More news this week on the lowest ever mortgage rate…
I am back and truly refreshed after a week away in Jersey. We were very lucky with the weather and got out to explore a lot of what is such a beautiful Island. It’s not the Med, but to have such a beautiful place on your (relative) doorstep is a blessing in a pandemic! Also, a case study on how to manage Covid correctly when you are an Island… Just saying…
The natural downside is the battle with my inbox. Before I went away I had just 6 emails in my inbox. It has taken me a year of really focused work to get my email traffic down and productivity up. So a bit heart-breaking to have 60+ emails to deal with (as I still deleted out the cr@p each day while off), but thankfully no dramas to return to, so a huge thank you to the team for doing what they do so well and allowing me to get away to recharge the batteries.
I would love to bang on about the heartbreak of the Lions with the Boks ‘anti-rugby’, or the huge success of Team GB at the Olympics (which officially was the best boxing effort ever, which I called before the Games started!), or the lucky break from the cricketers with the weather. But you came for mortgage news, so mortgage news you shall get!
Mortgage Rates Continue To Fall
I think I am just going to leave this header here… (actually have from last week!) and add the ‘lowest ever mortgage rate’.
Halifax changed the game this week by bringing out the lowest ever mortgage rate for a 2 year fixed rate at a ridiculous 0.83%… The usual caveat that you can not borrow more than 60% of the property value, there is a £1,499 fee and a survey fee of £200, but to undercut their nearest rival by such a huge margin was like the time Usain Bolt jogged over the line winning Olympic gold for 100m and breaking the world record in the process. It has shattered the competition.
Also, many lenders have really cut their rates when looking to borrow 90% of the property value. Halifax again leading the way here with their rate cut last week at 2.19% for a 2 year fixed rate. The best mortgage rates in this area have literally halved since the onset of the pandemic and are back at a very palatable level.
The rate limbo goes on…
Bank of England Hold Rates
As widely expected, the Bank of England voted unanimously to hold their benchmark rate at 0.1% where it has been since March last year.
Interestingly, they also voted 7-1 in favour of maintaining the current quantitative easing policy which is worth £895bn in total.
In the minutes (as I do actually read them!), they made it clear that they do expect inflation to continue to rise this year to around 4%, but then to drop back to the target level of 2% by the end of 2023.
With such a clear statement on expectations of inflation to fall back in line “naturally”, and still opting to go with QE, it has poured some cold water on expectations of a rate rise sooner rather than later. Maybe not a coincidence that Halifax launched their deal after this announcement… The fear is very much that if we tighten fiscal policy too soon, it will kill off the recovery we are seeing.
So again, things are finely balanced and the major topic to keep an eye on in the mortgage world as it may not take much to tip the scales in the other direction.
Rents on the rise
Average rents in England increased by more than 10% in the month to July, the latest index from Goodlord has revealed.
Rents rose by £100 a month from £960.62 in June to reach £1,060.50 in July, which is the highest level recorded for two years. July’s figure was also 4% higher than a year ago when rents averaged £1,016.87.
The South West saw prices rise by 24% over the month – taking average costs to £1,248 as demand for coastal living continued.
The North East saw a 19% uplift in average rent from £732 to £872. Despite this, the North East remains the cheapest place to rent in the UK in relation to average regional salaries.
All other regions recorded a rise: the North West (11.5%), the South East (7%), the East Midlands (6.8%) Greater London (4%), and the West Midlands (3.5%).
Voids are at their lowest level since August 2019, and tenant salaries are at their highest since the index began in 2014.
No surprise to see a rise in shorter-term rates and a decrease in longer-term rates with the notes from the Bank of England meeting. No major changes, but the topic to keep an eye on for the foreseeable.
Therefore, our default position stands, unless you have any specific needs, we would most likely recommend a longer-term fixed rate if you have a 25% + deposit, but keep it short term or flexible if less than that figure.
In the last week:
3 Month Sterling = down 0.005% at 0.069%
2 Year SWAP = up by 0.033% at 0.476%
5 Year SWAP = down by 0.026% to 0.669%
Bank of England Base Rate = Held at 0.10%
2 Year Variable from 0.99%
2 Year Fixed Rates from 0.83%
5 Year Fixed Rates from 0.99%
BTL Rates from 1.19%
The actual rate you will be offered will be dependent on your personal circumstance and deposit level. Please speak to one of our advisers so that they can guide you through this process
Source: Twenty7Tec August 2021
If you would like more information on the lowest ever mortgage rate, or any other advice with your mortgage please contact one of the team.