The Bank of China has emerged to offer funding for UK mortgage customers aiming to meet heavy demand for decent mortgage lending at competitive rates. The deals will be available for residential and buy to let mortgages as the bank seeks to build a long term relationship with UK customers and a competitive advantage within the UK banking sector.
With the majority of UK banks stalling and hesitant to lend competitively, we are left with a few lenders who have been consistent, topping the market but going no further than this.
Over recent weeks you will have heard a mention of a Chinese Bank offering mortgages in the UK, well now a select few brokers have information on their criteria and rates - including us. At 3.5% over base rate for buy to let borrowers and only a 1% arrangement fee, lenders like The Mortgage Works don't have a great deal to shout about anymore in comparison, when their lowest deal is similar but with a 3.5% arrangement fee.
Don't expect the icing on the cake with Loan to Value's (LTV's) though. From conversations today with a number of our specialist brokers, buy to let mortgages on leasehold properties will carry a maximum of 60% LTV and freehold properties up to 65% LTV. This may be the deal turner for most people as investors were hoping to see 75% LTV lending return, but hopefully these new products will encourage the likes of The Mortgage Works (who were thinking about coming back with 75% lending) to compete on this basis.
Our View:
Fantastic news for the market, even though they may only start with a small tranche of funds which will go very quickly to the shrewd investors, we are certainly seeing the return of competitive lending. UK banks won't like the thought of sharing a piece of the pie with an international lender but they have brought it on themselves. We believe the Chinese banks will be successful but I do think most investors will need to be entrepreneurial and act fast. Once they have our attention I think the focus will shift to residential mortgages only.
With regard to criteria, the Chinese officials want to meet as many applicants as possible in a one-to-one interview. This could cause a massive waiting list and delay in mortgage processing, ultimately resulting in many applicants switching lender for convenience.
Be one of the shrewd investors and check your deal with us for these products today.
