A journalist suggested to me this week that private bank mortgages were no longer likely to be as competitive as high-street mortgages now that high-street lenders can call upon money available via the Funding for Lending Scheme FLS). He argued that while private bank mortgages had consistently undercut their high-street equivalents over the past few years, this perhaps was a situation that could not continue.
He said he would like to write about private bank mortgages in the future but confessed that he thought there would be less reason to do so going forward. Instead, the headlines would be all about applying for cheap loans because of the FLS.
Why private bank mortgages are more competitive
Yet it is highly unlikely that private bank mortgages are going to start looking uncompetitive all of a sudden when you compare them with what is available on the high street. Admittedly, we are seeing some of the lowest mortgage rates ever seen from mainstream lenders, which is excellent news for borrowers with straightforward income streams who don’t need to borrow large sums of money.
However, even better news for wealthy borrowers with complex income streams is that the private banks will still have an important role to play. You need to understand how they work in order to appreciate that they will still be able to offer some of the best mortgage rates, even if they aren’t accessing the FLS – and some private banks are taking advantage of these cheap funds.
Why you’ll never find a best buy table for private bank mortgages
Private bank mortgages don’t come in ‘best buy’ tables which are issued to prospective customers. They are tailored to the client depending on their situation, income, assets, the property they are trying to buy or refinance, and any other properties in the background. The private bank may well offer a low mortgage rate – cheaper than the high street – in order to get that client on board, encourage them to bring over their investments and perhaps their savings.
For the private banks it is all about building a transactional relationship with the client, not simply giving them a private bank mortgage. Thus they can agree an investment mortgage on normal residential terms – something unheard of on the high street since the downturn. Private bank mortgages tend to come on interest-only terms, which suits many thousands of borrowers who can’t access these terms on the high street.
How Anderson Harris can help arrange private bank mortgages
Private bank mortgages are our speciality. We deal with many private banks and can find the right one for your situation. You might not need to transfer assets under management, it depends on the private bank. Speak to us if you require flexible underwriting and a tailored situation to fit your circumstances.