Mortgage Market Update – March 2023 Review
Richard Campo, Founder of Rose Capital Partners
As the first quarter of this year has quite literally flown by, I find myself reflecting of the events following the now infamous ‘Mini-Budget’ and wonder – what a gigantic waste of time and effort! Even if you put aside the huge damage it caused, which is hard to ignore, in our world fixed rates are now lower than they were before the event! Meaning some clients who rushed to secure the best deals they thought they were ever going to get, have just been undercut and now need to be replaced… Much candle wax was wasted in that process…
It is hard to leave that point alone as it shapes everything this year – higher borrowing costs, higher cost of living and falling house prices – that should equal a recipe for disaster, but certainly in London and the more affluent areas of the country, we are seeing far more activity than we expected back in December, so this month I will try and have a look at why that is in more detail.
To Fix or Float?
What product you opt for if you are looking to take a mortgage right now, will depend on 2 key factors:
- Your view on future rate rises:
- I can give you equally good arguments as to why rates will come down next year, and why they will stay in the 4% region for some time. This is perhaps why my job feels more like fortune telling than financial advice at present… So it just depends on what you are seeing in your crystal ball vs what I am seeing in mine (my view is that rates will stay closer to 4% for longer than many would hope, making a long term fixed rate look good value right now if you were wondering).
- I can give you equally good arguments as to why rates will come down next year, and why they will stay in the 4% region for some time. This is perhaps why my job feels more like fortune telling than financial advice at present… So it just depends on what you are seeing in your crystal ball vs what I am seeing in mine (my view is that rates will stay closer to 4% for longer than many would hope, making a long term fixed rate look good value right now if you were wondering).
- The amount you wish to borrow:
- For obvious reasons (such as higher borrowing costs, inflation, cost of living etc) lenders are now being more cautious in the loans they grant, meaning you may get a smaller loan now than you would have done a few months (or certainly a few years) ago. UNLESS, you go for a 5 year fixed rate, which lenders feel safeguard you against future rises and also gives them more certainty on affordability. So while you may have your own view on rates, if the only way you can borrow what you want means you need to take a 5 year fixed rate, then that will drive your ‘choice’. But as I say, rates have dropped so much in the last few weeks (see below) that is not a bad thing.
So as ever, your personal situation and views on rates will drive the outcome, but they are the main things you should be thinking about right now if you are looking to arrange your mortgage.
Money Market & Mortgage Rates
5 Year money down by 0.3.97% to 3.617%
2 Year money down by 0.443% to 4.061%
3 Month Sterling Libor up 0.105% to 4.418%
UK Base Rate – up by 0.25% to 4.25%
Source: chathamfinancial.com
Market Leading Mortgage Rates:
2 Year Fixed Rates from 4.10% (previously 4.20%)
5 Year Fixed Rates from 3.84% (previously 3.86%)
10 Year Fixed Rates from 3.99% (previously 3.99%)
Variable Rates from 3.80% (previously 3.79%)
Buy To Let Rates from 4.09% (previously 3.99%
Source: Twenty7Tec – April 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.