Blog Archives

Post-general election calm on the mortgage front

15.06.2017

A hung parliament wasn’t the outcome most of us were expecting from the general election but now that the surprise has subsided it’s clear that the mortgage market hasn’t been rattled by the result.

It really is business as usual. Swap rates – the rate lenders pay to borrow from each other – barely moved in response to the outcome. Lenders remain keen to lend and there continue to be some exceptional mortgage rates to choose from as they compete for business.

With a lack of urgency among buyers to purchase property, lenders are concentrating on the remortgage market, with some excellent rates available with the valuation and legal fees paid by the lender. Given that we may be close to the bottom of the market in terms of rates and near the top of the market with regard to property values, it is a good time to consider remortgaging, particularly if you are sat on your lender’s standard variable rate (SVR).

Jonathan Harris
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Jonathan Harris

Cheap mortgage rates attract first-time buyers and those remortgaging

17.05.2017

The number of first-time buyers and those remortgaging rose in March compared with February and the same period last year, according to figures from the Council of Mortgage Lenders (CML).

As one would expect, March was a better month for the housing market than February as we move into traditionally what is a busier time of year. First-time buyers borrowed £4.9bn, up 29 per cent on February and 9 per cent on March 2016, as the Bank of Mum and Dad continues to step up to the plate, while lenders offer competitive rates at high loan-to-values.

Remortgage activity was up 13 per cent by value and 14 per cent by volume on February as homeowners took advantage of record low mortgage rates. With lenders still keen to lend and overall transaction levels fairly subdued, they will have to continue offering competitive deals in order to drum up business, which is good news for consumers.

As always, meeting lenders’ affordability criteria can be tricky which is where good independent mortgage advice comes in.

Jonathan Harris
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Jonathan Harris

Remortgaging on the rise as lenders cut rates

18.11.2016

There has never been a better time to remortgage with rock-bottom rates to attract borrowers. With lenders vying for business ahead of the year-end and demand for mortgages for house purchase steady but not spectacular, banks and building societies realise there is plenty to be gained by slashing the pricing on remortgage deals.

With plenty of uncertainty following the referendum, it is no surprise that longer-term fixed rates are so popular. With the average five-year fixed rate falling below 3 per cent for the first time according to Moneyfacts, and the best priced deals a lot cheaper than that, borrowers can get security for a decent period of time at an excellent rate.

The real issue for buyers is trying to find a property they wish to buy at a price they are prepared to pay. In the meantime, we are likely to see more people staying put and improving the home they have, remortgaging to release equity and build an extension or go up into the roof or down into the basement.

Jonathan Harris
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Jonathan Harris

Make 2013 the year you get on top of your mortgage

02.01.2013

The beginning of a new year, when not much is going on, is a good time for taking a long, hard, critical look at your finances and the biggest outgoing of them all – the mortgage. This is particularly important this year when finances are likely to be a little tight.

First, consider your existing deal. If you are on a fixed-rate mortgage or base-rate tracker, and would incur an early redemption charge for switching to another deal, it may be worth staying put for now. Make a note when your current deal ends – if it is at some point during this year, you will need to take action. Diarise it; about six months before that date, book at an appointment to see an independent finance specialist such as Anderson Harris, to talk through your options. New deals can be secured up to six months before you actually take them out, depending on the lender, so leave plenty of time to find a new one.

If you are on your lender’s standard variable rate (SVR), you need to decide whether to stay put or remortgage. Much depends on the SVR you are paying, your income and how much equity you have in your home. If you are paying more than 3.5 per cent, and have at least 25 per cent equity in your home, you should find a cheaper fix or tracker, so should consider remortgaging. Your lender’s SVR will not get any cheaper: indeed, it will only rise when base rate starts to increase and may do so quickly.

Those who are on really cheap SVRs or ‘go to’ trackers, may want to stay put for now. If you do, it makes sense to use money ‘saved’ each month to reduce your mortgage further.

If you require interest only, have complicated income streams, or are an ‘older’ borrower, seek independent advice. You might find it tricky to source a mortgage on your own but we might be able to help, particularly if you qualify for finance from a private bank.

The important thing is to take action – even if it is only to reaffirm that you are on the right deal for your circumstances at the present time. There is no room for complacency: while forecasters can’t agree when interest rates will rise, they will at some point. The smart borrower will take advice if they are unsure and take time to prepare for whatever 2013 may have in store.

Adrian Anderson
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Adrian Anderson

Santander’s SVR hike means borrowers must be vigilant

22.08.2012

Santander has written to customers on its standard variable rate (SVR) this week telling them that the rate will jump from 4.24 per cent to 4.74 per cent from October. This will be unwelcome news for those who are already stretched financially and don’t have enough equity in their homes to enable them to remortgage onto a cheaper fixed or tracker rate.

Santander follows several other lenders, including Halifax, Clydesdale and Yorkshire Banks, who all raised their SVRs in May. The average SVR is now 4.23 per cent, according to the Bank of England, making Santander’s new rate look expensive. Borrowers may be bemused as to why their rate is going up when interest rates haven’t moved but this has always been the problem with SVRs – lenders can raise them as, and when, they want.

While this extended period of low interest rates – three and a half years without an increase from 0.5 per cent – is welcome news for homeowners on variable mortgage rates, it is an expensive headache for lenders. There is little incentive for borrowers to remortgage at the end of a fixed or discounted period if the alternative is a lender’s cheap SVR with no arrangement fee, early repayment charge or loan-to-value stipulation. It’s no wonder lenders want borrowers to move off them. Hiking them is one way of doing this.

But not everyone is able to remortgage. If your lender raises its SVR, the usual advice is to switch to another deal but many borrowers won’t be able to as they have become mortgage prisoners. They don’t have enough equity in their home, have an interest-only mortgage, or their circumstances have changed since they first took out their mortgage, so they no longer meet lenders’ criteria.

If you are in this situation, seek advice. Use savings earning next-to-nothing in terms of interest to pay down your loan and improve your equity position, making it easier to remortgage. Ask your lender whether it will offer you another deal, particularly if you will struggle to pay the higher rate.

And for those borrowers whose SVR has not yet gone up, be vigilant. Unless you have a guarantee that it won’t, such as those borrowers with Nationwide and Lloyds TSB who can be charged no more than 2 per cent above base rate – you are at risk of higher monthly payments.

Adrian Anderson
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Adrian Anderson