Here you will find the latest mortgage market update for 2023. Updated weekly with the very latest on mortgage rates, mortgage lender changes, and general property news, this builds up as an informative resource to track changes in the market over the year.
To find out more, ask questions, or speak to Monty or one of our friendly mortgage experts click here.
There is a sense that for the first time in a while, the mortgage market has at least settled in a space where the sudden movements in rates have diminished and an eery calm has fallen.
SWAP rates have steadied and eased a little more over the past few days, with 2-year money back below the 5% level and 5-year money at 4.5%, and we are back with the expectation that the Bank of England will not move rates upwards again this year. In fact, 1-year money is now 5.2%, below the current Bank of England Base Rate of 5.25%.
Of course, this can change, but the voices are growing in volume cautioning against any further rises. The next Base Rate decision will be this week and we will let you know what happens, but I don’t expect any change.
Santander are the latest big name to get in on the action, or at least try to promote some action, announcing some major reductions which will also add to the competitive pressure.
Two-year fixed rates continue to edge towards the 4’s with Santander leading the way with their 5.14%, (8.10% APRC), offering, whilst in the five-year fixed market Santander has eclipsed Halifax moving down to 4.64% (6.70% APRC).
This month has seen an uptick in activity as consumers look to see if they can take advantage of a buyers’ market and some more attractive mortgage rates. This is from a low base as mortgage approval figures showed last month fell to the lowest level since January, but a positive, nonetheless.
I still firmly believe that lenders can do more to help though, whether that is in the rate department or in their process, affordability, and criteria. It is time for them to come back to the table properly.
Elsewhere, the talk is around the forthcoming Autumn Statement, or budget to you and I, and the fact that housing could play a major role.
We have already seen Mr Gove’s latest plans around phasing out the Leasehold system. Plans include ensuring all new houses built must be freehold, capping all ground rents on existing leasehold properties to a ‘peppercorn’ rate, as well as changing the standard contract lease extension from 90 years to 990 years. They want to remove the 2-year limit before a lease extension as well.
Other items said to be considered are an extension of the Mortgage Guarantee Scheme by a further year, which would help lenders lend more, and yet another tweak to Stamp Duty!
Watch this space…
Have a great week!
In terms of mortgage rates, for standard residential mortgages, borrowers can obtain 2-year fixes at 5.14% (8.10% APRC) and 5-year fixes from 4.64%, (6.70% APRC), whilst variable discounted rates are around from 5.34%, (6.70% APRC) and variable tracker rates from 5.39% (8.00%).
Those looking at Buy-To-Let can now obtain products from 4.49% (8.40% APRC) for a 2-year fixed, 5.54%, (8.04% APRC) for a 2-year tracker or 5-year fixes are available from 4.69% (5.30% APRC).
Mortgage rates have continued to drop over the past week, with Halifax the latest big lender to involve themselves with, not so much a rate war, but a light skirmish. Their new 5-year fixed is now at 4.73%, with Danske Bank again back in the mix with good 2 and 5-year products for those with EPC ratings of A, B, or C.
They have been helped by another easing in SWAP rates, which has tempered some of the concerns of another rate rise from the Bank of England before the year is out. The markets seem to suggest that another rise is no longer on the cards, and with 5-year money now falling back to the 4.5% level, there is room for lenders to cut further.
Hopefully, with 2-year money now just under the 5% level once more, we will soon see 2-year fixes also starting with a 4 which will be a real boon to the mortgage market, but as we know much can change.
There is also more choice now in the higher Loan-to-Value bracket for those with only a 10% deposit, as more lenders return to this area and rates have also fallen.
It really is hard to call what happens next, with organisations such as the International Monetary Fund, (IMF) saying that rates in the UK have not peaked and they will have to stay higher for longer, but others believing that this is the peak and going further will cause issues and mean rates will have to be cut faster than expected next year to avoid undershooting the inflation target.
Add in the fact that the global and inflationary outlook has been somewhat complicated again by events elsewhere in the world and all the uncertainty that brings, and it is a brave person who claims they know what the next move will be.
What we do know is that pent-up demand is continuing to grow, and when the levee breaks, it is going to be all hands on deck once more.
4.82% is now the new headline rate, as a whole host of lenders continue to move their product offerings down, following the SWAP rate falls of the last couple of weeks.
There are now nine lenders who have an offering starting with a 4 on the residential purchase side of the market, which is a whole lot better than it has been for some time.
