The Royal Bank of Scotland has said that it wants to become a larger player in the market for UK mortgages in the years to come.
Since its bailout by the government, the bank has reduced its corporate balance sheet while increasing its share of the market for new residential mortgages.
The institution is now responsible for issuing more than 10% of all new mortgage loans.
Its current range of products is headlined by a two-year fixed-rate deal at 1.74% on a 60% LTV loan, while its equivalent duration tracker mortgage offers a rate of 2.17% with a much lower arrangement fee of £995. A fee-free option is also available at 2.69%.
David Hollingworth, of London & Country, said that RBS’s low rate was capturing public attention, despite the large arrangement fees associated with the products.
"These big fees and low rates are about grabbing attention," he said.
"For some period they have been out of the game and it is great to have them back and with more appetite."
Targeting First-Time Buyers
The bank also hopes to boost lending at 90% LTV and above for first-time buyers, a move that has been encouraged by the government’s Help to Buy Scheme, which is due to launch next year.
Subsidiary NatWest already offers fee-free deals on mortgages at both 90% and 95% through the existing NewBuy Scheme.
The Help to Buy Scheme will offer lenders a guarantee on mortgages of up to 95% LTV in a move intended to break the stalemate of young people becoming trapped in rented accommodation by high housing costs.
"We have the funding and the balance sheet to lend more," said the bank’s Head of Mortgages, Moray McDonald, who also supports the government's new schemes.
"The government is looking to pull forward borrowing that would have taken place anyway in a few years' time," he said.
"If this means someone is able to get on with their lives, rather than wait, that will be a good outcome."
James Booker
Which4U
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