Post-Election Mortgage Market View

As the election campaign fades from memory, and the wounds from Euro ’24 still burn raw, we can at least now hopefully look forward to some stability, summer vibes and a busier mortgage and housing market.

With the King’s Speech due this week the business of Government really starts and there is a steely sense of determination from the new Government to get stuff done. We can only hope that that is not eroded by outside issues or the general trappings of power over time.

Mortgage rates have continued to drop at a frustratingly slow pace, but the trend is decidedly downwards. Five-year fixes are now available a shade over 4%, whilst a couple of lenders have interestingly introduced 1-year fixes, for those who want security now but do believe rates may be cheaper in a year.

Coreco is also one of the few brokers to gain access to a new lender, April, who offers an interesting take on longer-term fixed rates, available from 5 to 15 years with a whole load of flexible features built in.

Inflation

This week is also important for inflation, as the odds of a rate cut in August and September have been yo-yoing over the past month. Service inflation is the main culprit, falling at a very slow rate and proving stubbornly sticky.

It seems that the Bank of England’s Monetary Policy Committee never learn from past lessons and has been consistently slower to react than they should, and this time is no exception.

The country is crying out for that first rate cut, which is now long overdue. If it does not come in August, and at the very latest September, there will be more than a whiff of negligence in the air.

Buy To Let Market

The BTL market has undertaken a radical change over the past few years, moving away from amateur landlords and into the hands of professional landlords who are set up to take advantage of the benefits investing in the sector brings.

Whilst we still do not quite know how the new Government will treat the sector, at present there are still benefits for those who take the time to work their portfolio as a business in its own right and get the correct tax advice.

Demand for rental property is as strong as it has ever been, and this shows no signs of abating any time soon. Rents are robust, there are currently some good deals to be found on property as amateur landlords sell and prices soften, and the sector will benefit greatly as interest rates slowly begin to fall.

For anyone looking to get into BTL, it is all about going into the market with eyes wide open and armed with good tax advice and a knowledgeable mortgage adviser with experience in this market.

We are seeing professional landlords move further North to student towns and look into higher-yield properties, such as HMOs, all of which require knowledge and advice. That said, BTL investors can still do well in today’s market and there is no reason why this cannot continue, especially as rates start to fall.

Best Mortgage Rates

In terms of mortgage rates, for standard residential mortgages, borrowers can obtain 2-year fixes at 4.49% (8.20% APRC) and 5-year fixes from 4.09%, (6.90% APRC), whilst variable discounted rates are around from 4.89%, (6.70% APRC) and variable tracker rates from 5.39% (7.60%).

Those looking at Buy-To-Let can now obtain products from 3.69% (8.00% APRC) for a 2-year fixed, 5.52%, (7.60% APRC) for a 2-year tracker or 5-year fixes are available from 3.83% (4.20% APRC).

Important

Your home may be repossessed if you do not keep up repayments on your mortgage. There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.