If your weekend was anything like mine, you had the very strange experience of sunbathing on Easter Sunday, only to see snow on Monday! God bless the British weather…
Today’s Government press briefing didn’t tell us much we didn’t know. It is great the vaccine roll out is going so well and the staged re-opening of UK businesses continues as planned, but it is still a guessing game on foreign holidays? Do you stick and plan ahead, or twist and pay an outrageous amount for ‘Holiday Park’ in the UK? Just an FYI, Jersey is still the UK and gorgeous in the summer so could be the perfect hedge.
But as things do start to ‘bounce back’, I’ve looked at some areas that we are seeing that back up in the property world.
95% Mortgages are back(ish)
April officially sees the launch of the Mortgage Guarantee scheme that was announced in the Budget in March. I had a very detailed look at this in a blog which you can read here if you like, but the key things to think about are:
- What happened when we last saw this scheme in the property world?
- House prices jumped 30.43% – see below from Nationwide’s house price index.
- Who benefits?
- Home movers who were previously priced out of moving due to not having a large deposit available.
- Why is this being done?
- To give confidence back to banks to lend with just a 5% deposit.
We are still waiting for many of the ‘big banks’ to launch products but as they have agreed to the scheme, we expect them shortly, but there are plenty of options with other lenders now available.
As I say, we saw this scheme back in 2014 in the property world so it is not fair to draw a direct comparison to today as the UK/Economy were in a very different state. Covid still has to play out in economic terms and we haven’t really adjusted to not being in the EU in a practical sense due to that, but I do believe that history teaches us a lot if you know where to look.
It doesn’t take a rocket scientist to work out that if you add fuel like Stamp Duty Holidays and Government backed guarantees on mortgages you are going to see an increase in lending which will push up house prices. The question is by how much and will history repeat it’s self?
If we have learnt anything in the last 12 months in the property world its that the future isn’t necessarily what you expect it to be, but this is one I am fairly confident on that we’ll see house price rises continue, but to put a figure on what it will be in 2-3 years time is just too hard to do right now.
House Prices Up Again
Closely linked to the above, and using Nationwide as the data source, they believe house prices are up 5.7% in March alone. Which is a slower pace than the 6.9% increase they saw in February but still a very healthy rise for one month.
The data for Q1 this year across the UK is very mixed. England saw the smallest growth of the home nations at 6.4% ( N.Ireland top with 7.4% gain, then Wales at 7.2% and Scotland at 6.9%). The North East saw the greatest rise in England, up 8.2% with London the weakest performer of the regions at 4.8%.
We are now going to enter a very weird time of year on year comparisons as the first lockdown kicked in from the 23rd March, but it will be very interesting none the less to see how the remainder of the year shakes out. A bounce in London should be expected as the Mortgage Guarantee scheme will play a much bigger role on the higher average property values in the South East.
UK GDP Revised Up
The ONS (Office for National Statistics) revised the UK’s GDP for Q4 last year to 1.3% from their initial assessment of a 0.3% gain. That does give 2020 an overall contraction of 9.8%, which in any other time in history would horrify everyone, but that is actually way up on expectations earlier in the year!
With lockdown extending for much of Q1 this year, the figures aren’t expected to be pretty, but as above, much less scary that initially thought. So the ‘bounce back’ the Government had bet the farm on, seems to be happening.
Market Rates all up again last week, which is reflecting a more positive outlook for the UK economy than was the case at the end of last year.
Not much more to add as this is covered above, but what the best mortgage rate for you will be very dependant on your situation, but in the right circumstances, fixing for the longer term now looks to make sense.
In the last week:
3 Month Sterling Libor = down by 0.003% at 0.087%
2 Year SWAP = up by 0.010% at 0.283%
5 Year SWAP = up by 0.046% to 0.683%
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 one of the team about your mortgage please call us or book a consultation with one of our mortgage advisers.