What are your mortgage expectations in the current lending climate?

For the first time since 23rd March, I actually had a few days last week with no children in my house, which was utter bliss. I love my daughters very much, but I have also come to value childcare greatly since lockdown. There was a definite feel of things returning to normality as gyms/beauticians reopened, unless you are or were planning a trip to Spain that is…

Back in sunny Blighty, the busy mortgage market continues unabated. So much so, we are seeing business levels that are now higher than pre-lockdown, (but we are having to manage mortgage expectations). On the one hand that is great, on the other that is making conditions very challenging. This made me think about that classic saying about 3 kinds of service:

Lenders still have limited capacity

Nearly all lenders are running with severely limited capacity as they will have staff on furlough, some working from home, and all the challenges remote working brings. So we are now seeing a very bizarre dynamic in whoever is the cheapest lender for specific products, now withdrawing them as they can’t deal with applications. The second placed lender is then flooded with applications so they pull their products. The result means that even though money market rates are reducing, many headline rates on mortgages are increasing. Especially in the higher loan to value area (meaning, mortgages where you have less than a 25% deposit/equity. The smaller the deposit, the more the issue is felt).

Good, cheap or fast – what are your mortgage expectations?

So hence the adage above, if you want the cheapest rate on the market, don’t expect it to happen quickly. Many lenders are taking between 5-10 days to even look at cases, which is all well and good, but if there are any queries on an application, it can then be another 10 days until that is resolved. If more info is required, another 10 days, so it can now be more than 4 weeks to get an offer whereas in ‘normal’ times we could have got that resolved in a week.

If you are refinancing, not so much of an issue. But if you are buying, in a market where the pressure is really on to move quickly, picking the right lenders, and packaging cases is just so crucial as that can be the difference between you securing a property or losing out. So only a broker like us with unrivalled access to the market can help guide you through this added level of complexity.

Rate Corner Money markets all down again last week. Libor still below the base rate. This indicates rates are more likely to go down than up in the short term, with the expectation over the next 5 years is for rates to stay at this level if not a fraction higher. But as the graph above illustrates well, most likely that rates will stay flat for a long time to come. In the last week: 3 Month Sterling Libor = down by 0.003% at 0.081% 2 Year SWAP = down by 0.027% to 0.104% 5 Year SWAP = down by 0.027% to 0.164%

Best Rates: 2 Year Variable from 1.29% 2 Year Fixed Rates from 1.06% 5 Year Fixed Rates from 1.34% 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 July 2020

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