Latest mortgage news

19 March 2024: This week in mortgages

In the past week we’ve seen lenders continue to edge rates back upwards, ahead of the base rate announcement this Thursday (21 March). This is likely due to broad speculation across the industry that the Bank of England (BoE) will not reduce this base rate this time around. This will be unwanted news for the many homeowners with fixed-rate deals ending soon, many of whom are currently on rates of 3% or below, according to the Financial Conduct Authority.

Perhaps then, it’s a sign of the times that lenders are beginning to broaden their affordability criteria to help borrowers meet higher interest rate demands. For example, Santander has this week added Universal Credit as an acceptable secondary income source. We’ve also seen lenders, such as Halifax, extend their maximum age limits on mortgage applications. 

Some economists expect the first BoE base rate cut to come in May of this year. However, with rates being pulled increasingly quickly again, it’s a difficult decision whether to remortgage now or wait it out to see if this rings true in May. The average standard variable rate is still above 8.5%, so if your deal’s end date is imminent, it’s best to speak to a mortgage broker asap.

15 January 2024: This week in mortgages

Mortgage lenders are divided this week, as an increase in swap rates seems to have caused some lenders to reprice their recently reduced deals, whereas others are either holding fast with the rates announced in the previous weeks, or even making further reductions.

HSBC, for example, has committed to cut prices across some of their two, three and five-year fixed rate deals for both product transfers (including those wanting to increase their borrowing) as well as new customers, tomorrow (16 Jan). Co-op, on the other hand, pulled some of their recently reduced rates today - mostly those below 4% - and are repricing them to take into account recently fluctuating swap rates.

This sort of behaviour typically indicates that tougher competition is returning to the mortgage market, meaning it's even more important to compare mortgage deals, whether you're looking to remortgage or buy a new property.

Mortgage term increases

According to a report by Bowmore Financial Planning, 2023 saw a 13% increase in people taking out mortgages with terms longer than 30 years. This is a likely impact of the rising cost in monthly payments caused by the rate increases seen over 2022 and 2023.

While rates do now seem to be falling again, combined with other factors, such as a higher general cost of living, and rising property prices, affordability is tight for many taking out mortgages and remortgages in 2024. Extending the mortgage term can help to increase mortgage affordability, however, it does also increase the amount of interest you'll pay overall, the longer the mortgage term is.

Landlord news

According to a report by Hampton's Letting agency, a record number of landlords set up SPVs (Special purpose vehicles) to manage their buy-to-let portfolios in 2023. This is even more prominent given that the number of properties bought for BTL purposes fell in 2023.

While the popularity of limited company buy-to-let begun to increase back in 2016, following a change to the tax rules around claiming back landlord related costs, large increases in mortgage repayments those landlords remortgaging have seen over the past year has likely spurred on this activity.

There are a range of tax benefits to operating a rental portfolio as a business, rather than an individual. However, limited company purchase won't suit everyone, so it's a good idea to speak to a mortgage broker with knowledge and expertise in the buy-to-let market before going down this path.

08 January 2024: This week in mortgages

It's been a fairly positive start to the year in terms of mortgage rates, with many more rate cuts seen across both residential and buy to let mortgage deals, and an increase in the deals available overall to a 15 year high.

Some of the bigger lenders, such as NatWest have launched remortgage rates as low as 4.64% for a 2 year fixed-rate mortgage deal at 60% LTV via a broker. Today we've also seen smaller and more specialist lenders follow suite, with Virgin Money offering 2 year fixes as low as 4.57% at 65% LTV and 6.97% at 90% LTV.

While some economists are warning that the Bank of England (BoE) won't make any cuts to the base rate until 2025, an extensive survey carried out by the Times suggests that the majority (42.5%) now feel that at least 2 base rate cuts will be seen in 2024. The BoE has also released promising data suggesting that the market is recovering, with their December Money and Credit Report highlighting an increase in net remortgage approvals for from 24,000 in October to 27,000 in November.

Help for first time buyers

However, according to Yorkshire building society, it's not all positive news. They reported a decline in first-time buyer mortgages of a fifth in 2023 compared to the previous year - making it the lowest number since 2013.