There is however, a side note to this, that in the last couple of days SWAPs have increased once more, driven by expectation that whilst food prices have fallen finally, oil prices are back on the way up and some commentators are not ruling out a final Bank Base Rate rise to 5.5% before the year is out.
Today we saw a couple of lenders price some rates up again whilst others continued down, so we will keep our beady eyes on this and report back if anything significant happens.
The Government are working hard to take any credit for inflation falling but in reality, much is beyond their control and whilst it will fall naturally, there is still danger in trying too hard to get it down, which could mean issues for the economy.
At the moment however, the general economy is still proving to be pretty robust, despite upticks in unemployment, redundancies, and mortgage arrears. There are still a whole host of borrowers yet to exit the comfort of ultra-low rates onto much higher ones, so another move by the bank would be premature in my humble opinion.
What is clear however, is that there is still a market, and good brokers and agents prepared to speak to people and go the extra mile will find that not only do they do well now, but a steady stream of people will come back to them as the market turns next year.
Mortgage lenders all seem to have turned their attention to 2024, and are planning in earnest to make sure that they increase their market share, so we should continue to see rates and criteria improve over the coming weeks.
Buy To Let
A little important note on the BTL mortgage market. At the moment the Best Buy tables are full of low rates, for example Landbay’s 4.19%. Landlords looking at these need to also be aware of the high arrangement fees on these deals, in this example 7% of the loan amount.
3% – 7% fees are pretty standard at the moment in order for the lender to keep the rate down and hence the rental calculations, so whilst this may work in some cases, (it may be the only option), in others it may be a poor decision. The rates listed below are the ones with a maximum fee of 3%.
As always our very own BTL Specialist brokers are here to help landlords make sense of the market and ensure the product they get works for them.
In this market, people need help and guidance more than ever, from both Estate Agents and Mortgage Brokers, who can work together to ensure the very best experience, smoothest transaction and ensure that the future is bright.
Have a great week!
Hopefully, you have all enjoyed a nice summer sipping Pina Coladas and not getting caught in the rain, maybe in the sweltering heat of far-off shores, with those of you who have kids both enjoying their company and simultaneously hoping they go back to school soon.
For others waiting for the usual holiday madness to subside before you go so you can get a quieter, cheaper, and probably more temperate holiday, I hope you have a great time.
The biggest question I get asked most now is when interest rates are going to come down. Well, the good news is that they have already started to, at least from a mortgage sense at least.
SWAP rates have eased slightly and though we still think there will be another Bank Base Rate rise, it looks more likely now that the top will be at 5.50% rather than any higher.
Whether we have finally got to the stage of there being some calm in the markets time will tell, but inflation finally seems to be moving, and with recent reports of food prices falling to their lowest level in a year on top of the Energy Price cap reducing, there is every expectation that falls will continue.
Today we saw both NatWest and HSBC cut rates, which usually means others will follow and 5-year fixes are now down to the low 5’s with Barclays at 5.17% (7.40% APRC).
As to how far they will go, don’t expect to see massive reductions any time soon, but an easing is taking place. If the next inflation report is a good one, then we could well see SWAPs reduce further and the first 4.99% 5-year fix by the end of the year, though that may be the lowest we go for a while.
The new norm will be rates around the 4.5% to 5.5% mark for the foreseeable future, but it will take time to ease down to that level.
We expect activity to increase once more as people begin to come back from their holidays and lenders continue to remember they do need to lend, with healthy competition for market share and getting a good start to next year of some importance.
There are some promising signs and part of the recent slowness is down to the first proper summer holiday season we have had since pre-Covid! Demand is still there, and many will see the easing of rates and prices as a good signal to buy.
We also do not know what the Government will do in terms of pre-election policies to boost housing. This is an unknown that could suddenly boost activity, demand, and prices in the near future, so watch this space.
Of course, our lovely advisers are always available to talk to as many people as possible to guide them through the mortgage maze, which at times like these, is essential to get the best advice and products.
Have a great week!
In terms of mortgage rates, for standard residential mortgages, borrowers can obtain 2-year fixes at 5.66% (8.60% APRC) and 5-year fixes from 5.17%, (7.40% APRC), whilst variable discounted rates are around from 5.24%, (7.60% APRC) and variable tracker rates from 5.39% (8.20%).
