Number of fixed-rate mortgage deals at 90%+ loan-to-value has almost doubled in a year

There are now 147 fixed-rate mortgage available if you have less than 10 per cent deposit — an 88% increase on the 78 products available in February 2009.

Speaking of fixed rate mortgages generally, not just high LTV, the increase is more modest: 46% more products than at this time last year. The average loan-to-value on a fixed-rate mortgage is up 1.3 percentage points to 76.8%.

Tracker mortgage borrowers, however, are not so well served at high loan-to-value ratios. The number of tracker mortgages with a loan-to-value above 90 per cent grew only slightly, from 43 to 51 in the last twelve months.

It's unusual for a fee-free mortgage to really mean "fee free" - but First Direct seems to mean it.

Their two new offset tracker mortgages are designed to appeal to borrowers moving their mortgage from another provider.  These are borrowers who are often put off by the high charges for booking and arrangement.

There are other mortgage deals without arrangement fees, but they often do have other charges to pay: for example, valuation fees, exit fees or (most commonly) early repayment charges.  That's what makes it remarkable that First Direct's deals have none of these – just a closure admin fee.

Let's look at the trackers in more depth:

• Up to 60% LTV: tracks 2.49% above base rate, currently 2.99%
• Up to 75% LTV: tracks 2.94% above base rate, currently 3.44%

That's really all there is to say. No fixed periods and no fees.  We're impressed.

Remember that they're offset mortgages, so they function best if you've got savings too (to offset the mortgage interest – or to look at it another way, to earn up to 3.44% on your savings tax-free).  Also, those tracker rates won't look so appetising if or when the base rate goes back up to four or five per cent, whenever that may be.

Nevertheless, for now, these look like appealing deals for those with at least 25% equity in their current property value.  And the catch, if you can call it one, is this: they're only available for a limited time.

Buyers, not remortgagers, will benefit from HSBC's increased lending quota

HSBC has responded to growing demand from first-time buyers, announcing an increase in the amount of money it is earmarking for purchase loans at the 90% loan to value limit.

The bank's £500 million increase in allocated lending should enable around 3,650 additional house purchases between now and the New Year (based on an average first-time purchase price of £150,289).

HSBC Head of Mortgages, Martijn van der Heijden, comments that many buyers who put off purchasing last year are now heading back to the housing market as they have seen reports of prices bottoming out.

If you want a fixed-rate 90 per cent mortgage, HSBC's rates work out as follows:

• 5.99 per cent fixed for 2 years
• 6.49 per cent fixed for 5 years
• Both these deals cost £599 in fees.

Competing deals are available from NatWest (5 years at 5.99 per cent, with no fees) and Yorkshire Bank (2 years at 5.99 per cent, with a £999 fee).

HSBC is also offering 90 per cent LTV mortgages with tracker interest rates. You can opt for a 2-year discounted tracker (3.89%, booking fee £1199) or a lifetime tracker (4.09 per cent, booking fee £999).

The surprise is that competition for lending at this level is still so low.  However, with the cost of inter-bank lending having dropped from its credit-crunch high to a historically low rate, we might see more lenders boarding the 90% LTV bandwagon.

Leeds Building Society is launching a cheap tracker mortgage at 3.2%...

– or you can pay 3.7% on a similar deal with no lock-in.

There are two new tracker mortgages on offer and one fixed-rate deal. The lowest initial interest rate is available on the two-year mortgage tracking at 2.7% over Base Rate. It's limited at 75% loan to value, with total fees of £599.  This mortgage allows you to repay up to 10% of the capital each year without penalty.

Oddly, the higher rate deal (currently 3.7%, tracking at 3.2% over base rate) has lower loan to value limits (70%) and higher fees (£999). Why's that?

The difference is that the latter deal can be paid off at any time without penalty.  If you suspect you might want to clear large chunks of the capital at once, this deal could be better over the term.

