Mortgage news

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

02 October: Was scrapping the MEES EPC deadlines good or bad for landlords? 

In late September, Rishi Sunak scrapped the MEES (Minimum Energy Efficiency Standard) plans affecting EPC (Energy Performance Certificate) ratings in England, which had been set to help hit their 2050 Net Zero target. 

In 2020, the MEES had directed that all landlords would need to ensure that their existing rental property tenancies met a minimum EPC standard of C by 2025. Any new tenancies would also have needed to have done so by 2028.

What's changed for landlords?

As of 23 September 2023, however, the following green initiatives have been scrapped by the government:

• Landlords are no longer legally required to upgrade the energy efficiency of their tenanted properties to C or above by 2025

• Landlords are no longer legally required to upgrade the energy efficiency of any newly tenanted properties to C or above by 2028

Both previous requirements are now only suggestions, which can be ignored without penalty. It is currently unclear whether the £3,500 expenditure limit on upgrading rental properties to achieve minimum EEC standards will still apply if the MEES regulations are re-implemented in the future, or whether it would be increased to £10,000.

How do landlords feel about this u-turn?

There seem to be mixed feelings about this, with some landlords frustrated, having already forked out substantial funds to meet the original 2025 deadline. However, many have, understandably, been relieved about not having to meet these requirements during a time of financial crisis and high mortgage interest-rates.

Paragon Bank research found that when questioned about the MEES plans, one in five landlords would rather sell their properties than upgrade them. 27% also said that they’d increase rents to cover upgrade costs. 

However, Shawbrook research found that 80% of UK landlords were already prepared for the 2025 EPC regulation deadline - 30% of whom had already achieved an EPC rating of A-C, and a further 50% intending to by 2025.

Nevertheless, whether landlords are irked or relieved, the scrapping of these plans has caused a great deal of indecision in the sector. The NRLA (National Residential Landlords Association) Cheif Executive, Ben Beadle commented “The uncertainty surrounding energy efficiency policy has been hugely damaging to the supply of rented properties...Landlords are struggling to make investment decisions without a clear idea of the government's direction of travel."

How will this impact rentability? 

Interestingly, some recent Uswitch research looking at what prospective tenants look for in a rental, has found that UK renters listed the EPC rating of a property among the most important characteristics of a property they were considering.

Those surveyed felt that the top factors to influence their decision when choosing a rental property are:

• Contract length (57%)

• Council tax (54%)

• EPC rating (32%) / Broadband speed (32%)

This could be some comfort to those landlords who have already made the previously required EPC upgrades, which has clearly increased the appeal of their rental properties to their customers. 

The other benefit to consider are the increasing number of green mortgage options coming to market, many of which offer better rates to those buying properties, or altering properties to meet higher EPC standards.

21 September: Base rate halted as price war continues

The Bank of England (BOE) Monetary Policy Committee (MPC) took the decision this afternoon not to raise the UK base rate of interest any further, it remains at 5.25%.

The MPC's decision followed recent inflation data, which revealed that the CPI had reduced to 6.7% in August. However, the base rate is expected to remain high for now, with some experts feeling that reductions won't begin until at least mid 2024.

Unless inflation falls faster than currently forecast, it could be even longer before any reductions to the base rate are announced - with some economists expecting it to remain at it's current level for a year or more.

Are rates falling? Even before the base rate announcement, we've seen lender slashed their (mainly fixed) rates over the past few weeks, in what looks to be becoming a much more competitive market than we've seen in recent months. This is mainly due to swap rates, which are used to price fixed-rate deals, recently falling.

Here are some of the notable rate cuts for this week so far:

• NatWest - announced further cuts on selected residential fixed and tracker deals by up to 0.2% and fixed and tracker buy-to-let deals by up to 0.31%

• State Bank Of India - announced a very surprising 3.9% two-year fixed-rate deal for new buy-to-let customers

• Virgin Money - launched broker-only residential and buy-to-let fixes with sub 5% interest rates

• Accord Mortgages - and a few other lenders have also announced rate changes will be made later today, likely following the base rate announcement

Is it time to fix? As always, it depends on your circumstances and whether a fixed-rate mortgage is the best option for you. Of course, it also helps if you're within that key six month window of your current deal's end date. During this period you can sign up for a new rate now, but are not bound to the deal until your existing one ends.

According to UK Finance around 800,000 fixed-rate deals are ending in the latter half of 2023, and 1.6m in 2024. The majority of these customers will be coming off of fixed-rates that were taken out when the base rate was much lower.