Those looking at Buy-To-Let can now obtain products from 4.99% (8.40% APRC) for a 2-Year fixed, 5.47%, (7.81% APRC) for a 2-year tracker or 5-year fixes are available from 5.14%% (7.60% APRC).
Back from holiday and have waited to send this week’s update as there has been a plethora of rate changes to filter through.
What a difference a promising inflation report makes! Since the last one showed that inflation fell more than expected last month, from 8.7% to 7.9%, whilst more importantly, core inflation also fell, we have seen SWAP rates fall by around 0.5% or so.
This led to the Bank of England increasing rates by 0.25% to 5.25% rather than by a higher amount. I still think this is a step too far, and hope that the Bank now sees sense and pauses for breath as this, and previous rises finally work themselves through the economy.
As expected, a few weeks after SWAP rates fell, we are now starting to see the reaction from lenders as, having also cleared their backlogs and going into a traditionally quieter period, they begin to cut rates.
Just an hour or so ago, Halifax cut their rates by up to 0.71%, with their 5-year fix now down to 5.28%. Nationwide, HSBC and TSB are among other major lenders to cut rates this week.
The next inflation report is set for 16th August and that will prove to be another important guide as to where we are now. If inflation is seen to have fallen once more, it may help to stay the Bank of England’s arm further and see SWAP rates and therefore mortgage rates fall back further.
What we do know is that we are not going to see a sudden cut in Bank Base anytime soon and rates will be higher for longer, but as long as they settle back to the mid 4% / low 5% levels that will be acceptable to many and see a return to long-term normal levels that existed before the Credit Crunch over a decade ago.
It also seems that buyer interest has not waned and if these things do continue the way they are going, an easing of both mortgage rates and slight easing of house prices, the last quarter could provide a welcome boost in activity.
As has been said before, for First-Time buyers who are comparing monthly mortgage costs to monthly rental costs, this could be an ideal time to come back to the market.
There is always opportunity, especially in markets such as these.
Have a great week!
In terms of mortgage rates, for standard residential mortgages, borrowers can obtain 2-year fixes at 5.66% (8.60% APRC) and 5-year fixes from 5.23%, (7.60% APRC), whilst variable discounted rates are around from 4.84%, (7.60% APRC) and variable tracker rates from 5.39% (8.20%).
Those looking at Buy-To-Let can now obtain products from 5.14% (8.50% APRC) for a 2-Year fixed, 5.47%, (7.81% APRC) for a 2-year tracker or 5-year fixes are available from 5.14%% (7.70% APRC).
First, apologies for the delay in the latest update. To say it has been a torrid, hectic time in the mortgage world is an understatement. I have started this every week, and every week sudden rate changes have made this a pointless affair.
To give you an idea, the rates quoted here are now pretty much 1% higher than they were a month ago – it has been that crazy.
Not only have the days of the 3% mortgage gone, but as you can see below, 4% fixed-rate mortgages are now no longer unless you want to fix for 10 years at 4.94%.
Two-year fixes have been affected massively, and we are now looking at rates starting at 5.7% and moving rapidly towards starting with a 6, something that will surely happen unless the Bank of England decides to suddenly put its sensible pants on and opt for a wait and see approach, rather than careering onwards with its policy of interest rate rises.
Bank of England’s Base Rate now stands at 5%, with predictions that it will hit 6% in the near future. I still feel this is unnecessary for a whole host of reasons, but I don’t expect the Bank to pay heed to mortals like me. That said, I do hope that it peaks at no more than 5.5%, which may mean that mortgage rates do not need to get much higher as markets have already priced this in.
Two-Year SWAP rates are now at the 6% level and with 5-year money also rising to 5.2% it shows that the markets expect rates to stay higher for much longer.
We, therefore, find ourselves for the foreseeable future in a period where mortgage rates are 5% to 6% and borrowers need to adjust to the new normal. This is easier for purchasers, especially those comparing mortgage payments to their rental payments, and I do expect purchases to continue throughout the rest of the year as the social reasons behind the demand for property are still strong.
Those remortgaging, however, are experiencing payment shock as they look at their mortgage rates going up 4% to 5% from where they were previously. This again will stabalise and there are tools in every broker’s box to help mitigate these changes.
With the above in mind, the Government has rushed through The Mortgage Charter, now signed by almost 40 lenders.
This a new deal between lenders, the FCA, and the government permitting customers worried about their payments to:
These options can be taken by customers who are up to date with their payments without a new affordability check or affecting their credit score.
