A big week in the mortgage world with lenders really starting to sharpen their pencils with sub 1% mortgage rates, more on that below. It must have been an insane week if you are a hairdresser or beautician! Many people must have been out enjoying the pubs re-opening as on Wednesday when I was in the office I noticed sick in the corner of the street as I went to get a coffee, and I thought to myself, “ah, I’ve missed that” (we are based in SE1 after all…).
Also it was really nice that a few of us got back in the office for the first time in well over a year! Seeing other humans not on a screen, and being in a place of work with no distractions really felt good. We look set to work a hybrid model going forward with people in the office a day or two a week. It will be a slow return for some of our guys that still don’t fancy commuting while not being vaccinated which I think is completely fair, so I am just curious to see how you are playing it? Are you office bound? Staying at home, or doing something in the middle? Feel free to drop me a line as I am really quite interested in how other firms are approaching this.
Sub 1% Mortgage Rates Are Back
That Titan of lending – The Hinkley & Rugby Building Society – is wading in with a market leading, sub 1% mortgage product on Friday (23rd April).
As you would expect, there are stipulations such as;
- It is for remortgages only.
- You need to have 40% or more equity in your property
- The loan has to be on a repayment basis
- You can borrow 4.5 x your income
This sub 1% mortgage rates product is a 0.99% 2 year variable rate with a £999 fee (and will revert to their standard variable rate of 5.89% when the deal ends, but you are free to move at that stage). But if you have a nice straight forward situation, this could be a good option. I’m not confident this will be around long, as demand will be very high and the H&R have limited capacity, but it’s certainly grabbed headlines and means the bigger banks will have to follow suit if they want this nice low risk business.
At the other end of the spectrum, we are seeing rates start to come down if you have just a 5% deposit. Halifax have re-entered with a market leading 3.73% 2 year fixed rate (Max loan £500k). Santander are set to launch this week as well, so we could see that rate bettered, and we are also seeing that push down rates if you have a 10-15% deposit. So while slower than we had hoped, we are now seeing pricing coming down in this area to sensible levels.
First Time Buyers Paying £73k More Since Lockdown
Data from BuildScan has discovered that First Time Buyers are paying £73k more on average for a property than they were pre-May last year.
Constant house price rises have grabbed the headlines in the property world post lockdown, so it is interesting to see that quantified. I have said this for a while and will continue to do so, but if you are planning on moving, it will be better to do that sooner rather than later. I explain the mechanics in more detail in this blog if you are interested, but we are seeing the most basic of market dynamics in play at the moment – limited supply of property, with huge buyer demand, is pushing up prices – as credit conditions ease, as outlined above, it will further fuel the demand, so I can’t see that dynamic changing anytime soon.
Market rates just edging down a touch last week after weeks of upward movement, but no major changes.
So 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. We are yet to see the ‘big boys’ come into the 95% Market, so once we see some movement there, we also expect the cost of mortgages at this level to start to decrease, but that may take some time yet.
In the last week:
3 Month Sterling Libor = down by 0.002% at 0.083%
2 Year SWAP = down by 0.007% at 0.277%
5 Year SWAP = down by 0.013% to 0.660%
Bank of England Base Rate = Held at 0.10%
2 Year Variable from 1.19%
2 Year Fixed Rates from 1.05%
5 Year Fixed Rates from 1.24%
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 April 2021
If you would like to speak to any of our team on any mortgage goal that you have, we would be delighted to help. You can find the contact details of the team here.