However, there's more competition in the market now then we've seen for some time, with some lenders easing rates below the 5% threshold. It could therefore very well be a good time to lock in a new rate. The average SVR (standard variable rate) as of today is still high, at 8.69%, so you'll probably want to avoid falling onto this if you're able to secure a more competitive fixed-rate deal.

What about variable rates?

If economists prove to be correct and we've seen the last increase in the base rate for now, it may be worth staying put. The average tracker is still lower than equivalent fixed and variable deals, at 5.94% at 75% LTV - so it may be best to wait until fixed-rates fall further.

What to do if you're struggling to pay your mortgage While rates are beginning to come down, the 14 consecutive base rate increases, understandably, threw many homeowners into disarray with their finances.

If you're struggling with your repayments, speak to your lender at your earliest convenience. The Mortgage Charter, which was introduced back in June of 2023, compels lenders to assist their struggling customers, so don't be afraid to ask for help.

11 September: Mortgage rates drop further, will house prices follow?

In positive news, the Bank of England governor recently announced that interest rates may not rise much further. He also stated that he expected inflation to continue falling for the remainder of 2023, with a marked fall seen by the end of the year.

Despite this revelation, the majority of economists still expect a 15th consecutive rise in the Bank of England base rate on 21 September. However, it's now predicted to peak at 5.75%, so with it currently at 5.25%, the run of base rate increases may well soon be over.

Lenders seem to think so, if the past week's continued rate cuts are any indicator:

Mortgage rate news and criteria changes in the past week

• Accord - reduced selected fixed deals by up to 0.98%

• First Direct - reduced two-year fixes by up to 0.15% and five-year fixes by up to 0.30%

• Halifax - cut a selection of fixed-rate deals by up to 0.13%

• HSBC - reduced some of their fixed-rate deal range by up to 0.20%

• Lloyds Bank - cut certain fixed-rate deals by up to 0.13%

• NatWest - reduced selected fixed rates by up to 0.18%

• Santander - cut selected fixed rates by as much as 0.11%

• TSB - cut selected residential fixed rates by up to 0.20% and buy-to-let rates by up to 0.50%

• Virgin Money - reduced selected fixed rates across residential purchase and remortgage deals by up to 0.69% as well as selected buy-to-let rates by up to 0.24%

• Yorkshire building society - cut both fixed-rate and tracker rate products by up to 0.41%

Criteria changes and new products

• First direct - introduced a new three-year fix at 5.79% for 75% loan-to-value

• Just Group - the lifetime mortgage specialist has introduced green mortgage discount across it's entire range of lifetime mortgage products, with customers able to request a free energy performance certificate at application stage

• TSB - launched a range of fee-free remortgage specifically for buy-to-let borrowers with rates as low as 5.79%

Are property prices falling?

Zoopla's August House price index reports a fall in buyer demand of 34% over the past four years versus the five year average. Whilst there is regional variance, this does seem to be very slowly translating into a fall in property value, with e.surv reporting a 1.3% fall in the price of property in England and Wales over the past year. This is the first annual fall in more than 11 years.

However, Zoopla's house price index shows that the largest price falls can be seen in the South, where the property is least affordable property in the country for first-time buyers. On the other hand, in more affordable locations, such as Scotland, there is actual a growth in property prices of around 1.7%, due to higher demand.

04 September: When will mortgage rates drop enough to aid affordability?

According to Standard Life, Google searches for the term ‘when will mortgage rates drop’ have increased dramatically over the past few months, despite most lenders having recently announced at least modest reductions.

We've also seen a short but continued downwards trend in rates over the past two weeks, albeit a smaller one than most mortgage holders and prospective buyers anticipated. But, with new Bank of England statistics showing a 10% fall in mortgage approvals, from 54,600 in June to 49,400 in July, rates are perhaps not yet falling quickly enough to aid affordability.

In their monthly house price index for July, Zoopla forecast that total property sales will have fallen to their lowest level since 2012 by the end of 2023. They also reported an 18% drop in buyer demand over the past two months. Halifax' house price index goes some way to explaining this, reporting that the current average UK home price is still around 6.7 times average earnings, despite this gap having narrowed since 2022. They also calculated that mortgage costs have risen by, on average, 22% in the past year.