While the Tory's have hinted at additional help for first-time buyers ahead of the election, at the moment, we are yet to see any progress beyond the extension to the mortgage guarantee scheme. That said, rates are falling, so if you're currently looking to take your first step onto the property ladder, it's worthwhile speaking to a broker, like our partners at Mojo mortgages, to see what's available to you.

14 December: Today's base rate announcement

Today the Bank of England held the base rate at 5.25% for the third time in a row. It's remained unchanged since August, when it was last increased by 0.25%, the last in a spate of 14 consecutive base rate rises which began back in December 2021.

In the past 2 years since then, the average two-year fix rose from 2.34% to 6.04% and average five-year fix from 2.64% to 5.65%, largely as a result of these base rate increases. The average SVR (standard variable rate) is currently 8.19%, almost double the 4.40% it sat at in December 2021.

The majority of economists expect that we'll see mortgage rates continue to fall next year as average swap rates have now fallen for five months in a row. Some even expect a 1 percent total cut in the base rate, with suggestions the base rate will fall as low as 4.25% by the end of 2024.

Ahead of the base rate announcement, lenders continued to cut fixed rates, which shows that this base rate announcement was also anticipated. The next base rate announcement will be on 1 February 2024.

Is now the time to fix? With SVRs still significantly higher than the average two-year fixed-rate deal, there's a tough decision to be made for those coming out of their initial deals this month. While rates are declining and base rate cuts are expected in 2024, it's unlikely they will be substantial enough to warrant staying on your SVR for months.

It's a good idea to take advice from an experienced broker before making a final decision on remortgaging. While it may be wise to be cautious when locking in a longer rate, depending on your circumstances, if your due to fall onto an SVR, rates on short fixes are worth comparing.

11 December: This week in mortgages

This week we've seen a continues decline in rates across two and five year deals, with average rates now sitting below 6% according to moneyfacts. There has also been an increase in the number of deals available overall, with over 700 deals now available at 90% LTV.

SVRs remain high, with the average rate still above 8%. So those mortgage holders with two or five year deals ending imminently may want to lock in a new rate sooner rather than later - despite suggestions that rates will now continue to fall, albeit gradually. The base rate announcement on 14th December should provide more insight into the direction of travel of mortgage rates going into January 2024.

Continued impact of rate hikes

Despite the continued downward trend in mortgage rates following the 15 continuous base rate hikes seen up until September, those customers who are still yet to remortgage from their much cheaper previous deals are still in for a large increase in repayments. 

With many still due to come out of two, and five year fixes that were taken at a time where average mortgage rates were much lower, The Bank of England’s latest Financial Stability Report has forecast that around 900,000 borrowers will experience mortgage shock.

They warn of monthly mortgage payment increases of around £240 on average - but 20% of those borrowers will see more than £1,000 rise in their costs.

Mortgage approvals

Mortgage approvals for house purchases increased to 47,400 in October, up from 43,700 in September, according to the latest figures in the Bank of England’s Money and Credit report. However, UK Finance reports that mortgage lending is likely to fall again in 2024.

Approvals for remortgaging also increased from 20,600 in September to 23,700 in October. The number of remortgages had fallen in previous months as more borrowers decided to take a product transfer deal with their existing lender.

Now that rates are starting to come down, it’s certainly worth comparing remortgage rates before you decide to stick with your current lender, as rates are becoming more competitive. Our broker partner, Mojo Mortgages, can help you with this. 

Property prices

This month a report by the building society association (BSA) showed that 33% of people believe that house prices will rise in 2024. However, the most recent Zoopla house price index reports a 1.2% fall in prices since the same time period last year. 

Rightmove has also reported a house price fall of 7% in December, compared to November 2023. While there is typically a decline in December, this is a larger decline than the average.

That said, there is hope for 2024, with most industry experts believing that the market could be stimulated by a continued fall in mortgage rates. In fact, national chartered surveyors firm, e.surv produced this report, highlighting the resilience of first-time buyers in the current market.

