Credit conditions easing as decisions reversed
In the last week we have seen a number of large lenders reverse decisions they had made after the onset of Covid back in March with credit conditions easing. The result means it is now easier to get a mortgage than it had been as lenders tightened up during the various lockdowns.
This is a huge sign of confidence in the UK housing market, so we look at some of the key changes in a bit more detail to see where you may benefit. That doesn’t necessarily mean rushing to your nearest Range Rover dealer though!
Main players come back at 90%
Last week we talked about how Halifax had come back in to offer mortgages with just a 10% deposit. In the past 7 days – Barclays, TSB, Digital Mortgages, Metro Bank & Virgin – have either come back in at this level, or repriced their products to be more competitive.
A special mention should go to Nationwide, Bank of Ireland & HSBC who have supported this end of the market all the way through. With most of the other major lenders back in play we are seeing the costs of these products go down, and more crucially for us, it is allowing the maximum loans to go up. The maximum you can now buy at, with just a 10% deposit, is £1.5m! This is double what was possible just last week.
Larger loans now easier to achieve
Not only are lenders entertaining smaller deposits, they are now stretching how much they will lend. Below is a very crude guide as to what is possible now:
- 5 & 10% Deposit = 4.5 x income
- 15% Deposit = 5 x income
- 25% Deposit = 5.5 x income (min income £100k)
There will be exceptions to this, especially where your income is larger and/or more complex (typically that means being self employed, using bonus income and/or multiple income streams) and you could even exceed the above figures due to some relationships we have, but it is quite a useful starting point.
Having more lenders offer loans of 5 x income is great to see and having the 5.5 x bracket back now is a gamechanger as a result of credit conditions easing. Just a few months ago, the maximum you could achieve was 4.5 x your income unless it was an exceptional circumstance, so to have up to a 22% increase in your buying power really makes a difference if you are looking to move or release some money from your home.
Quite significant drops in money markets last week. Which will be a knock on impact of the potential fears of a no-deal Brexit. That said, it is still all in the balance and it just feels like a deal will be done at 11:59 on the 31st December at this rate (lets hope at least…). We aren’t seeing that filter through into cheaper mortgages, so we still feel keeping your mortgage options short term will save you the money in the long run.
In the last week:
3 Month Sterling Libor = down by 0.001% to 0.038%
2 Year SWAP = up by 0.044% to 0.046%
5 Year SWAP = up by 0.073% to 0.198%
Bank of England Base Rate = Held at 0.10%
2 Year Variable from 1.19%
2 Year Fixed Rates from 1.04%
5 Year Fixed Rates from 1.32%
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 December 2020
If you would like to talk to any of our advisers about the mortgage market and how credit conditions are easing, they will be more than happy to answer any questions you may have and you can find them all here. Meet the team
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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.