Rather than go into more detail here we will provide a full explanation in a separate post.
Of course, our lovely advisers are available to talk to any of you who want to chat about this here.
In terms of mortgage rates, for standard residential mortgages, borrowers can obtain 2-year fixes at 5.70% (8.20% APRC) and 5-year fixes from 5.15%, (6.60% APRC), whilst variable discounted rates are around from 4.30%, (7.70% APRC) and variable tracker rates from 5.15% (8.20%).
Those looking at Buy-To-Let can now obtain products from 5.14% (8.50% APRC) for a 2-Year fixed, 4.99%, (8.70% APRC) for a 2-year tracker or 5-year fixes are available from 4.83% (7.80% APRC).
Whilst you can still obtain some decent mortgage rates at the moment, with 5-year fixes at 3.74% to 3.99%, it seems inevitable that we will see the Bank of England increase interest rates today, but hopefully by no more than 0.25%.
This would take the Bank Base Rate to 4.5%, some 3% higher than it was this time last year.
The problem for the Bank of England is that they risk increasing rates too far and causing a whole host of other issues for banks and for the general economy, as changes take time to filter through the system. Given the type of inflationary pressures we are currently facing there is concern that rates would have to get to an unsustainable level before having any real direct effect as they would do in a more normal environment. Going much higher in such a relatively small time period could cause more harm than good.
Many lenders have already started to price in this anticipated rise as SWAP rates, the cost of future funds upon which many lenders base their fixed rates on, have increased again recently.
With inflation continuing to stay more stubborn than anticipated, it looks more like the current pricing levels will stay around their current level for a while yet and continue to disappoint anyone who was waiting on the expectation that rates will start to reduce. This shows just how hard it is to predict the market.
There is some good news as Skipton Building Society has brought back the 100% mortgage as expected.
There are many potential buyers who have proved they can afford to pay rent at the current high levels, but just do not have the means to meet ever-increasing deposit levels and feel constantly at the mercy of rising rents.
The Skipton product is different from those of yesteryear, as it is linked to the rent currently being paid and the mortgage payment cannot be more than the average of the borrower’s last 6 months’ rent. Priced at 5.49% for a 5-Year fixed, it will also need to meet Skipton’s standard income multiples.
This new product will not be suitable for everyone, but it will help some of the new generation of home buyers get off the rental treadmill and enjoy the security of owning their own home.
In terms of mortgage rates, for standard residential mortgages, borrowers can obtain 2-year fixes at 4.20% (7.10% APRC) and 5-year fixes from 3.74%, (6.10% APRC), whilst variable discounted rates are around from 4.05%, (7.40% APRC) or trackers from 4.39% (7.20% APRC).
Those looking at Buy-To-Let can now obtain products at 4.49%, (8.10% APRC) for a 2-year tracker, 3.69% (7.90% APRC) for a 2-year fixed or 5-year fixes are available from 3.94% (6.90% APRC).
Despite the fact the Bank of England increased Base Rate to 4.25%, and there could be one more movement to come, the end of Q1 seems to have finally fired the starting gun for some lenders to come to the lending party.
We now have more than a couple of lenders who have 5-year fixes starting with a 3. On the purchase side, Virgin Money have a 5-year fixed at 3.90% closely followed by NatWest at 3.94%. For those looking to remortgage NatWest have a 3.91% 5-year fixed.
In fact, on the purchase side, there are now a total of 12 lenders who have some kind of offering starting with a 3.
The further good news is that SWAP rates have stabilised at this slightly lower level, with 5-year money around the 3.7% mark. This means that there is still some room for competition between lenders and I expect we shall see this competition hot up.
2-year fixes have also reduced and are now available from 4.10%, so affordability wise at least for those looking to buy, there are now some good options.
Those looking to remortgage also will have a jump from their last rate, but not as much as once feared.
As we enter the buoyant spring season, we are already seeing activity and demand pick up nicely, and I suspect many more prospective buyers will want to take advantage of the current climate after having their lives put on hold for the last few months, or even years, as they waited for stability.
One thing that has been excellent this first quarter has been the increase in leads from Lettings, with referrals up 670% in the first quarter!
This really does show that this is an area where landlords really do want and need financial advice and assistance now more than ever. With changes in taxation, interest rates, lending criteria, and the upcoming Energy Performance Certificates, there is much to discuss.
