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Mortgage market continues to pick up in May


The mortgage market continues to improve, according to the British Bankers’ Association, with borrowers attracted by lower rates and easing criteria. The number of mortgages approved in the three months to May rose from 32,952 to a 16-month high of 36,102.

Help to Buy is already helping first-time buyers and is expected to give a further boost to this group, as well as second steppers, from January when the guarantee element of the scheme is rolled out.

There are fears that mortgage rates will start increasing soon on the back of rising Swap rates but there are many other factors coming into play which dictate pricing. There is no need to panic but it is worth seeking independent mortgage advice if you are concerned. We expect mortgage rates to continue to be extremely competitive in coming months as lenders vie for business.

Borrowers who can afford to do so continue to overpay on their mortgages, taking advantage of record low interest rates, and pay down debt where they can. This makes sense – why leave savings languishing in accounts paying such poor rates of interest when you can reduce your borrowing? There is also a reluctance to take on extra borrowing because of the uncertain economic and jobs climate.

While lending volumes are improving, we remain some way off a sustained recovery in the housing market as caution continues to prevail. However, mortgage brokers and estate agents are still reporting a high level of enquiries so we expect this to continue to feed through to improved official figures in coming months.

Jonathan Harris
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Jonathan Harris

Falling rates and easing criteria: it’s getting easier to obtain a mortgage


Mortgage rates continue to fall on the back of the Government’s Funding for Lending scheme, while lenders are crucially now also loosening criteria. It has never been easier – certainly not in the past five years – to get a mortgage.

This is great news for those who have been holding back from moving, concerned that it’s not worth applying for a mortgage because they wouldn’t get one anyway. It is also good news for those who haven’t bothered looking into remortgaging for much the same reason. Now is the time to act, and while rates may fall further still, they are already at historic lows. What have you got to lose?

On the rate front, two-year fixes are available at less than 2 per cent, five-year fixes at less than 3 per cent and now even ten-year fixes at less than 4 per cent. Of course, you will need a sizeable deposit of around 40 per cent of the purchase price to qualify for the best rates but further up the loan-to-value curve, pricing has also fallen.

What is really encouraging is that criteria are easing too. For every lender tightening its interest-only criteria or making it tougher for older borrowers to get a mortgage, there are others who are realising that the way to bring in more business and grow their loan book is to be more flexible, not less.

The private banks have continued to lend throughout the financial crisis and are still often the best option for the right sort of client. They have an understanding of borrowers with complex income streams – taking retained profits in a business or bonuses into account – that is simply not the case on the high street.

We’ve also seen some improvements for contractors and on buy-to-let, with several lenders loosening previously tight criteria in the past few weeks. It all adds to a more positive market that is well worth exploring if you have been holding off applying for funding.

However, as usual, caveats apply. While lenders are demonstrating more of an appetite to lend, it is still worth seeking independent mortgage advice. There may be more options available at better rates but sourcing them all yourself is a tricky business. Why not speak to an expert who spends their working day sifting through what’s available and who can advise you accordingly?

Jonathan Harris
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Jonathan Harris