Combined with the cost of living crisis, this means that affordability is still out of reach for many prospective home buyers and movers. If you're struggling with mortgage repayments or to find a viable remortgage, contact your lender as soon as possible. The mortgage charter puts more onus on lenders to help customers in financial distress - so be sure to look into the easements that may be available to you.

Is there hope on the horizon?

On a more positive note, Zoopla also expects that it's likely we'll see 'rates return to the 4-5% window this Autumn', although executive director Richard Donnell feels that "Any falls to mortgage rates are unlikely to impact the market and improve affordability further until at least the first half of 2024.

In the meantime, we've seen further cuts and some lenders expanding their criteria over the past week, in an attempt to counteract some of the negative impact of the current rate environment.

Mortgage rate news and criteria changes

• Aldermore (BTL only) - introduce a limited edition two-year fixed rate deal for landlords at 5.74% (75% LTV) with a 3% fee on 5 September

• Barclays - cut fixed rates for new residential and buy-to-let by up to 0.2%, bringing their two-year fixed rate below the 6% mark, at 5.98%

• BM Solutions (BTL only) - announced reductions of up to 0.71% across their entire range

• HSBC - reduced fixed-rates across selected residential and buy-to-let deals for first-time buyers, home movers and remortgage by up to 0.3%

• Landbay (BTL only) - cut some of their broker-only five-year fixed rates by up to 0.1%

• NatWest - announced cuts of up to 0.55% to some of their fixed and tracker rate deals from 5 September

• Virgin Money - cut fixed rates for new and existing customers by up to 0.3%

Criteria changes

• Accord Mortgages will now consider zero-hours’ contract applicants

• HSBC increased their maximum mortgage term to 40 years

• Skipton extended their 'Track Record' 100% mortgage criteria to include buyers who have previously owned a home, but are no longer on the property ladder - for example, as a result of divorce, disability or illness etc

• Virgin Money announced improved stress rate calculations for portfolio and non-portfolio landlords and lowered their ICR (interest cover ratio) to 125% for basic rate taxpayers

Is shared ownership the most viable route to modern home ownership?

There have been numerous headlines in recent months outlining the difficult path to home ownership, particularly for young people, in the current climate. Somewhat surprisingly, however, Leeds Building Society recently revealed that over a third of their first-time buyer customers had never heard of the shared ownership scheme, despite it having being around for many years.

With the Levelling Up, Housing and Communities Committee recently launching an inquiry into shared ownership and whether the scheme is genuinely an affordable route to owning a home, this could become a more prominent alternative route onto the property ladder for many who are priced out of the current market. Shared ownership allows both first-time buyers, and previous homeowners who can no longer afford a property that meets their needs to buy a 10-75% portion of a new build home. They can then increase ownership in chunks of 1%+, as and when their affordability increases.

17 August: This week in mortgages - rates fall alongside inflation

Yesterday (16 August) the Office for National Statistics (ONS) revealed that UK inflation had fell from 7.9% to 6.8% - which is its lowest level since February 2022. We've also seen a spate of further lender rate reductions this week, both before and after the ONS publication.

While many are celebrating the news of falling rates, some economists are warning that a difficult path still lies ahead, with a potential recession not yet ruled out. The government’s target for inflation is 2%, so there's still some way to go - meaning the Bank of England might be unlikely to relent on the base rate increases just yet. With this in mind, the rate reductions we're seeing now could be temporary. You may therefore want to take advantage of current remortgage rates, especially if your deal expires before the end of the year - as SVRs remain very high, with an average rate of 8.5%.

Which lenders have cut rates this week?

There have been a substantial number of rate cuts this week, across both residential and buy-to-let borrowing. Here are the highlights:

• Accord Mortgages - cut some (broker-only) fixed-rate deals by up to 0.8%

• Bank of Ireland - cut some fixed rate products by up to 0.15%

• Barclays - cut selected fixed rate deals by up to 0.43% across it's fixed range and products transfers

• First Direct - cut a selection of fixed rate deals by up to 0.2%

• Halifax - cut certain fixed-rate residential deals by up to 0.71%

• HSBC - cut certain fixed-rate residential products by 0.2%

• NatWest - cut selected residential fixed-rate deals by up to 0.45%

• Platform Mortgages - cut some fixed residential and buy-to-let deals by up to 0.29%

• Santander - cut fixed rates deals for new customers by up to 0.29%

• Skipton building society - cut fixed-rate mortgages by up to 0.22% - this includes the 100% mortgage 'Track Record' product (-0.15%) aimed at trapped renters and buy-to-let deals

• TSB - cut rates on some fixed-rate residential deals for new customers by up to 0.4%

• Virgin - cut fixed rates (broker-only deals) by up to 0.16% as well as certain buy-to-let fixed rates by up to 0.14%

• Yorkshire building society - cut some fixed-rate deals by as much as 0.27%

Should I remortgage now?