Our specialist Buy to Let team has years of experience and can help landlords with 1 or 1,000 properties. We can also of course help tenants who want to buy!
In terms of mortgage rates, for standard residential mortgages, borrowers can obtain 2-year fixes at 4.10% (7.30% APRC) and 5-year fixes from 3.90%, (6.50% APRC), whilst variable discounted rates are around from 3.80%, (7.10% APRC) or trackers from 4.39% (7.20% APRC).
Those looking at Buy-To-Let can now obtain products at 4.34%, (7.80% APRC) for a 2-year tracker, 3.78% (8.30% APRC) for a 2-year fixed or 5-year fixes are available from 4.09% (6.90% APRC).
Those of you joining us from our monthly Coreco Mailshot (welcome), but I envisaged that you would just be reading the below dated 16th March. However, whilst a week is a long time in politics, it seems a weekend is an aeon in the financial markets.
Much of what I said I hold to below, but it is worth talking about the very latest here before you read the below as it potentially changes things somewhat.
Firstly, although we are seeing echoes of 2007/8, (I have just re-read my blogs from that time), this does feel very different. There is no one major issue, but as a couple of distinguished journalists have termed it, “every complex banking issue seems to be happening all at once”.
The common theme between then and now is the fact that at the time Central banks were increasing interest rates to curb inflation. Higher interest rates, especially when they are increased faster than expected, (thank Truss and Kwartang for that), often expose potential issues in financial institutions.
Silicon Valley Bank, (SVB) home to mainly tech companies with loads of cash on deposit, were a different problem to the issues facing Credit Suisse. Looking for places to put their cash they invested in bonds that as interest rates rose lost value.
When rumours of issues started to swirl around people started withdrawing funds. These days a run on a bank is much quicker than queuing outside a bank branch, and the US was forced to act by guaranteeing accounts, whilst the UK arm was swallowed up quickly by HSBC.
With other smaller US banks in similar positions, as clients move funds to safer, larger institutions, more may follow.
Credit Suisse on the other hand has long had rumours of endemic weakness. As more attention focused on them and investors were spooked it seemed only a matter of time before trouble followed.
The Swiss acted quickly and a forced marriage to UBS was arranged. However there has been some concern over how this was done, and without going into technical details here about AT1 bonds losing all their value, other investors are concerned about their own holdings.
Leading Central Banks have acted quickly, but the question is around the threat of further contagion. Will the action taken be enough to calm and quell the tide, or are more issues simmering and waiting to boil over?
In times like these banks often reduce their lending as potential credit is squeezed.
What this undoubtedly all means is that The Bank of England and the Fed in the US should be pausing their interest rate hikes. Whether they will or not is another matter, but the markets certainly suggest that rather than another expected 0.5% rise this month we may see no movement, or if anything a quarter-point rise.
SWAP rates have reversed themselves again, falling back down to the levels seen a couple of weeks ago. Five-year money is now at 3.6% and Two-year money has dipped below 4%.
Before you get excited, although we have seen a couple of lenders cut rates already, this could be temporary and unless there really are some serious issues, we don’t expect rates to fall dramatically.
Over the last couple of weeks, we had seen SWAP rates increase and lenders putting rates up, so this rollercoaster could continue for some time yet, with 4% being a consistent average as it always traditionally was.
It is worth saying that the financial system as a whole is in a better position than it was in 2008, with the big banks having balance sheets that are in good shape and well capitalised and whole set of stronger regulations than back then. Of course, we never say never, but we can only hope that the differences are big enough that history does not repeat itself.
As for mortgage costs, for many first-time buyers, monthly mortgage costs will compare favourably to strengthening rental costs.
Hence our advice does not change; anyone waiting to see interest rates get suddenly much cheaper before buying could win slightly or end up disappointed and it shows how trying to call the market is fraught with danger, especially if with cheaper rates comes tougher borrowing conditions.
Locking in sooner rather than later as a safety net is still good advice, and a good broker will always be able to switch to a better rate if it comes along before completion.
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, and at the right time for you.
I thought I would wait until the Budget before I put finger to keyboard on this week’s update and to be honest, I shouldn’t have waited. Mind you, a bit of boring is exactly what we need after the last effort last year!
Although there was not much expected in terms of Housing this time round, no one quite expected absolutely nothing at all.
Some say it was an opportunity missed, but with much of what they have done in the past, like stamp duty holidays and Help to Buy, undoubtedly contributing to higher prices, they did not want to risk anything that could be deemed as inflationary. They really cannot afford to take any chances with the markets volatile and watching closely at this point, so expect more next time when an election is closer.
