Despite market uncertainty created by Brexit and increased regulations in the residential and commercial mortgage market, the current outlook for those needing a mortgage or remortgage is more positive than it may seem.
Recently published data suggests that mortgage affordability for households has improved. The data suggests that at the end of December last year, the average income of those taking out a new mortgage or a remortgage on their home fell by 8.13% and 8.9% respectively, over the year. This means that salaries could now allow borrowers to take out more than a year ago.1 According to market experts there are two main reasons for this:
Record low rates
Since last year's cut to the Bank of England Base Rate and the fall in Swap rates (which partly dictate how much banks can lend and at what rates), mortgage interest rates have fallen dramatically. Although we may have already seen rates at their lowest, they are still very competitive.
In particular, we are seeing a trend of stronger competition among lenders on 5 year fixed rates in both Buy to Let and Residential mortgages. The reason for this is ultimately down to changes in mortgage stress testing.
Changes to stress testing are squeezing landlords in particular, and reducing the amount they can borrow. 5 year fixed rates, however, are exempt from the higher stress rate as borrowers are protected from short term rate fluctuations, this allows landlords to borrow more. As these products become more attractive to borrowers we are seeing lenders competing on rates and fees. Similarly, residential 5 year fixed rate mortgage are also, currently, highly competitive. Whether you require a new mortgage or remortgage, they are well worth considering.
Increased flexibility in lender criteria has also been cited as a reason for the increased affordability for borrowers 2. Whether you are an older borrower or have a complex income structure, there may be more options available to you than you realise. Lenders have opened up their affordability criteria to accommodate a wider range of borrowers.
Low mortgage interest rates and more flexible lending, leading to increased affordability, makes this a great time to consider your mortgage requirements.
largemortgageloans.com has unlimited access to the market. This allows us access to a broad range of lenders who take a holistic approach when considering the client's circumstances. By speaking with one of our advisers, we can talk you through all the options available to you and find the mortgage that suits your needs best at the most competitive rate. Call us on 020 7519 4985 or send us an email to speak to one of our specialist Mortgage Managers today.
Some of this month's top interest rates are listed above; the actual rate will depend on your circumstances. Please note that this information does not contain all the details you need to choose a mortgage, ask one of our advisers for a personalised key facts illustration on 020 7519 4900. The rate displayed may become out of date at short notice.
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A typical fee of 1.17% of the mortgage amount is payable. Of this, 20% is payable on application and the balance of 80% on completion. For example on a mortgage application of £300,000 the fee would be £3,510 in total. Of this, £702 (20%) would be payable on application and the balance of £2,808 (80%) on completion. The total fee is non refundable. We may also be paid commission from the lender. The guidance and/or advice contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK. Calls may be recorded for training and monitoring.
You may have to pay an early repayment charge to your existing lender if you remortgage.
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