Buy-to-let

Despite continued rising rental costs in the private rental sector, particularly smaller independent landlords are leaving the market rapidly, largely as a result of the narrow profit margins currently possible with a smaller property portfolio.

In fact, according to a survey of more than 1,000 clients of the Deposit Protection Service (DPS), landlords with two or fewer properties plan to leave the rental market at twice the rate of those with more than 10 properties.

Landlords with portfolios larger than 10 properties are also almost 10% more likely to increase their portfolio, than those with more modest property ownership.

22 November: How will the Autumn Statement impact mortgages?

Jeremy Hunt's second Autumn statement was delivered today, and many mortgage holders will, understandably, have been poised and hoping to hear some good news. Mortgage rates and house prices, whilst in slow and steady decline for the most part, have recently made home ownership a painful prospect for many who already have or need a mortgage.

However, tax and national insurance cuts, alongside a rise in the minimum wage from April 2024, overshadowed most of the remaining '110 measures for growth' announced by the chancellor today. While a slight increase in the average paycheck could ease a small element of the burden caused by costly mortgage repayments, there's little more of significant value for the majority of homeowners in today's statement.

In some good news for commercial investors, business planning permission applications will be refunded in full, if the council responsible fails to meet guaranteed faster turnaround times. This is in an effort to prevent commercial planning application delays.

Buy-to-let landlords can take some comfort in the raising of local housing allowance thresholds and universal credit increases announced. This should help those tenants struggling to pay the large rent increases they've seen over the past year.

Many landlords were forced to push up rents as a result of multiple base rate rises, which left mortgage rates high and profit margins narrower for most investors.

Mortgage guarantee scheme extension

In an easy win for the government, they also announced an extension to the mortgage guarantee scheme. This was due to end on 31 December this year, however, it will now be available for a further 18 months, until June 2025.

The mortgage guarantee scheme was introduced during the pandemic, as a way to encourage weary lenders back to higher LTV (loan to value) lending. It protects the lender, rather than the borrower, with the government covering some of the loss lenders' offering 95% LTV mortgages under the scheme would make, if borrowers are unable to pay.

While the scheme did go some way to whipping up a reluctant lending market back in 2021, the vast majority of mortgage providers have now returned to 95% LTV lending without the scheme's backing. This means that, sadly, this gesture is unlikely to benefit a significant number of first-time buyers.

In fact, in today's market, particularly, many buyers are looking for the lower interest rates achievable with a larger deposit - as they may very well be unable to afford 95% LTV mortgage rates.

What other options are there for first-time buyers?

Thankfully, there are a range of other schemes that provide routes into home ownership for those on a low income or struggling to save a large enough deposit. However, as with any mortgage, there are positive and negative factors to consider, so be sure to seek advice from a qualified broker.

1. Shared ownership - this long running scheme allows borrowers to purchase between 10-75% of a property initially, with most housing associations allowing further shares to be purchased up to an eventual 100% ownership

2. Rent-to-buy - This scheme attempts to provide an easier transition from tenant to homeowner by offering a discounted rent on specific properties. Savings made on rent can then to go towards a deposit to eventually buy your rented home

3. Deposit unlock - The first non-government home ownership scheme was introduced in 2021. It allows homes from participating house builders to purchase a new build home with a 95% mortgage from an associated lender. This makes new build homes, which typically require a higher deposit of around 15%, more achievable for first-time buyers

November 13: When will remortgaging become more affordable?

Despite mortgage rates continuing on a downwards trend for the the third consecutive month, A report by conveyancing firm, LMS, has show that remortgage instructions fell by 13% in October, in favour of product transfers. A product transfer is changing mortgages with your existing lender.

They also reported an increase in remortgage cancellation rates, up to 7.7%, as well as an average increase of £187.72 for those who completed their remortgage in October.

Although product transfer rates are not universally more appealing than the remortgage rates currently being offered, it's expected that many mortgage holders are concerned by the more rigid finance and credit checks required for a remortgage, compared to a product transfer.

