Newcastle for Intermediaries, the intermediary-facing arm of Newcastle Building Society, has launched a 72-month fixed rate deal to boost borrower affordability.
The mutual’s Affordability Boost range is available on select products, and Newcastle Building Society will assess borrowers more favourably than its standard residential five-year fixed rate criteria.
The mutual said that, depending on a borrower’s finances and requirements, this could increase the size of their loan.
Newcastle Building Society said a couple with one child, a combined income of £75,000 and credit commitments of £650 could access up to £375,000 with the range, rather than the £305,000 through its standard options.
The products are available up to 95% loan to value (LTV). At 90% LTV with a £999 fee, it has a rate of 5.24% and early repayment charges (ERCs) of 6% in the first year, which incrementally decline over the fixed rate period.
The mutual said the 72-month product would ensure that a borrower is able to complete on their purchase and still have more than five years remaining on their term.
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Francesco Di Pietro (pictured), head of intermediary mortgages at Newcastle Building Society, said: “Current market conditions have had a negative impact on borrowing capacity, and the way affordability is assessed for shorter-term products sometimes limits opportunities for borrowers to own their dream home.
“By adapting to the dynamic nature of the market, we can ensure that we continue to offer brokers a flexible proposition that meets the needs of their clients. That’s why we’ve worked collaboratively with our broker partners to develop a new range of products to improve affordability in a sustainable way.
“The Affordability Boost range is complemented by the enhancements offered by our flexible lending criteria, direct access to our team of underwriters and support for each broker via their dedicated regional business development manager.”
Tanya Toumadj, managing director at Mortgage Broker Tools, said: “Affordability is very much still a constraint to borrowers, and at present, no lender meets the loan requested in around 15% of our cases, with around 50% of these cases being below a loan to income (LTI) of 5.5, so income multiples aren’t the sole constraint.
“However, a significant proportion of borrowers are flexible in terms of the length of term they want to commit to, with 33% of all our cases opting as ‘undecided’; therefore, Affordability Boost offers a realistic option to brokers looking for solutions to their client’s affordability challenges.”
