Mortgage Market Update – February 2023 Review
Founder of Rose Capital Partners
Yet another month flies by. Time seems to go past ever faster these days (perhaps showing my age, or that the general pace of life speeds with the ever-increasing amount of tech in our lives, who knows…), and equally as time flies by, so do the changes in the mortgage market. I remember a time when mortgages were boring, and quite frankly I preferred that, but for the foreseeable future, there is a lot to talk about. With that in mind I talk about the changes in sentiment in the past few days and what that means if you are looking to secure your mortgage anytime soon.
To Fix or Float?
This is the biggest question of the moment, and my opinion has changed in the last few days. As long ago as last week, I felt the correct approach was to take a penalty free tracker, ride the market out on its current downward curve, then look to fix in the Spring/Summer. However, due to conflicting and oddly positive economic data, that may not be the best approach now.
Literally in the last few days, we have had a sea change in sentiment that the Bank of England may raise rates at least once, maybe twice this year. Roll the clock back 4 weeks and we felt this cycle had topped out, but now, maybe not. Money markets would certainly back up this new view (see below). I was also quoted in a Forbes article talking about this in more detail, so this idea is gaining momentum.
So that poses the question – should I fix my mortgage or float? The answer is always – that depends on your preferences, risk appetite and personal situation (a typically Financial Adviser answer, sorry) – However, I do feel now is the time to fix. The question now though is it best for 2 years or 5? As 10-year rates are the same as 5, and with rates predicted to fall over the longer term, I can’t see that being good value. So that makes the 2/5 year debate so hard. Rates should be lower in 2 years than now, but if the base rate stays stubbornly around the 4% mark you could argue that the mortgage rates we are seeing now are the best you are likely to see for some time. As ever, the caveat is – unless something changes – and with so much changing, so frequently, it really is down to the individual as to what is best for them.
Remember Buy To Let
I appreciate I have been blowing this particular trumpet for a while, but that is because I believe it is true! Indeed, my comments on this subject were recently picked up by a leading IFA publication who also seem to agree. With rising rents, and seemingly bottomed out interest rates, I feel that fortune favours the brave when it comes to the Buy To Let market. So, if you are considering investing, now could be the time. Just consider – if you are a higher rate taxpayer, should you buy through a Ltd Co? – We are not Accountants and would never give tax advice, but this is something that all serious investors and higher earners should be considering. If you do not have access to an Accountant/Property Tax Adviser, please ask us and we’ll be happy to recommend one.
Money Market & Mortgage Rates
- 5 Year money up by 0.469% to 4.014%
- 2 Year money up by 0.537% to 4.504%
- 3 Month Sterling Libor up 0.188% to 4.313%
- UK Base Rate – up by 0.5% to 4%
Source: chathamfinancial.com
Market Leading Mortgage Rates:
- 2 Year Fixed Rates from 4.20% (previously 4.35%)
- 5 Year Fixed Rates from 3.86% (previously 4.16%)
- 10 Year Fixed Rates from 3.89% (previously 3.99%)
- Variable Rates from 3.79% (previously 3.45%)
- Buy To Let Rates from 3.99% (previously 3.89%
Source: Twenty7Tec March 2023 – 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
Summary
Now more than ever, quality financial advice is needed. Not just to navigate the product options discussed above, but also the very tricky ‘affordability’ rules that lenders are imposing. This is how lenders determine how much they will lend you, which sways hugely on your income, outgoings, debts, commitments and spending patterns. Not all lenders look at things the same way, so that is why it is imperative you talk to an adviser who can find the best way forward for you.
So, if you do not currently work with us, we would love to talk to you and get you on the way to getting your mortgage paid off as soon as possible! We are acutely aware that no-one actually wants a mortgage, but you want what it achieves, so let’s help you on that journey as best as we can.