A recent market analysis shows that borrowers are being denied access to record-low mortgage rates due to lenders’ affordability requirements according to Enness Mortgages, a large London based mortgage broker.
It has been pointed out that most borrowers fail to qualify for the most attractive deals – even though they would probably have no difficulty in making the repayments.
The problems are said to be particularly acute for people who are self-employed or in professions that lack a steady income stream.
Skipton Building Society recently became the latest lender to join the mortgage price war with a 0.99 per cent two-year fixed deal, for 60 per cent loan to value borrowing, which comes with a sizeable £1,995 fee.
But with the average fixed rate mortgage fee recently reaching a four-year high, concerns have been raised that consumers opting for headline-grabbing rates may not be getting the best deal available – particularly as some of the products are not available via intermediaries.
Steven Boyde, associate director at Enness Mortgages, said borrowers who can more than afford to service a mortgage often have to pay a higher rate because they have more complex circumstances.
Daren O’Brien, IFA at London-based Aurora Financial Solutions, said the sub-1 per cent rates are typically only available to 5 to 10 per cent of clients.
“They (the lenders) are advertising these rates and clients are having unrealistic expectations of what they can achieve,” he explained. “They then get agitated with us, saying ‘they are offering a great rate – why can’t I have it?’
“It is just headline grabbing, really, and unfortunately in today’s quick turnover of headlines it seems to be working.”
This can mean clients sometimes see low rates and ask why they have not been advised to take out the product, adding “it brings into question our whole-of-market research”.
So, why not engage with an independent adviser, pay a fixed advice fee (and not a sky-high mortgage fee!) to get the best rate for your circumstances and requirements.