Mortgage Market Update
Market Update – The budget looms large later today, but will it be full of tricks or treats? With Theresa May suggesting an end to Austerity it has made it a lot more interesting than I had expected. If I was a cynical man, I would say that the Tories had made many unpopular cuts and tax changes in the lead up to the B-Word, so they can relax the purse strings a bit to try and curry some good favour ahead of a very tough time for them, so they can cling on in power for longer. But luckily, I don’t think like that…. I am not expecting any major changes to affect the property world. I believe the factors affecting the property market in the Chancellors remit, such as the rise in Stamp Duty on £1m+ purchases and 2nd Property purchases (including the removal of tax relief on BTL’s), have been annoyingly effective in raising revenue while only affecting the London market and Landlords. In many cases, the wider voting community remain relatively unaffected, therefore perceived votes secured. However, there is also the Stamp Duty holiday for First Time Buyers up to £300k, so not all bad news. Point being, I don’t think it can get any worst so lets cross our fingers for some good news! That’s before we even address the fact we have not built enough homes for the last 30 years, resulting in the high prices we see, but that is a story for another day.
Rate Update – We’ve seen a fall back in SWAP Rates in recent weeks – 2 year money is down to 1.098% (a fall of 0.108% in 2 weeks) and 5 year money is down to 1.362% (a fall of 0.169% in 2 weeks). This is relevant as banks largely price their fixed rate mortgages off SWAP Rates, or at least it is a very good guide as to where pricing is heading. However, we aren’t expecting mortgage rates to drop as the general curve has been upwards for the past few months, it just takes the pressure off any increases in the near future.
LIBOR remains pretty much flat at 0.808% (up 0.005% in the last week). This is the main reference for variable rate mortgages as this is the benchmark rate at which Banks lend to one another.
On both fixed and variable rates, lenders will typically add about 0.5% to the rates above to create the mortgage products they offer. However, the rate you will be offered is heavily dependant on your circumstances and deposit/equity level.
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