There were however a couple of relevant changes. Firstly, the changes to childcare, though coming in slowly, will be most welcome by many families. It will also have potentially a double-edged benefit to those looking for mortgages.
Not only will childcare bills reduce for some, meaning more to put towards affordability, but it may enable those working part-time because of childcare costs to work another day or two, again increasing income and therefore affordability.
Childcare costs are one of the big factors when it comes to mortgage affordability and these changes may, therefore, enable some to borrow that little bit more which could well be the difference between obtaining their dream home or not.
The fact that the Government now expect the UK to miss a technical recession altogether is good news, as is their prediction that inflation could well fall faster than expected to around the 2.9% level by the end of the year.
This could be good news for interest rates.
In the markets, we have seen SWAP rates fall again, mainly due to the worrying spectacle of the issues facing Silicon Valley Bank, (SVB) in the US. Anyone who lived through the credit crunch a decade ago will remember its almost innocuous start with a couple of smaller banks failing in the US and contagion spreading.
With big rumours also about issues with Credit Suisse it is no wonder that there are some market jitters.
HSBC swung to the rescue of SVB UK, which could have affected thousands of tech businesses here in the UK, so that particular crisis seems to have been averted, but we will be watching developments closely over the coming weeks.
The fall in SWAPs, however, does give some lenders a chance to go back and cut their rates once more, and we have seen a smattering of this.
However, as I have mentioned before, and as was relayed to me by the head of one of the top lenders yesterday, the current 4% average seems to be where the mortgage market will be for some time yet – barring of course another major issue.
It was only last week that SWAP rates increased pretty dramatically and lenders started putting rates up again.
There are a few thoughts on what was causing this, but stronger than expected economic data both here and in the US, wage inflation, higher car sales, and continued low unemployment has seen markets believe that inflation may stay higher for longer than expected.
There is an expectation that the Fed in the US may up the pace of their rate hikes and the UK would follow. Hence interest rates may need to stay higher for longer.
Indeed, we saw SWAPs increase again yesterday, and fall again today, so this see-saw effect looks set for a while especially when contradictory forces are at work.
It should be remembered, however, that 4% is more akin to the long-term “normal” average of interest rates rather than the ultra-low rates we have seen over the past decade. They were very much the anomaly, not the current rates.
The property market has always been more robust than many people assume, but it is important not to jump to wild conclusions early on in the year. We know and have seen with enquiry levels early this year, that demand is still strong whilst supply is still nowhere near where it should be, and with mortgage rates falling to more realistic levels, inflation starting to drift down and fuel prices lower, there is room for some cautious optimism.
Flatlining is now the more likely scenario for house prices over the course of the year and prices will differ as regionalisation becomes more pronounced. Overall house prices look set to perhaps fall no more than 5% overall, with some areas faring above or below that level.
Activity is definitely up and those looking to buy will find that the first half of the year is the optimum time to do so.
In terms of mortgage rates, for standard residential mortgages, borrowers can obtain 2-year fixes at 4.14% (6.80% APRC) and 5-year fixes from 3.96%, (6.00% APRC), whilst variable discounted rates are around from 3.89%, (5.70% APRC) or trackers from 4.14% (7.20% APRC).
Those looking at Buy-To-Let can now obtain products at 4.24%, (7.80% APRC) for a 2-year tracker, 4.08% (8.10% APRC) for a 2-year fixed or 5-year fix are available from 4.39% (7.00% APRC).
This week all eyes are on the Bank of England to see if they will increase interest rates once more. The smart money suggests that we will see the last larger rise of another 0.5% to take the Base Rate to a nice round 4%.
So much depends upon not the next moves by the Bank of England, but on the rhetoric that accompanies it. Although there could even be another move after this to 4.25%, I personally do not see the need to move any further at all, but the stubbornness of inflation, the fact that wage inflation is bothering the Bank, and that the recession may not be as bad as predicted, or even appear at all, means there is some caution.
Maybe there will be a surprise of just a quarter-point rise, but we shall know soon enough.
Either way, these rises are already priced into existing mortgage rates and I still expect rates to fall overall from mortgage providers as competition and the desire to lend takes a more serious hold.
