The Lowdown on Mortgages
The Lowdown on Mortgages
We start the year by sharing the lowdown on mortgages. We wouldn’t be wrong in saying the mortgage market has had a turbulent time over the last twelve months.
From what’s available, the steady growth in the number of products, to the criteria for specific mortgages; here you’ll find all you need to know.
Mortgage products on the increase
In January, the lowdown on mortgages was shared by Moneyfacts in their UK Mortgage Trends Treasury Report. Their figures put into perspective the effects of the pandemic when you can see the number of high loan-to-value (LTV) products have doubled from 72 in July 2020 to 160 in January 2021.
When the UK first went into lockdown back in March last year, the lenders were withdrawing mortgages with LTV ratios higher than 60 per cent. When it came to 90% LTV deals, 92% of them were pulled from the market.
Why did lenders do this? Well, once the lockdown was confirmed, we saw mortgage lenders starting to receive calls from existing customers, asking how they can take mortgage holidays. It was all too risky for high LTV products to be sold, at the time. But it left a huge proportion of borrowers with little or nowhere to turn.
A different picture this time round
While we find ourselves in lockdown (at the time of publication), mortgage approvals are at their highest they have been since before the last recession.
When it comes to high-value LTV mortgage products, in many cases the number of deals available have doubled since July 2020. Overall, there are 111 more deals on offer this month, which puts the total number of mortgage products on offer at 2,893 and the highest number recorded since April 2020.
75% LTV mortgage products – x629 deals available.
85% LTV mortgage products – x439 deals available.
90% LTV mortgage products – x160 deals available.
This is good news for borrowers! They now have greater choice and need not feel the despair which they did throughout most of last year. It’s especially promising for those who are working with lower levels of deposit or equity. It’s also welcome news for those with more of a deposit or equity to play with, as there are more products available at the 75% and 80% LTV tiers.
When you compare the availability to last year, overall, the lowdown on mortgages is looking encouraging. And the large number of products available shows the competition is good, which means there are deals to be had.
How are rates looking?
The overall average 2-year fixed rate across all LTV products is the highest it has been since January 2019, standing at now 2.52%. It’s been increasing month on month since July last year.
However, if you look at the top end of the LTV tiers, there have been monthly reductions to both the two and five-year fixed rate deals. These decreases are an indication that lender confidence may well be returning to this end of the mortgage market.
90% LTV mortgage products – 0.14% decrease for 2-year fixed & 0.13% decrease for 5-year fixed.
85% LTV mortgage products – 0.05% decrease for 2-year fixed & 0.06% decrease for 5-year fixed.
The key takeaway message for anyone looking for a new mortgage deal is to properly explore your options. And do it now, before rates increase further. And we would recommend getting help and advice from a qualified mortgage adviser to get the best options for your circumstances.
Tips for borrowers
As we give the lowdown on mortgages, here are some tips if you’re starting the year by considering taking out a mortgage.
Start saving. There are fewer mortgages available and the market is uncertain, despite the surge in house sales in the last few months. Cut back on any unnecessary expenditure and try to get a 10% deposit under your belt.
Shop around. As we mentioned before, get a professional mortgage adviser to help you find the best deals for you. Sometimes the best deals advertised come with hidden details.
Health check finances. Be smart with your money and get your credit score in check. Focus on paying off credit cards and loans to stand you in good stead when you apply for a mortgage.
Consider all the costs. It’s not just the deposit and the mortgage you need to consider when buying a property. There are the legal fees, the stamp duty, any repairs, moving costs, even new furniture. The list soon grows, so make sure to factor everything in!
Mortgage in principle. By discussing with a lender and getting a mortgage in principle, you will get a realistic understanding of what you can afford.
Jameson & Partners is an independent estate agent located in the heart of Altrincham town centre. Whether you are looking to buy a new home or rent a property, to sell your home or start letting out your property, we can help. Contact us on 0161 941 4445 or book a FREE PROPERTY VALUATION with us today.