With three interest rates rises at consecutive Bank of England meetings. Taking interest rates from 0.1 per cent in March 2020 to 0.75 per cent. Mortgage rates are also on the increase. The cheapest, sub-1 per cent fixed rates seen in the autumn are long gone. But we remain in a low interest rate cycle. It’s still possible to fix at less than 2 per cent for two and five years, depending on your loan-to-value.
Another recent quirk of the market has been five-year fixes priced more cheaply than their two-year equivalents. Traditionally, the longer the fix, the more expensive it is as you are paying for the extra level of protection from potential rate rises. However, lenders realize that buyers prefer medium-term security as they are worried about rising living costs, inflation, and interest rates. Subsequently, they are pricing these products more competitively to attract business. A five-year fix gives peace of mind for a reasonable period of time. Without locking borrowers in for too long and at risk of having to pay early redemption charges to exit the mortgage before the end of the fixed rate.
Property Transactions
Transaction numbers, while down on last year, are still increasing month-on-month, according to latest data from HM Revenue and Customs. An estimated 114,650 property transactions took place in March, up 2.6 per cent on February but down 35.7 per cent of March last year. On a seasonally-adjusted basis. This is down to the situation we found ourselves in last year. Where the stamp duty holiday was about to come to an end and buyers brought forward property purchases to take advantage of the considerable saving.
While the frenetic pace of the market has calmed down, house prices continue to rise even though the cost-of-living crisis is worsening. Because there are fewer properties for sale than people wanting to buy them. Nationwide building society reports that property prices rose by 14.3 per cent over the year to March. With property inflation at its highest level since 2004. This means the average home has risen by £33,000 in the past 12 months, leaving a lot of extra cash for buyers to find. Not only that but this is an average figure – the cost of a detached home has jumped by £68,000 since the start of the pandemic.
Large loans for Contractors
As rates edge upwards, albeit from low levels, and more money needs to be found to buy that dream home. Borrowers may find that mortgages aren’t as affordable as they have been. Advice from a whole-of-market broker such as AWS Private Finance, is more important than ever.
We scour the entire market on your behalf, finding the right deal for your circumstances. Whether you are taking out a new mortgage or refinancing. With mortgage rates continuing to rise, there is added pressure to lock into a deal before they go any higher. Rates can be booked up to six months before you need them, so it is worth planning ahead. We have particular experience in arranging large loans for contractors, the self-employed and professionals such as doctors, accountants and lawyers with lenders often prepared to offer higher loan-to-income multiples than for non-professionals. Please get in touch for more information.
