95% – Mortgages
This is the big one. Mr Johnson feels that the lack of 95% mortgages is the major issue in the housing market. I had some comments published here which explains why that may not be the case. The point nicely emphasized in a video here from 2013 where I was on the BBC (and also about 15kg heavier…) talking about the very same subject… In a nutshell, I feel it is the lack of affordable housing which is driving up prices which is the issue, not mortgage availability.
3.4% – House Prices
The above point is beautifully illustrated by the surveyors ESurv saying that house prices went up 3.4% in September alone. Which takes the annual rate of growth to a staggering 7.6% in London and making the average home in the capital now valued at £666,117. Growth at this level is simply unsustainable so a very close eye now needs to be paid on what impact this will have next year after the stamp duty holiday and economic headwinds play out…
2.1% – GDP
Talking of economic headwinds, GDP rose by 2.1% in August according to data from the ONS (Office for National Statistics). That is the lowest level of growth since May. It had been hoped that it would be higher due to fewer Covid restrictions and things like Eat Out To Help Out. However, that will most likely see the UK formally leave recession in September and means GDP is now 21.7% higher than the low of April.
That truly is a mixed bag. On one hand you have the Government saying mortgage availability is an issue, while on the other you have soaring house prices. Underpinned by relatively sluggish economic activity.
We really are set for a fascinating end to the year as what role will a ‘second spike’ play? Will a post Brexit Trade Deal get done this week? Can house prices carry on at the pace they are? Where is Wally?
All of those are very much unknown at this stage. My Crystal Ball is in for it’s annual MOT at the moment, but I will be gazing into it very hard next week to see if we can make the future any clearer.
For now, and for what it is worth as a mortgage advisor, when looking specifically at the mortgage world, keeping your options as open as possible may well pay off, so perhaps thing short term deals and penalty free options as who knows what opportunities may show up next year.
The same trend we saw last week in that longer term money over 2 & 5 years just creeping up, while short term money (Libor, over 3 months) just edges down. That ties in broadly with the above comments as in the short term, it may be a bumpy ride but we are expecting a small amount of economic growth in the mid-long term. So yet again, all signs point to short term deals presenting the best value at present.
In the last week:
3 Month Sterling Libor = down by 0.010% to 0.050%
2 Year SWAP = up by 0.010% to 0.083%
5 Year SWAP = up by 0.034% to 0.225%
2 Year Variable from 1.19%
2 Year Fixed Rates from 1.04%
5 Year Fixed Rates from 1.33%
BTL Rates from 1.14%
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 October 2020
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