Blakey’s Blog
Our Trusted partner Ebor Mortgages have kindly written a blog on the current position on the mortgage market.
At YorWealth, our financial advisers do not have authorisation to advise on mortgages. However, many clients want to know more about the current situation.
Blakey’s blog
The property and mortgage market have changed a lot over the last 12 months and looking back over that period shows just how much and how quickly things have changed.
If I had been asked to write this article 12 months ago, I would have said that interest rates would move up a bit and that the property market was probably too buoyant with buyers expected to pay well in excess of asking prices.
If this article was written 6 months ago, I would have said that interest rates were rising very quickly with an expectation that they would go higher. I’d have said that the property market had started to slow down with fewer transactions but buyers probably expected to pay around or a little bit above the asking price.
Where does that leave the market today?
Mortgage rates seem to have peaked and are starting to move downwards. Although, the pace of this is far slower than when mortgage rates were rising during the summer last year. Property prices also seem to have plateaued. There is the expectation that buyers will pay something around the asking price to agree a purchase.
Many mortgage lenders suffered problems with service provision particularly during the summer month last year. This prompted lenders to raise their mortgage rates very quickly in order to reduce demand. This was one of the factors which pushed lenders to increase interest rates quickly in the second half of 2022. This factor now seems to have been addressed as the number of mortgage applications fell in the Autumn months. The market is now much more competitive than it was at certain times last year. This competition between lender is one of the factors which has resulted in mortgage rates starting to reduce over the last couple of months.
One peculiarity in the current mortgage market is that 5 year fixed rates are currently cheaper than 2 year fixed rates. This very rarely happens. Borrowers would normally expect to pay a higher interest rate for the security of having a 5 year fixed rate
There has been a lot of commentary about inflation and the rising cost of living over the last 12 months. Lenders affordability assessments for owner occupier mortgages have seen minor rather than major adjustments over the last few months. Any reductions in the amount which can be borrowed has been small. The big change for borrowers has been with the level of monthly payments needed to meet the current rates. Rates are much higher than have been seen for many years.
Buy to Let
Buy to Let is a part of the market which has been very popular over the past 15-20 years. It has been a big part of peoples financial plans. Interest rates were ultra low between 2009 and the early part of 2022. Therefore, borrowing to fund Buy to Let mortgages was cheap. This scenario changed very quickly with rising interest rates over the last 12 months. The cost of borrowing has risen sharply which will squeeze landlords profits on those properties when their existing cheap mortgage deals end.
Although rents have risen, it’s by nothing like the same amount as borrowers interest costs have risen. It seems likely that landlords will start to review their strategy when they review their mortgage deals. If their profits are going to be significantly lower over the next couple of years, then it’s possible that landlords will start to sell properties. In this instance it’s likely that professional taxation advice will be needed regarding those sales.
In conclusion, it’s an ever changing market. Market conditions could be very different in 6-12 months than there are today. It’s very difficult to predict what will change but it’s fairly certain that change will happen.
If you want to know more then please get in touch with Ebor Mortgages. Call 01904 897 667 for a free initial consultation.
Ebor Mortgages Limited are authorised and regulated by the Financial Conduct Authority under FRN 933012.
Registered in England and Wales, Number – 12741297
Registered address. Acomb House, 23 Front Street, Acomb, York, YO24 3BW
All enquiries are treated in the strictest confidence.
Categories: Updates
