Now is a time you need a good mortgage broker on your side
I can imagine that most people put aside their search for a good mortgage broker and spent the weekend dashing to the coast, having BBQ’s, toasting them themselves in the sun or watching the Football. Or maybe all of the above! The glorious weather really does take the edge off the mess that is foreign travel at present.
Even the England football team are playing their part by winning their first group game ever at the Euro’s! (I couldn’t believe that stat when I first heard it, but many years of high hopes are often crushed at the first game, so that does ring true). Surely that means we are destined to win our first Euro’s ever now… Not getting carried away of course.
Mortgage application challenges
I must admit, the weekend was welcome relief from the day job at present. As I have talked about a lot recently, it really is a pig getting a mortgage application through at the moment. That wouldn’t matter so much but the Stamp Duty deadline at the end of the month looms large. The endless back and forward with lenders is very draining and stressful for everyone, and there seems to be a new trick lenders have employed which is declining cases at the first hint of any issues. Their logic is that it gets it out of their pipeline while the issues is resolved. We just then re-submit the case and finally get the application offered. It is a cheap trick to make some lenders look like they are processing applications faster than they actually are. It’s a very poor customer experience, both for us and our clients. If you were told your mortgage application was declined, you would rightly be worried no matter how much reassurance we give. So that is a fun new game we are also having to contend with.
All that said, everyone who should be getting a mortgage, are doing so. That is actually what makes it so annoying as there are so rarely any real issues, so the point is – if you are having a bumpy ride on your application, or are about to apply, just be mindful of that. We will always sort out any issues, as that is our job, but it is just not easy at present. Again, more than ever, now is a time you need a good mortgage broker on your side, as you may well need it!
Mortgage Rates Keep Getting Lower
I seem to have said this a lot over recent years, but it does seem that mortgage rates just can’t get much lower.
While talk of negative interest rates has gone away for now, that hasn’t stopped lenders cutting their best mortgage rates even further. Not long ago we saw the return of sub 1% rates, now there are multiple lenders at this level with the lowest rate currently available a 0.95% 2 year fixed rate (with a free survey and £1,499 fee which can be added to the loan). 5 Year Fixed Rates have also come down further to 1.14% (again with a free survey and a £995 lender fee that can be added to the loan – for purchase business only).
At the other end of the spectrum, costs of 95% mortgage have come right down as well. The lowest 2 year fixed is currently 3.58% (with a £900 lender fee and free survey), which is almost 1% down from when the new Mortgage Guarantee Scheme was launched by the Government a few months back.
So while there is obvious focus around hitting the stamp duty deadline, with mortgage rates coming down so much, there is a great saving to be had and if you are looking to refinance, you could be pleasantly surprised at what deal you are offered when you look to remortgage. It certainly could be a good time to fix in for a longer term unless you have any plans of moving, as in 3-4 years time that could look like a great deal (assuming we have no major drama’s on the horizon!)
A good mortgage broker can talk you through your mortgage rate options.
House Supply/Demand Gap Widens
Last week, RICS (the Royal Institute of Chartered Surveyors) published data which showed that the gap between supply and demand for new property was at its widest in 7 years.
The number of people looking to buy a new home continued to rise in May, with a net balance of 32% of surveyors reporting an increase in prospective buyers. At the same time a net balance of -21% respondents reported another fall in the number of new listings being brought to market.
But this boom in sales is not expected to last, as sales predictions for the coming twelve months have now turned flat, suggesting that the stamp duty holiday is the primary driving force behind it.
However, RICS says that current market conditions suggest that there is no sign of house price inflation losing any steam.
A net balance of 83% of respondents reported house price rises in May, up from 76% in April, marking the fourth successive month in which upward pressure has intensified.
A good mortgage broker we can keep you abreast of the vagaries of the property market.
Interestingly, 5 year money dipped quite a bit last week, whereas most other rates stayed flat-ish. Normally that would be a sign of the economy not expected to perform as well in the longer term. It could just be that expectations were overly optimistic recently, but such a large movement in a short space of time gets my attention. So one to track closely from here.
That said, 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 Libor = up 0.005% at 0.083%
2 Year SWAP = down by 0.006% at 0.316%
5 Year SWAP = down by 0.048% to 0.662%
Bank of England Base Rate = Held at 0.10%
2 Year Variable from 0.99%
2 Year Fixed Rates from 0.95%
5 Year Fixed Rates from 1.14%
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 June 2021
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