If your current fixed-rate mortgage is due to expire within the next six months, you might want to lock in a new deal now. Standard variable rates are still high, so if you can avoid moving on to your lender's one, you stand to save some cash. Don't forget, you're not locked in until your current deal ends, so the earlier you lock in a rate, the better - you can always swap to a more competitive deal, should it arise before that.

If you've remained on a tracker this long and are content to ride out the BofE increases, then you may benefit from slightly lower options before the end of the year if inflation and swap rates continues to drop. That said, if you've begun to struggle with repayments, it could be time to consider a fixed-rate deal. While this will likely be slightly higher, this will give you the peace of mind that your repayments won't go up again for a set period. However, you also won't benefit from lower repayments if rates fall.

Homeowners not out of hot water just yet

Despite the positive news surrounding the decline in inflation and mortgage interest rates, the turmoil caused by mortgage rate hikes over the past year is still clearly evident for many homeowners and landlords across the UK this week.

UK Finance reported a 7% rise in homeowners with mortgage arrears above 2.5% in the second quarter of 2023, compared to the previous quarter. An even greater proportion of landlords had reportedly fallen into mortgage arrears greater than 2.5% since quarter one, with a rise of 28% seen in the second quarter of 2023. If you're concerned about repaying your mortgage or struggling to find an affordable remortgage option, it's important to contact your lender immediately. Since the mortgage charter was announced back in June, lenders are obliged to do more to help you.

10 August: This week in mortgages, are rates falling?

Despite the base rate rising to 5.25% last week, lenders seem to be continuing with fixed-rate reductions across the board for the time being. Although we may now see a slowing of rate reduction announcements until lenders have digested the new inflation data, due to be released by ONS on August 16.

Where are we seeing rates cut?

The majority of the bigger lenders have announced rate reductions in the past week, and this has also been reflected in the buy-to-let market.

Nationwide has reduced fixed-rate mortgage deals for new customers by up to 0.55 percentage points. Slightly smaller reductions were seen from HSBC, with residential rates cut by between 0.05 percentage points and 0.35 percentage points, as well as TSB, who cut five-year fixed-rate deals by up to 0.4 percentage points for new residential customers.

Halifax, the largest UK mortgage lender has announced that they will apply rate reductions of up to 0.71 percentage points from tomorrow (Friday 11 August) - the largest cut seen across the market to date.

Buy-to-let rates

In the buy-to-let market there have been even greater cuts, with specialist lenders Quantum Mortgages announcing cuts across its entire range of fixed-rate deals by up to 110 percentage points.

Specialist buy-to-let lenders Keystone Property Finance and CHL Mortgages have both announced that they are cutting rates in their ranges by 0.25 percentage points and up to 34 percentage points, respectively.

Paragon Bank has also launched a limited edition range of five-year fixed-rate deals specifically for portfolio landlords, with rates starting at 6.45%.

Is now the time to fix?

For the time being, fixed-rate deals do seem to be on a gradual decline, although the reductions are likely a small comfort to those coming off of deals in the 2% region.

Inflation is falling, but remains much higher than the target of 2%, so future base rate rises are not out of the question. So if your deal is due to end in the next six months, now may very well be a good time to lock in a rate that may not be available for too long.

If we do see a continuous downtrend in inflation, and consequently, mortgage rates, you can always swap your fix for a more competitive deal at any time before the end of your current deal.

What about variable rates?

We've not seen the same pattern of cuts in variable rates, with the average 2 year tracker deal at 75% LTV holding fast at 5.94%, and SVR at 8.50%. That said, trackers are still cheaper, in the main, than their fixed-rate equivalents. Those with more flexibility in their finances may, therefore, choose to stay put and make savings where they can until fixed-rates fall further.

If your deal has recently ended and you've fallen onto a high SVR, it's definitely worth looking at the other variable or fixed-rate deals available to you. There are still considerable savings to be made compared to staying put.

If you're struggling to remortgage due to reduced affordability caused by higher rates, it's worth looking at the mortgage charter - as there may be options open to you that you're unaware of.