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Considering remortgaging? Read this before you do….


We can all rest easy as Mark Carney, Governor of the Bank of England, is keeping a watchful eye on the housing market and proactively ensuring it is not overheating. He’s doing this by diverting cheap money away from individual mortgages into businesses from January, via the Funding for Lending Scheme (FLS). This is good news because it means money is going where it is needed most and  ensures we have more measured growth in the housing market.

Speculation abounds that this might mean more expensive mortgages. But will it?

As far as the Bank of England is concerned, there are many more pieces to the jigsaw than the housing market. There is the state of the economy, which is showing signs of growth but is still relatively fragile. There  is unemployment, which has a long way to go to get anywhere near the 7 per cent threshold for it to be considered under control. There is also the level of indebtedness for many UK households. Mr Carney will not want to push up interest rates, exacerbating personal debt, when many are struggling with household bills. He will want a strong sign that debt is manageable before this happens.

Mortgage lenders have to plan ahead and many still have FLS money in their coffers and the ability to draw down more before 2014. So this means there will still be cheaper money available, well into 2014. This suggests mortgage rates will not shoot up overnight.

However, longer-term Swap rates are trending upwards. This is one of a number of sources of funds for lenders when pricing longer term fixed-rate mortgages. This could mean rates could go up on longer fixes in 2014.

There is no need to panic but it is important to look at your situation to ensure you have the right mortgage for your circumstances. It might be worth considering a longer fix to help with budgeting, and there are some excellent deals available, with five-year fixes starting at 2.89 per cent. Contact us for more details.

Adrian Anderson
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Adrian Anderson

Autumn Statement: As the retirement age rises, lenders need to move with the times


One of the most reported aspects of the Autumn Statement was the rise in the retirement age. But what does this mean for homebuyers when it comes to getting a mortgage?

Most mortgage lenders have long used 65 as the benchmark retirement age, with many not lending past this unless borrowers can prove sufficient income to service the debt. But most of us are already likely to be working beyond that age, even before yesterday’s announcement. Now that the official retirement age will rise, are lenders shifting their expectations in line with this?

It is important that attitudes change. If borrowers have longer to pay off their mortgage, it makes the monthly payments more affordable. For example, we recently arranged a 20-year repayment mortgage for a 50-year-old client whose employer confirmed they could work until age 70. They were originally offered a mortgage up to the age of 65 but we were able to argue the case that a longer term was more appropriate and manageable for their needs.

Some lenders are more flexible than others and will assess on the merits of individual cases. Contact us for more details.


Jonathan Harris
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Jonathan Harris

No need to panic as Funding for Lending changes focus


As speculation of a house-price bubble continues to grow in some quarters, the Bank of England is putting the brakes on Funding for Lending (FLS) – at least as far as mortgages for households is concerned. Mark Carney, the Governor of the Bank of England, has announced that from 2014 the focus of FLS monies will be on small businesses, rather than individuals.

Was this decision made because the Bank panicked about rising property prices and activity? Data released last week from the Land Registry and Nationwide both underline the rise in activity in the housing market. The Land Registry said London  house prices have risen by 9 per cent in the past year, but it’s not just London: other parts of the UK are also seeing rises, albeit at a slower pace.

Nationwide reported a 0.6 per cent growth in prices in November compared with 1 per cent in October but this is in line with a seasonal slowdown as sellers approach Christmas and delay putting their properties on the market until January.

The repositioning of the FLS is no surprise as it was only meant to stimulate the market in the short term. This has resulted in cheaper mortgage rates with borrowers never having it so good.

Borrowers don’t need to panic but lenders may look to re-price fixed rates higher so if you need one of these, it may be worth securing a deal sooner rather than later.  However, it is unlikely that mortgage rates will shoot up overnight: lenders have targets to meet for the end of this year and into the Spring, before the Mortgage Market Review is implemented in April, so we still expect some competitive pricing.

Contact us for advice as to what to do next.

Adrian Anderson
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Adrian Anderson