We now have the Prime Minister’s latest “road-map” to some semblance of normality, and whilst it is cautious and slow, it at least gives everyone some focus and for those of us with kids a well-earned reprieve!
Hopefully, by the Summer we can all get together in a nice beer garden somewhere and look back on the madness of the past year or so with relief.
The mortgage market itself continues to travel along its own path to normality, which is also cautious and slow but will begin to gather pace as the days go by.
Already we are seeing more product availability and a slight increase in competitiveness. What is extraordinary is the small difference between the best 2-year fixes and the best 5-year fixes, only 0.1%!
In another sign that the market may be settling down, the average time a mortgage product is around for has risen from 28 days in the past 3 months to 40 days. More stability of rate availability is a good thing indeed.
According to Moneyfacts, mortgage availability is now at an 11-month high, with product choice increasing by a whopping 42% since October.
High LTV Borrowing
Leading the way is the return of the 90% LTV market, with another 88 more deals available at that level of borrowing than last month. There are now 248 products available which is up 386% since October.
Most mainstream lenders now have products available for those with just a 10% deposit, with a couple of lenders already starting to discuss the possibility of introducing a 95% LTV product once more.
NatWest are the latest to have re-introduced 90% LTV products whilst rates are getting cheaper at the 90% LTV level too with both Halifax and Virgin Money reducing rates on their products last week.
Halifax now has a 90% LTV 2-year fixed rate at 3.09% which although more expensive than they were a year ago, are still, historically speaking at least, affordable.
I suspect that the second half of this year will see the cost of these high LTV products fall a lot further as the Stamp Duty ends, the proposed Government Guarantee Scheme comes into play and lenders revert to their normal competitive battle-stance.
Affordability & Income Multiples
More good news has come from HSBC, who are now starting to accept annual bonus payments again as long as payment has been received since 1st January. This will be a massive help to many looking at bolstering their borrowing potential.
Other lenders have also done this and are now actively looking at bonus payments and commission as part of their affordability calculations.
There is also a return to higher-income multiples with a few lenders now lending 5 times income for higher earners. In fact, for those earning over £75,000 and who have at least 20% deposit, one lender may now be able to lend up to 5.5 times income for the right applicant!
The remortgage market continues to be competitive and we really do urge anyone who has their current product expiring this year to contact us early to review the market and take advantage of the extraordinary rates on offer.
It really is important to review your options first before just renewing with your existing lender, as not only could there be better products available elsewhere, but it may be a good opportunity to restructure your loan and make it more suitable to you.
Changing the term and cutting years off your loan and hence reduce your interest payments, switch to an Offset or change the repayment structure.
Over the past few years, we have also seen an increasing number of borrowers using their product renewal period, the time when they would remortgage, as a good time to also review their borrowing needs overall. For many, raising additional funds at this time to finally upgrade that kitchen or bathroom they planned to do when first moving in makes sense.
In terms of paperwork, these days it is just as simple to work with a trusted broker rather than just your existing lender. Also, unlike your lender, a good broker will always look out for you.
Buy to Let
What is also interesting is that lenders’ appetite for Buy to Let lending remains strong. One particular mainstream lender has just increased their lending limits from £1m to £3m and will also allow up to five properties with them rather than just three.
We have also seen the return of a whole host of Specialist lenders who have some great criteria and rental calculations. So whether you are looking for your first or 100th Buy to let, looking in a personal name, limited company, or LLP and have a standard property, HMO, or something you want to develop, there are lenders around who want to assist.
In summary, although we are still a way away from a fully functioning mortgage market it is great to know that things are now improving at a rate of knots.
Best Mortgage Rates
In terms of mortgage rates, for standard residential mortgages, borrowers can obtain 2-year fixes at 1.14%, (3.90% APRC) and 5-year fixes from 1.24%, (2.50% APRC) whilst variable tracker rates are around from 1.39%, (3.30% APRC).
Those looking at Buy-To-Let can now obtain products from 1.19%, (4.40% APRC) for a 2-year fixed or 5-year fix are available from 1.64% (3.80% APRC).