As I mentioned to the BBC today, for First Time Buyers who are comparing monthly mortgage payments to ever-increasing rents, the comparison is not out of kilter so their demand to buy this year will remain strong as rates stabilise and ease.
There has been a further plethora of changes from lenders and product rates are continuing to tick down. Well done to Virgin Money for what looks like the first fixed rate, their ten-year fix, to be priced under 4% at 3.99%. Santander has come close with their 5-year fixed at 4.19% and it won’t be long until we see a few more products once again starting with a 3.
What is most pleasing is the amount of choice that has once again returned to the market after the heady days of the disastrous mini-budget.
Whether borrowers have a large or smaller deposit, whether they are employed, self-employed or a contractor, or whatever else they have that is not quite the norm, lenders are available to assist once more.
Like many others, it was surprising on a couple of levels to read a report from Rightmove that house prices rebounded in January. Firstly, because we must reiterate that this is not house prices but “asking prices”, which is a huge difference, and secondly because we are barely only midway through January! Talk about desperation to get some good news out.
The question, therefore, is does this mean anything sensible? More importantly, is this an accurate guide to future trends? The answer to the latter is probably a resounding no, but there are some interesting nuances on both these questions.
The first is that this data shows an immediate snapshot in time, that the market has started brighter than many expected. There is usually a bounce in activity at this time of year as many potential buyers actually have time to think over the Christmas break and vow to have moved by next Christmas or, sadly, vow to not have to spend another Christmas together.
The real test will be whether this initial bounce of activity is sustained and translates into actual sales.
What we can optimistically gage from this, however, is that demand for property is still alive and well, and that higher interest rates are no longer putting off people from looking. I expect this will continue and the market, though undoubtedly slower than last year, will continue to confound doom-mongers yet again predicting any kind of crash.
All we will see, and any changes will be regionalised, is a more likely relatively soft correction as the pandemic froth exacerbated by the stamp duty holiday comes off. Much of this has already happened as far as asking prices are concerned, perhaps why we saw a little bump up in the last set of statistics, so I suspect on average we may well see leveling off over the year with an overall fall of 5%.
Once you factor in expected falls in energy costs, inflation, and mortgage rates, the second half of the year looks rosier with a fair share of cautious optimism as stability returns to the housing market. In fact, 2023 looks like it could well be the year to buy as slightly lower prices and more realistic interest rates mean that those who do manage to buy this year will look back in a few years’ time with a smug grin.
The world has changed dramatically over the past couple of months as fixed rates are no longer the foregone conclusion they have been for many borrowers over the past decade.
We have been through a short period of sharp interest rate increase and with Bank Base likely to peak after the next interest rate decision in February, we now find ourselves waiting with bated breath for lenders to move to cut their rates once more.
We have seen a plethora of changes already, but there will undoubtedly be more to come as lenders are starting 2023 with less of a pipeline of new business than usual and similar target levels for the year.
More borrowers are now starting to look at the prospect of tracker rate mortgages, which are variable rate deals which simply track the changes in the Bank of England Base Rate at a certain percentage above it. The reason for this is that not only are many of these on offer below equivalent fixed rates, but because many come with no early repayment charges and therefore there is an ability to switch onto a fixed rate once more when deemed appropriate.
That said, tracker rates do contain an element of risk, and for those who would sleep better at night knowing that their monthly payments will not suddenly change if something else unexpected happens, fixed rates are still sensible advice for many.
Taking professional advice is therefore key. There are a myriad of products, lenders and options out there that a borrower’s own bank may not have available. Whether this is an offset product, a 7-year fixed, a part repayment / part interest only loan, or an option available from a lender you would never have thought of approaching that will give a higher borrowing capacity, the right product to enable buyers to buy the home they want now, at a rate they can afford, is out there.
Have a great week!
In terms of mortgage rates, for standard residential mortgages, borrowers can obtain 2-year fixes at 4.37% (6.50% APRC) and 5-year fixes from 4.34%, (5.90% APRC), whilst variable discounted rates are around from 3.14%, (3.20% APRC).
Those looking at Buy-To-Let can now obtain products from 3.74%, (6.80% APRC) for a 2-year tracker or 5-year fixes are available from 4.63% (5.90% APRC).
There is already talk amongst journalists that the coming weeks could see the return of a mortgage “Price War”. Of course, we all love a good price war, but times are a little bit different now.
