At Oakfield we work closely with Connect Mortgage Services who are a proactive, local broker who have their fingers on the pulse when it comes to what is happening in the world of mortgages and they will be providing us with regular updates to share with our customers. Of course the big news was the Bank of England 0.25% rate drop last week but there is other news too:
Rate drops – Since the general election at the start of the month, we’ve seen multiple rate decreases across multiple lenders. Some had drops as much as 0.35%. Which on a £200,000 interest only mortgage, is around £80 a month savings. The Bank of England also dropped the base rate for the first time in 4 years, from 5.25% to 5%. This shows a very positive outlook for the mortgage market for the future. We expect rates to continually drop at this rate for the remainder of the year. An estimates 7 million people on mortgages are said to have been waiting for this news of the base rate drop before starting to look into their mortgage options. This should lead to many of these people revaluating their housing needs with majority of them looking to sell and therefore come onto the market.
Rightmove yearly data – this time last year. The average 5-year fixed rate was 6.08%. Today, it’s 4.88%. If this trend continues, which the general consensus is that it will, that means the average 5-year fixed rate will be 3.68% this time next year. We believe that the last 2 years have been slow, purely down to rates being very high. Once rates come back down to the 3% level, all these potential purchasers will flood back to the market. Meaning more competition and higher house prices again. So, for anyone who thinks they want to wait to save on interest rates, they will most likely loose those savings due to purchasing at a higher price. This is further backed up with the news above.
Concessionary purchase – we’re seeing a huge increase in landlords selling up their portfolios and evicting their tenants to do so. Many lenders will allow the tenant to purchase the property from their landlord without a deposit. The lender requires that the landlord sells the property at a 10% discount, which they will then use, in theory, as the deposit. This allows many people to get onto the property ladder without having to come up with thousands of pounds for the deposit. This can also be used to purchase property from family members.
If you are looking to buy or want to discuss your current mortgage the team are can offer free impartial advice so don’t hesitate to get in touch. Check out our website to arrange a call back here.