Mortgage applications approved or not?
I would like to make some pithy comments on The Line of Duty, or whatever farcical events there have been on social media, or the complete implosion around Man Utd, but in all honestly, I have been so busy I am struggling to know what is going on in the ‘real world’ (including whether mortgage applications approved or not?).
That is partly due to my workload, but also partly more of a conscious effort to disengage in a lot of nonsense that seems to be going on right now. Whether that is the US owners of English football clubs trying a blatant landgrab, or the ever divisive issues around Covid and Vaccinations (I’m having mine Tuesday morning if you were wondering). I must admit, I am a lot happier not following the ‘news’ so much… so on that note, here’s your weeks mortgage news!
Lender Sees 81% of FTB Applications Declined
Aldermore, who in fairness are more of a specialist lender, has seen 81% of applications declined for First Time Buyers since the start of Covid.
I found that stat really quite shocking. Aldermore are very heavily reliant on mortgage brokers, so for allegedly professional advisors to get it so wrong is quite startling. I can see why that would happen, as unless you have a very straight forward situation at present, it can be like running a gauntlet trying to get a mortgage approved. But that is our job, to get this stuff right! 92% of our applications get a mortgage offer produced, so a mortgage applications approved rate of just 19% is really quite tragic.
That does also highlight the myriad of issues you need to concern yourself with as a mortgage broker placing a case for a client. Most lenders want an explanation of how you have (or haven’t) been affected by Covid. This work is very often done by us in the background, as we have good conversations with our clients so we really understand their backgrounds and goals, so typing up that rationale is really quite straight forward. None the less, it does remind me why we are proud fee charging, professional advisory, and never take a ‘hit it and hope’ approach with our clients. Your personal finances are too important for us to do that.
Buy To Let Market Looks Uncertain
Data from The Mortgage Works, who are the Buy To Let lending arm of Nationwide Building Society, painted a very mixed picture of the future of the private rental sector.
Demand has decreased slightly in 2020, with just 18.7% of households renting (down from 19.3% in 2019). With many landlords selling due to tighter regulation and a more onerous tax burden, even though there is slightly less demand, there is also less supply which may drive up prices.
Where that demand will be is the golden question. Londoners surveyed by the bank were most likely to relocate, but whether that holds as a long term trend remains to be seen. It is quite likely there will be much greater demand for rental property post covid, as some people’s finances will be adversely affected and therefore unable to get a mortgage (or deposit for a purchase) in the near future.
So we could see a boom in the rental sector, but we just aren’t quite sure where… Logic would dictate that as we get back to more ‘normal’ living and working conditions, that will boost demands in London and within a commutable distance of London. But with many people looking to return to work on a ‘hybrid’ basis of just a few days a week as opposed to full time as before, that ‘commutable distance’ would stretch quite some way…
Market rates popped back up again after a few weeks of declines, finishing the month just up on where we were the month prior.
So 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. We are yet to see the ‘big boys’ come into the 95% Market, so once we see some movement there, we also expect the cost of mortgages at this level to start to decrease, but that may take some time yet.
In the last week:
3 Month Sterling Libor = down by 0.004% at 0.083%
2 Year SWAP = up by 0.0038% at 0.309%
5 Year SWAP = up by 0.084% to 0.714%
Bank of England Base Rate = Held at 0.10%
2 Year Variable from 0.99%
2 Year Fixed Rates from 1.03%
5 Year Fixed Rates from 1.21%
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 May 2021
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Rose Capital Partners Limited is an appointed representative of PRIMIS Mortgage Network, a trading name of Advance Mortgage Funding Limited which is authorised and regulated by the Financial Conduct Authority.