Continuing the 'no handcuffs' theme, Leeds also introduces a two-year 4.6% fixed rate mortgage that lets you repay unlimited capital at any time without penalty. Total fees are £999 and the loan to value limit is 70%.

Reallywannatracker? 

I don't really understand the strength of demand for trackers at a time when the Bank of England is unlikely to make any further cuts in its rate.  However, if you're betting on base rates staying under 1.5% for the next couple of years, the interest would cost you less with the tracker than with the fixed—so that's a bet you might be happy to take.

And if freedom's your thing, Leeds Building Society clearly has a thing for non-locked-in mortgages, so they'd certainly be worth a look.

The Co-operative Bank likes its current account and banking customers so much, it's trimming nearly £800 off its typical mortgage fees for them.

And why not?, we say.  This kind of loyalty incentive is looking more common across the industry (see related story on Coventry Building Society).

The Co-op's new tracker deals are exemplified by the 3-year tracker that runs at 2.99 points above Bank of England Base Rate, giving a current rate of 3.49 per cent. It has a £199 fee. This and other tracker deals require borrowers to have an active current account at the bank.

Compare that to its fixed rate mortgages or its 3-year discounted rate mortgage—available to all comers, with a £995 fee—and you'll appreciate the difference.

What's more: Privilege or Privilege Premier current account customers, who pay subscription fees of £9.50 or more per month for a packaged account with complimentary benefits, can get the same deal for no fee whatsoever.  This also applies to Smilemore customers (the subscription current account offered by Co-operative Bank's internet-only offshoot Smile).

These loyalty bonuses aren't bad at all, considering there are other benefits to banking with the Co-operative anyway: a bank with an ethical policy and one that's been (perhaps not coincidentally) unshaken by the financial market mayhem over the last 18 months.

However, if you think base rates might go back up by a couple of points—and I wouldn't think a return to 3 or even 4 per cent within three years is unforeseeable—the question is whether you'd be satisfied with a tracker running that high over base to begin with.  We love the fee deal, but we'd be cautious about the mark-up!

Woolwich is now the second mortgage lender to offer a rate below 2%.

(Do you suppose parent company Barclays was envious of the headlines attracted by High Street rival HSBC?)

The new Woolwich mortgage deal is called the Step Tracker. Its headline starting rate of 1.98% is available to borrowers with 40% deposit or current equity in their property.

But with a rate this low you'd expect a catch, and yes, there's a substantial one. The discounted tracker rate – 1.48% on top of Barclays Bank Base Rate (BBBR) – only applies for the first year.  After 12 months, it reverts to a lifetime rate of BBBR plus 2.49%. There's also an Early Repayment Charge (ERC) for the first three years, requiring you to pay two per cent of the sum outstanding if you re-mortgage during that period.

If the base rate stays at 0.5%, you'll be paying an overall rate of 2.99% which seems reasonable.  However, base rates are only likely to move in one direction: upwards.  If base rates were to return to – say – 3%, you'd be paying 5.98% interest on your mortgage.

A further sanction: this deal is only available to those borrowing £200,000 or more.  With the ERC at two per cent, this means most borrowers would be paying over £3,000 in fees if they wanted to exit the mortgage early.

If you don't want this risk, you'll be pleased to hear Woolwich has cutits fixed rates as well.  A two-year fixed rate deal for people with 30 per cent depositis now 3.99 per cent.  If you'd prefer a three-year fix, the rate is 4.49per cent.

Our assessment of the 1.98% Step Tracker?

Woolwich has done a lot of manipulation in its quest for a headline rate.  HSBC's 1.99% deal was equally crafty in a different way, with its high application fees and equally selective criteria, but Woolwich has made sure its juicy low interest deal only launches to a slender segment ofpotential borrowers.  We're not convinced it will really appeal to that segment either: looking forward to 2012, we'd rather anticipate being on a 4.49% fixed rate than risking a high interest trap with that tracker!