Market Overview

The housing market remains buoyant, driven largely by the Stamp Duty holiday due to be phased out by 1st October ‘21. The Pandemic has also created a lot of home movers who wanted to change their own living circumstances.

House prices have been increasing, and according to the Halifax House Price Index, this amounted to 1.3% in May and a 9.5% annual increase.

Mortgage Rates / Criteria

Rates have continued to fall as competition between lenders increases. Borrowers with a 40% deposit or more can now obtain rates below 1% for the first time in almost 4 years! This competition has filtered through to higher Loan to Value mortgages too with more products available. However, those cheapest rate deals often come with hefty fees and often work out more expensive over the initial term than products with lesser fees!

Qualifying criteria for a mortgage have tightened, particularly for the self-employed. Lenders are scrutinising applicants more carefully than before the pandemic particularly if your circumstances have changed.

Offset mortgages are still available so those with or able to build a savings pot. The pot effectively reduces the amount owed on the mortgage by the amount in the linked pot, so you pay less interest overall. (EG. If you have a mortgage of £100,000 and have £40,000 in the offset savings pot you will only pay interest on £60,000) If you maintain your payment levels, this can be a great way to pay off your mortgage early!

Later Life Lending

Later life lending (aged 55 and over) is booming! In 2020 alone, £3.89bn was released, with interest rates being so low, and the rate fixed for the duration of the lending, which is normally when the last occupant moves into long term care or dies. Equity is being released by many for a variety of reasons, such as, to pay off an outstanding mortgage or debt, as additional income, home improvements, holidays or money for children or grandchildren, particularly helping them for property deposits. This is allowing parents/grandparents to see loved ones enjoy the benefits of receiving an early inheritance! Given the debt is part of the ‘Estate’, this can also be a great Inheritance tax planning tool.

With interest rates so low, now is a good time to fix in a good deal to alleviate the concern that interest rates may increase as we get back to a ‘new normal’ way of living.

At Blake and Day, we are registered for all types of mortgages and additional borrowing. If you need help or advice with a mortgage, please contact Mark Reynolds M: 07876 688996 or E: mark.reynolds@bdfinancial.co.uk.