What has been really interesting has been the fact that SWAP rates have bounced upwards once more from their pretty big falls last week. This shows that markets now definitely think there will be another slight Base Rate Rise, probably by 0.25%.
This is however contradicted by Monetary Policy Committee dove Silvana Tenreyro, who says that as it takes time to feel the effects of rate rises, the economy has not felt the real effects yet, so she thinks we have already gone too far!
According to Mortgage Solutions, “She said the MPC’s projections showed inflation would fall “well below the target”, meaning the risk of a downside of inflation being too low was greater than the risks of the upside of it being too high.”
Dissecting these slightly contradictory views tells us that despite the fact we have seen rates fall recently, with more lenders now offering rates below 4% on both 5-year and 10-year fixes, it does not necessarily mean that rates will continue to fall substantially in the short to medium term although the return of lender competition will see some tweaking.
Therefore, anyone waiting to see what happens next before buying or putting an offer in should not try to predict the market. It does not seem worth waiting any longer and now is as good a time as any to act. We just do not know what will happen next to rates and whilst they could be cheaper at the end of the year, they could also not be – (how’s that for a prediction!)
As I have said before I believe now is a good time to buy as asking prices have already dipped and mortgage affordability for purchasers at least has become more affordable. We know that demand is still there and once people do start coming back in more numbers, house prices, especially in high demand areas, will also strengthen once more.
It all adds up to getting proper, professional advice to ensure the right affordable product is chosen.
We have seen another lender in Virgin Money come in to the sub-4% 5-year fixed rate team by offering a product at 3.95%, however it is worth noting that the current rates below 4% are all for remortgages only so far, with purchase rates still above the 4% level.
Every day brings new rate changes at the moment and there are clear signs that lenders are starting to be competitive once more and finally get their year started, with Barclays and Nationwide being the big movers.
Santander are the latest lender to improve their maximum income multiples, and for capital and interest applicants earning £100,000 or more they will go up to 5.5 times income for loans at 75 per cent LTV or less. For those with income between £50k and £100k they will lend 5 times maximum.
Halifax have also previously improved their affordability calculations helping borrowers to potentially borrow that little bit extra.