Is it time for a Financial Spring Clean with regard to your Mortgage Loan needs?
As we move through 2022, will it be any calmer than 2021? Last year, we saw the ‘race for space’, with many looking for a different way to live. This resulted in a high level of property purchases, and strong house price growth.
In 2022, there’s still a desire to move, balanced by a lack of available properties to purchase. Plus, there’s still Covid, and cost of living concerns, with inflation already standing at over 5%. These will be exacerbated further by the recently announced Energy cost rise, which apply from April.
The impact on the Bank of England’s 2% inflation target has resulted in Base
Rate rises, and possibly further increases to come this year, with the knock-on effect on mortgage rates.
(Sources: Office for National Statistics, Consumer Price Inflation; January 2022; Bank of England, February 2022)
Still excellent deals…
That said, even though the direction of travel for interest rates is upwards, rises are coming from a record low base, which means that there are still excellent deals out there.
For a wide range of borrowers (such as the following), perhaps now’s the time to
act to lock-in the current deals:
– Looking to secure their first property loan.
– Have a mortgage deal that’s due for review in the next 6 months or so.
– Existing borrowers who simply want to obtain a decent interest rate now and/or
raise more funds.
– And those borrowers – impacted by the pandemic – who want to meet their desire
for more space, either within their current home, or considering a different property, possibly in another area.
House Prices
The average UK house price rose by 11.2% in the year to January 2022.
(Source: Nationwide, House Price Index, January 2022)
Whilst growth is expected to ease to single digits over 2022, rises in the last few years may have been beneficial for current homeowners. It might even open up better rate deals, if borrowing against a property that’s risen in value over recent years.
Lender requirements
Borrowers will be well aware that lenders continue to apply stringent controls on the ‘evidencing of income’ and ‘affordability’.
However, whilst the cost of living rises will not ease this situation, the Bank of England is looking to consult on possibly withdrawing, or easing, the ‘affordability’ requirements sometime in 2022.
This rule currently requires lenders to ensure that borrowers can afford a 3% rise in their mortgage interest rate before approving an application. If removed, or eased, it would then open up more property and borrowing options for purchasers, and remortgagers.
Low deposit deals
Deals such as 95% and 90% loan-to-value may have bucked the trend in rising rates,
as average rates have largely remained stable over recent months. This is partly a reflection of the enthusiasm of the Government to support the First-Time Buyer.
(Source: Moneyfacts, February 2022)
Green Mortgages
With a lot of talk about rising energy costs, it’ll focus the mind of many to seek out more energy-efficient properties, or renovate the existing one. This is where a Green Mortgage could be of interest – a product offering that’s sure to grow in popularity.
Why you should talk to us
With so many options to consider, it can be quite confusing. For example, there are the enticing headline rates (where you’ll also need to consider the associated lender fees), the option of a fixed or tracker rate, the length of the overall mortgage deal, and all the information lenders require.
So, it’s no wonder that most opt to take our professional advice to help identify a suitable route forward.
Please get in touch to hear more…
You may have to pay an early repayment charge to your existing lender if you remortgage.
Your home may be repossessed if you do not keep up repayments on your mortgage.
