Housing Market Hots Up and Mortgage Rates Continue To Fall
This week, the housing market hots up… and mortgage rates continue to fall.
I have managed to get away this week with the family to the beautiful island of Jersey. It was very nice this morning to wake up with a view of the Corbiere lighthouse and the very scenic coastline you get around here. Like many others, we opted to stay in the UK this year for obvious reasons and it does remind you of just how beautiful some parts of the UK are. We just hope the weather plays ball but so far, so good, as I intend to be on a surfboard as much as possible this week.
Another week, another gold rush at the Olympics! It was really interesting to see my 8-year-old daughter, watched open-mouthed, as Team GB’s Charlotte Worthington won her BMX Gold this morning. I won’t profess to be an expert on the technicalities of BMX but it does make for a great spectacle. Equally, has Lutalo Muhammad been a revelation with his commentary on Taekwondo, and life in general. If I am ever going through a rough patch, I need to get this guy’s number so I can call him and he can tell me “it is all going to be OK!”.
Mortgage Rates Continue To Fall
I think I am just going to leave this header here…
This week, Platform, the intermediary lender of the Co-Op Bank, hit a new record-breaking low with a 0.92% 2 Year Fixed Rate. Again, you need a 40% deposit and a fairly straightforward situation to be approved, but for those that do qualify, it is a sensationally low rate. Since Nationwide released their still market-leading 0.91% 2-year fixed-rate, many lenders have had to follow suit and go well under 1% to attract new borrowers.
It was a week of mortgage rate reductions across the board. So while it is the lowest rates that get the headlines, pretty much whatever your deposit level, situation, or mortgage goal, you’ll be in for a lower interest rate if you need to apply in the coming weeks.
It conjured up an image in my mind of various mortgage lenders having to limbo dance below one another to attract the type of clients that they want. While seeing Bankers Limbo dancing isn’t an Olympic sport (yet…) it gives you an idea of how competitive it is to attract the best clients. As lenders are still taking on less risky loans, it seems they are quite willing to cut each other’s throats on margins to bolster up their lending books. Our clients are the beneficiaries of this game so long may it continue!
Coutts joined the Green movement last week by offering new incentives to those who are more energy efficient. Clients taking out a mortgage product will be eligible for a discount of up to £2,000 off the arrangement fees when –
- a client purchases a new property with an EPC rating of A or B
- a client retrofits their property and improves the energy efficiency of that property to C or higher, within 12 months of drawdown
- when the mortgage is related to a residential or BTL property.
Many other lenders have similar schemes, so it is good to see that the mortgage market is attempting to do its bit of a greater focus on going green.
If the crazy weather this summer is anything to go by, any little thing we can do to try and slow down global warming should be jumped at!
Housing Market Hots Up
Zoopla believed that house prices went up 5.4% in June, but also pointed out that the housing supply was down 25% on the same period last year. They are also seeing a 23% increase in demand (with a 25% increase in demand from First Time Buyers also) in the housing market.
This dynamic was also picked up by Propertymark (an Estate Agency body), which showed that 40% of sales went at above the asking price in June, which is up from the 33% they saw in May.
This is the most simple market dynamic of all time – supply/demand – and the impact it has on prices. With the lending market also making it easier to get a mortgage, and this continued lack of supply, you can easily see how house prices will continue to rise for a good while yet.
It’s almost like we haven’t built enough, or the right type, or homes for nearly 30 years… Who would have thought that would have this impact…
Market rates were all pretty flat last week. So as I have touched on in previous updates, we could well be at the lowest point in this current rate cycle.
Therefore, our default position stands, unless you have any specific needs, we would most likely recommend a longer-term fixed rate if you have a 25% + deposit, but keep it short term or flexible if less than that figure.
In the last week:
3 Month Sterling = up 0.001% at 0.074%
2 Year SWAP = down by 0.002% at 0.443%
5 Year SWAP = up by 0.006% to 0.695%
Bank of England Base Rate = Held at 0.10%
2 Year Variable from 0.99%
2 Year Fixed Rates from 0.91%
5 Year Fixed Rates from 0.99%
BTL Rates from 1.19%
The actual rate you will be offered will be dependent on your personal circumstance and deposit level. Please speak to one of our advisers so that they can guide you through this process
Source: Twenty7Tec July 2021
If you would like more information on how the housing market, how mortgage rates continue to fall, or any other advice with your mortgage please contact one of the team.
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