Mortgage Market Update

Green shoots this spring for the mortgage and housing market.

The mortgage market has had a busy start to 2023. With a huge increase in mortgage products available to the public, plus interest rates that are gently settling and fixed rates that have fallen since the New Year.

Indeed, interest rates starting with a four might surprise some readers. A fixed rate 5-year mortgage offered by the Halifax to first-time buyers with a 20% deposit is currently 4.28%. This 35-year mortgage product taken on a £400,000 home equates to £1,471.00 per month.

The combination of a stable mortgage market and the choice of homes, the property market present lots of opportunities for home movers.

Kendell Laretive, Assistant Manager (Walderslade Sales Office) observes, "Only recently buyers were frustrated by the lack of homes to choose from, finding they couldn't get into see a property let alone have the opportunity to buy it. Our customers are now out viewing several homes back-to-back and benefiting from the luxury of choice. As we fast approach spring, there's green shoots emerging for the housing market."

To register for properties on the market in London & Kent, get in touch with us today.

In a recent buyer study*, 71% of our customers relied on a mortgage to buy their home. Logically therefore, changes in the lending market have a significant impact on people’s decisions to move.  

The recent increases to the Bank of England base rate have been widely reported. However, how the changes play-out for new borrowers is being overlooked. We can report the forecast is now looking much more positive for first-time buyers and home movers.

Indications are that the Bank of England base rate is not likely to increase anywhere near where first thought. With a predicted cap on the Bank of England base rate at around 4.5%. This new forecast has had a very positive effect on ‘Swap Rates’.

Without getting too technical, the Swap Rates are the markers used by mortgage lenders to guide the way fixed interest rate products are set. With Swap Rates now looking much lower than they were at the end of 2022, the fixed rates being offered by lenders are falling despite small increases to the base rate by the Bank of England.

Mark Alexander, Independent Financial Adviser explains, “In laymen’s terms, the BBC’s evening news will run with the headlines that the Bank of England is raising its rates – to control inflation. But since January, mortgage interest rates have not followed suit.

This trend is helping mortgages become more affordable being set at more stable rates with less volatility than before.”

The outlook is positive for buyers and therefore sellers. There is no sign that interest rates will rise again in the foreseeable future so fixed rate mortgages are unlikely to increase again anytime soon. If you are looking to buy a house or remortgage and opting for a fixed rate, then now is an excellent time to do so.

With the added appetite for lenders to continue lending, there is also more competition between banks which helps reduce the fixed rates on offer. With the competition being so strong we are also seeing lenders offering more flexibility in their affordability calculators and a greater range of diversity and products on offer.

“Lenders are offering mortgages with as little as a 5% deposit and buyers can still benefit from mortgage repayments that remain more competitive than the ever-increasing cost of renting a property.” Concludes Mark Alexander, IFA.

In our buyer survey, amongst those relying on a mortgage the majority (67%) said they sought financial advice before finding the property they were buying.

To see how much you could borrow, speak to an Independent Financial Adviser in the relaxed environment of our offices. With offices in London & Kent, open until late you can book appointments at your convenience.

*Data from the 2022 Home Mover Survey

Figures quoted are based on a repayment mortgage and are only intended as a guide. Your home may be repossessed if you do not keep up repayments on a mortgage.

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