It’s good news for customers when a new mortgage lender comes to the market. Especially when their products are competitive enough to drive down rates and fees around them.
The new products offered by the returning Mortgage Trust have already provoked other buy-to-let lenders, and the announcement that Tesco will soon be offering mortgages as well will challenge what traditional lenders are prepared to offer.
Mortgage Trust, a sister company of Paragon Mortgages, stopped lending in February 2008. However, Paragon have now relaunched it, offering new products such as a two-year fixed rate mortgage at 4.99% and a two-year tracker mortgage at 3.99%.
Both products are available for remortgages up to 75% with a £999 fee.
The return of Mortgage Trust to the market has already forced other lenders in the buy-to-let market to improve their products, with either lower rates or fees, or in some cases a combination of both. This is great news, especially if you want to buy to let on a small scale, for instance for a single, self-contained property.
Tesco Bank’s announcement that they are on track to launch mortgages in the summer will worry many brokers, because Tesco will be able to use its brand and club points scheme to cherry-pick customers. But at Limetree we see any new lender as a good thing. It will force traditional lenders to compete either on rate or by relaxing some criteria for borrowing.
Mortgage Trust’s products are only available through an intermediary, so talk to Limetree if you are interested. We will keep you up to date with what Tesco offer when they launch their products in the summer.