It's also possible that people are holding out for better remortgage rates, given the current continued fall in the cost of fixed-rate deals available. However, economists don't feel that a significant fall in mortgage interest rates will be seen until the end of 2024.

Should I consider a remortgage now?

The answer to this question will, of course, always depend on your individual circumstances - so there's no blanket answer that will apply to all. However, it's important not to write it off due to headlines and fear of rejection, as there are still savings to be made in some cases.

If you're due to remortgage, here are some tips to consider to help you make the best decision for long-term goals:

• Don't underestimate the importance of equity - If you've paid off a good chunk of your mortgage, and particularly if your property has increased in value, you may have gained substantial equity in your home. As well as giving you access to more appealing interest rates, this can balance out some of the perceived risk for some lenders. If your credit rating has taken a hit due to to cost of living crisis, it's possible that a good level of equity will soften this blow. Many lenders are looking at remortgage applications more holistically than ever, so don't base your decision solely on your credit score before speaking to a mortgage broker

• The Mortgage Charter still applies - Although this was brought in back in June of 2023, the mortgage charter is still in effect. This means that lenders are obliged to be more flexible when considering remortgage applications. If you are unable to remortgage, it does also mean that you'll be able to access a product transfer without any financial assessment

• Product transfers won't usually be quicker if you increase your borrowing - If you're simply looking to coast and pay off your existing home loan, a product transfer can be easier and quicker to get. However, if you want to borrow more, remortgaging elsewhere is likely to be just as straightforward. Borrowing more during a product transfer requires a further advance - which means finance and credit checks are still needed, and it's unlikely to save you any time versus remortgaging elsewhere. Our broker partner, Mojo mortgages, will be able to advise you further, depending on your specific needs

6 November 2023: Why are landlords leaving the rental market?

The residential mortgage market has been losing its appeal to landlords over the past few years, with another 151,000 buy-to-let and holiday home investors having left the industry in the year to April 5 2023, according to research by UHY Hacker Young.

From the income tax changes back in 2017 and a dramatic rise in buy-to-let mortgage rates since 2021, to an increase in tenants in arrears as a result of the cost-of-living crisis, rental properties have, no doubt, become less profitable for many landlords of late.

That said, the retention of section 21 evictions, which was a concern for many landlords, may go some way to retaining those looking to jump ship imminently. There is also, of course, still money to be made in residential lettings for those willing to find a way through current struggles. Lenders are beginning to try to address landlords' financial difficulties, with multiple buy-to-let rate cuts seen over the past couple of months.

23 October: What will the Autumn Statement mean for first-time buyers?

Jeremy Hunt is due to present this year's Autumn Statement on 22 November, with suggestions surfacing that it may include some elements of much needed first-time buyer support. With high rental and living costs limiting deposit savings, high house prices meaning larger deposits are needed, and higher interest rates making it difficult to qualify for a big enough mortgage, first-time buyers haven't had it easy over the past 18 months.

Many people will, therefore, be looking to the government to support those hoping to buy their first home. There's been some speculation over what measures could potentially be introduced, with improvements to the LISA scheme and an extension of the mortgage guarantee scheme both suggested as potentials.

The LISA is an ISA that can be used by under 40s to save for either their first home, or retirement - with the government topping up personal savings by up to 25%. However, current limitations mean they can only be used to purchase properties up to the value of £450,000. This makes it much less valuable for those in London and the South East - the average property price in the capital currently sitting at just shy of £542,000 according to Zoopla*.

It's also been suggested that an additional ISA product aimed at homeowners may be introduced. This could be in place of the help-to-buy scheme, which is no longer available outside of Wales - however, the details of any definitive schemes are not currently available.

There have also been hints that the mortgage guarantee scheme, which was introduced at the height of the pandemic, could be extended. This scheme was developed to encourage lenders to return to 95% mortgage lending, at a time where the level of employment uncertainty was high - with the government offering to cover a percentage of losses lenders might make.

However, with the majority of lenders now offering a range of 95% mortgages outside of the scheme, it's unclear how much assistance this would realistically provide to prospective homeowners.

*September 2023 Zoopla house price index