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Insurance industry

Norwich Union Enters Mortgage Market with Competitive Rates and Flexible Offers

Strategic Insights

— 1 min read

Norwich Union is set to shake up the UK mortgage market with the launch of its base rate tracker loan, offering rates as low as 5.1% for most borrowers. The move is seen as a direct challenge to Standard Life Bank's popular 6% mortgage, which has garnered £3.8bn in applications since its January launch. Norwich Union's innovative product will allow borrowers to switch to a fixed rate of 5.94% at no cost, ensuring they are protected from rising interest rates.

Key Takeaways:

  • Norwich Union's base rate tracker mortgage will offer rates as low as 5.1% for most borrowers, significantly lower than the 6.85% variable rate offered by traditional lenders Halifax and Abbey National.
  • The loan will be pegged to the Bank of England base rate, currently 5.25%, plus 0.85% for mortgages of up to £150,000, and will last for the lifetime of the mortgage.
  • Borrowers will have the option to switch to a fixed rate of 5.94% at no cost, providing protection against rising interest rates.
  • Norwich Union is offering a 1% discount for the first six months, bringing the initial rate for most borrowers down to 5.1%.
  • The lender is willing to provide 100% loans, but at a special rate of 8.99% for the remaining 10% of the loan.
  • This is a departure from the traditional 95% loan-to-value ratio, where lenders typically cap their loans.

Statistics:

  • £3.8bn: The amount in applications for Standard Life Bank's 6% mortgage since its January launch.
  • 15%: The market share grabbed by Standard Life Bank's mortgage since its launch.
  • 5.25%: The current Bank of England base rate.
  • 0.85%: The increment above the base rate for mortgages of up to £150,000.
  • 5.94%: The fixed rate available to borrowers at no cost.
  • 8.99%: The special rate for the remaining 10% of the loan in 100% mortgage deals.

Sources:

  • "Norwich Union to enter mortgage market" article, The Times, [date not specified].
  • Interview with a spokesman for Norwich Union, as quoted in "Norwich Union to enter mortgage market", The Times, [date not specified].

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