As Monty suns himself on a Mediterranean coast, we asked our Specialist Adviser, Matthew Yassin, to step in and let us know what’s happening in the world of mortgages. We actually think he did quite a good job so watch your back, Monty! Over to you Matthew…
As the autumn draws in, the final months of the year pose an interesting conundrum for the mortgage market. With the rates staying low and momentum being occasional the lenders are in the mood for offering some very interesting gearing at some inconceivable pricing.
“Buyers’ market” they say, but are the vendors selling? With disputed growth and lack of it in certain areas of the UK, it’s anyone’s guess. But there are a lot of positives in the property market. The Midlands and North of England are coming up trumps for growth, whereas London is staggering after the feast of equity that has been consumed over the last 30 years. But investors still see the London market as a robust deposit account for their funds as well as residential movers holding on to the faith that London is open!
First time buyers continue to flood the market with the tax changes that are occurring elsewhere in the market. These changes are creating more stock than usual thus allowing first time buyers the time to make the right decision at the right price. The overriding factor for first time buyers is pricing. Deals such as the 1.85% 2 year fixed with a £999 fee are attractive encouraging and very much motivational to take that first dip into the property ocean. Lenders still have a lot appetite at the 90-95% loan to value levels, but the caveat is very much affordability! Tighter lending guidelines reflect stringent underwriting, but for the right situation there lies plenty of cheap deals!
Like the rest of the market, this faction is also being influenced by the winds of change. Notably lenders are allowing brokers and clients to gain attractive pricing via the product transfer route. Like the rest of the world, slicker systems and hassle free processes are allowing for an excellent transition. This is benefiting the end user hugely, taking away the potential burden of legal work and additional valuations which allows all to peacefully sleep at night
With talk of rates moving up, then down, then holding firm, investors are looking at this as a great way of “not showing their hands” whilst not being left out. Products such as the 2.99% 5 year fixed without any penalties lets investors play the game and retain huge flexibility which can only be a very good thing.
If anything, you could feel sorry for this section of the market. It has been bullied and under scrutiny for a very long time now and in October we will see the lenders thoughts on portfolio lending as instructed by the regulator.
Gearing being the operative word, with yields in the London area prohibiting high loan to values. Landlords are finding that on remortgage the fluidity has disappeared and “guidelines” have become restrictive. Other areas in the UK seem unaffected although with the current growth rate this may well change.
Fear not, there is always a solution. Top slicing is being bandied around, which allows lenders to incorporate income excesses to subsidise the lending in some cases. We wait to hear what further changes will occur in this space. A very interesting and unique time!
In terms of the cost of investment, it is attractive as ever, with deals such as 1.98% with a £1999 fee convincing neutrals that property investment still has gold in the bottom of the bag… somewhere.