Another week goes by and the mortgage market continues to strengthen, where lenders are increasing the number of products they offer, and decreasing the amount of deposit they now require. Which is bolstering the market.
On top of that, lenders are also starting to relax their criteria, or more accurately, get back to more ‘normal’ lending such as taking bonuses/variable income into account.
We are even seeing some lenders come back to the market who had stopped lending entirely due to Covid. So the welcome return of heavyweights such as the Earl Shilton Building Society and others, is another positive sign.
When you put this all together, the market is in the best state it as been in since pre-March with a continuation of this theme predicted for the year ahead (more lending options, with credit policy easing).
Mortgage Market Predicted To Be Bigger in 2021
Research from IMLA (the Intermediary Mortgage Lenders Association) last week suggested that the mortgage market will increase this year. They believe new lending will hit £283 billion.
They also estimate that just 127,000 borrowers are now deferring mortgage payments compared to the peak of 1.8m back in June.
While there are very large problems in the economy, the finances of current and new borrowers should hold up as household spending is predicted to rise in these groups once lockdown eases/ends.
Increased Mortgage Market Competition Set To Push Down Pricing
As if more good news were needed, as more and more lenders come back to the market, especially in the high LTV space (meaning, offering loans to people with smaller deposits), we are starting to see lenders price down their products are 85% +
So if you have a 15% deposit or less, it is quite likely that rates will continue to fall in this bracket. As last week alone Virgin, Barclays and TSB all cut the rates on their products in this area. The margins are still very large compared to what we are used to, but it is starting to make these products more palatable.
Market Rates all up last week with a particular jump on 5 year money. The reason is obvious, as the vaccine roll out picks up, it is giving room to more optimism that the UK can bounce back faster than hoped 🤞.
That said, it has had no real impact on mortgage rates except as stated above, so we still feel keeping your mortgage options short term will save you the money in the long run.
In the last week:
3 Month Sterling Libor = up by 0.005% to 0.031%
2 Year SWAP = up by 0.032% to 0.093%
5 Year SWAP = up by 0.064% to 0.273%
Bank of England Base Rate = Held at 0.10%
Best Mortgage Rates
2 Year Variable from 1.19%
2 Year Fixed Rates from 1.04%
5 Year Fixed Rates from 1.27%
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 January 2021
Should you wish to discuss any of the issues raised above about how the mortgage market continues to strengthen, or require a conversation about your mortgage needs more broadly, we would be delighted to help. Please feel free to contact us or speak directly to a member of the team, details of which you can find here.