So much depends upon the next moves by the Bank of England and it is interesting to see that SWAP rates have actually increased a little in the recent week or so, but I do think that we are very near the top. We may see another increase to 3.75% or even 4% in February, though I personally do not see the need, and that should be the top of this particular cycle.
What we do know is that lenders need to lend and as they emerge from their end-of-year hibernation we will see more activity in the form of decreasing rates.
Due to the disastrous end to 2022, lenders may find that their pipelines are lower than they would normally like them to be, and whilst a rate war these days may seem different from those of the past, competition will continue to see better products over the coming weeks as lenders jostle for market share.
In this market, tracker rates are the new black this season, but as 5-year fixes start to edge down below 4.5% many prospective buyers will find that the monthly payments at this level are indeed affordable, especially compared to rising rental costs.
And this is the key point. Whether or not rates start with a 4 or a 3 or anything else for that matter is not the point, the main point is affordability and the monthly payments. Are they affordable and do they get you the property you want at the time you want it?
The market can move in any direction, and trying to second-guess what happens next is tricky at the best of times.
Behavioral economics and the concept of anchoring is really interesting here, and people generally adapt very quickly. Most now accept they will not see rates at 1% or 2%, and are grateful that they will not see rates of 6% or 7%, so this new middle ground starts to feel very reasonable pretty quickly.
As I have mentioned before, and as evidenced by the pleasing levels o activity we have seen since the start of the year, demand is still there. People will need to or want to move and now rates seem to be stabilising lower than expected and prices have softened, 2023 could be a surprising year and the best year to buy for a while.
Have a great week!
In terms of mortgage rates, for standard residential mortgages, borrowers can obtain 2-year fixes at 4.37% (6.50% APRC) and 5-year fixes from 4.35%, (5.90% APRC), whilst variable discounted rates are around from 3.29%, (4.91% APRC).
Those looking at Buy-To-Let can now obtain products from 3.74%, (6.80% APRC) for a 2-year tracker or 5-year fixes are available from 4.69% (6.50% APRC).
As the last shadows of 2022 sullenly skulk away and we turn to cautiously embrace the New Year, hoping that ’23 does not have its own range of unwelcome surprises languishing in the shadows for us, we are faced with the usual barrage of predictions.
Making predictions these days is a combination of over-analysis, guesswork and crystal-ball gazing, a buffoonery only attempted by the very brave, the very stupid, or those with a particular reason for doing so. This year as an example I have seen house prices predicted to fall by over 10% on one side, to a rise of 5% to 8% on the other.
I will of course be making my own predictions in a separate post however!
What we do know is that mortgage rates themselves will fall in the first quarter of the year as lenders get competitive again and will stabilise so most people can borrow at between 3.5% to 4.5%, which is affordable for many. Three lenders announced big reductions today and 5-year fixes at 4.5% look decent once more.
The message is clear: we can only control our own choices and decisions at any one time, we can’t control everything.
What I do think however is that 2023 will very much be seen as a good year to buy, with prices easing a touch before rising again in the next few years. My mantra has always been that the best time for anyone to buy is when it suits them to, and it is affordable to do so. Holding off on the idea that it may be cheaper to next month or year rarely pans out, and often a chance is missed.
In fact, the discussion should not be about what the rate is at all, but is it affordable and get you the property you want now? We should stop trying to play the market.
You may have missed this but finally, there is some good news on the thorny issue of cladding!
From 9th January 2023, six of the top lenders in the UK have agreed to consider mortgage applications on properties with potentially problematic external cladding.
We are awaiting some full details from some of these for Monday, but lenders will need evidence that buildings will be self-remediated by developers or covered by a recognised UK Government scheme or by leaseholder protections contained in the Building Safety Act, as evidenced by a Leaseholder Deed of Certificate.
The recognised remediation schemes in England are:
As always, each lender will approach this differently and reserve the right to consider each case on its own merits and could ask for more information, so not an absolute given, but it is expected that many leaseholders who could not sell or remortgage will now be able to do so.
The lenders so far committed are:
We will of course continue to keep you posted as things develop.
Have a great week!
In terms of mortgage rates, for standard residential mortgages, borrowers can obtain 2-year fixes at 4.37% (6.50% APRC) and 5-year fixes from 4.35%, (5.90% APRC), whilst variable discounted rates are around from 3.28%, (6.30% APRC).
Those looking at Buy-To-Let can now obtain products from 3.74%, (6.80% APRC) for a 2-year tracker or 5-year fixes are available from 4.69% (6.50% APRC).