders who allege they have received up to £480 million in hidden commissions for building insurance. Solicitor Liam Spender of Velitor is leading the claim on a no-win-no-fee basis, with support from litigation funders. Spender, also a trustee of the Leasehold Knowledge Partnership, contends that leaseholders could be owed up to £480 million if the claim succeeds.
Santander UK mortgage loans tumble £4.4bn in H1  
Santander UK reported a £4.4 billion drop in mortgage lending during the first half of the year, which led to a nearly one-third decrease in the bank’s profit. The UK division of the Spanish lender stated it focused on “prioritising profitability” over the past six months, resulting in reduced mortgage lending and a £5.6 billion decline in customer deposits. The mortgage loan book stood at £170.8 billion as of the end of June.
West One and HSBC announce rate cuts
West One Loans has reduced rates on its first charge buy-to-let (BTL) fixed-rate products, with cuts of 5 to 15 basis points on standard five-year fixes. Additionally, the lender has lowered rates by 20 to 25 basis points on standard and specialist two-year fixed rates, including those for commercial properties and small houses of multiple occupancy/multi-use freehold blocks. Meanwhile, HSBC has also reduced rates on its residential and BTL products.
BTL lending falls by more than half in 2023: UK Finance  
Buy-to-let house purchase lending dropped by over 50% in 2023, with new loans falling from 25,280 in Q4 2022 to just 12,422 in Q1 2023, according to UK Finance. The number of outstanding BTL mortgages also declined for the first time, from 2.039 million in Q1 2023 to 1.98 million in Q1 2024. UK Finance attributes this decline to rapidly rising interest rates, which have made it more challenging for prospective buyers to meet lenders’ affordability tests.
Paragon introduces limited edition five-year BTL fixes
Paragon Bank has introduced four new limited-edition five-year fixed-rate buy-to-let mortgages. Two of these are designed for landlords with three or fewer mortgaged buy-to-let properties, while the other two cater to those with four or more. These loans are available for single self-contained properties with up to 65% loan-to-value, and each product includes a £2,995 fee.
Connells Group appoints Charlesworth as CEO 
Skipton-owned Connells Group has appointed Helen Charlesworth as its new Group Chief Executive. Charlesworth, who previously served as Managing Director at Stonegate Pub Company, brings experience from various sectors including retail, hospitality, and estate agency. Connells Group, which operates 1,200 branches nationwide, is part of the Skipton Group, which also owns Skipton Building Society. Charlesworth left Stonegate Pub Company in May after eight years.
Rate rises push 320,000 mortgage holders into poverty: IFS
Data from the Institute for Fiscal Studies reveals that successive interest rate hikes over the past three years have pushed 320,000 remortgagers and new mortgage holders into poverty. The report notes that official data inadequately measures mortgage interest payments, capturing only about two-thirds of those affected—approximately 230,000 people. The study tracks the impact of the Bank of England’s base rate increases, which rose 14 times from 0.1% in December 2021 to 5.25% last August, where it remains.
New Skipton index reinforces FTB and renter affordability challenges
According to the newly launched Skipton Group Home Affordability Index, only one in eight potential first-time buyers in the UK can afford the average property in their area based on their financial situation. For those earning £22,850 or less annually, this ratio drops to just 1 in 100. The index also reveals that nearly 80% of potential first-time buyers lack sufficient savings for a deposit. Renters face similar challenges, with nearly four in ten spending 45% or more of their income on essential housing costs, hindering their ability to save for a deposit.