Why use a mortgage broker?

How many times does the average person in the UK move house? Surprisingly, according to a recent poll from Zoopla it’s only once every 23 years. This has risen dramatically since the late 80s when the average was a little under nine years. Given this and the fact that about 85% of current mortgage stock in on fixed term deals, the average person’s experience of finding a new mortgage is limited. For something as important as a mortgage it makes sense to get expert help from someone who deals with them day in, day out.

So, what is stopping more people from using mortgage brokers? One reason is that it is now for more straightforward to get mortgage quotes. The rise of comparison websites has made it possible to get the rates for a wide variety of mortgage deals in a matter of few minutes.

However, when it comes to mortgages, rates are just part of the picture. Each lender has their own underwriting criteria, which is often extensive. According to Experian, lenders reject a third of customers using comparison sites as they do not meet their full lending criteria. A mortgage broker will gather all the information necessary and only present deals that you qualify for, preventing any unnecessary disappointment or delays.

This is just one reason to use a mortgage broker, here are four more.

Removes the hassle

Mortgage consultants at Springtide Capital take the time to fully understand the needs of each client, so they get to know what you need not just now but in the future. They do all the hard work for you, gathering the required information and documentation to conduct research with more than 100 lenders to find the most suitable deal for you.

No one enjoys completing forms, especially for something as involved as a mortgage. Once you’ve made an informed choice based on a complete picture of the options available, your consultant will prepare and submit your application for you. They’ll follow this up with a personalised report setting out and confirming their reasons for their advice and recommendations.

Dedicated support

Alongside your mortgage consultant, Springtide Capital will allocate you a dedicated case manager. They will ensure your application proceeds as smoothly and speedily as possible, they follow up with lenders through every step of the process. They can also liaise with third parties, such as solicitors, saving you valuable time and reducing additional worries at this already stressful time.

Providing peace of mind

When there are so many uncertainties in the world, understanding how you can protect your mortgage payments and safeguard your home if the worse should happen is vital. Our in-house protection specialist can review and arrange the appropriate cover for personal and/or business customers ensuring you are completely aware of the risks and how best to mitigate them.

Superior service

Springtide Capital has one overriding objective – to make sure you never pay more than you need to. Your mortgage consultant’s role doesn’t stop once a deal is complete, this a long-term partnership. It is their job to always be looking forward, proactively monitoring rates ahead of your renewal date to ensure you act quickly, at the right time, to get the right price.

At Springtide Capital our experts monitor all market indicators closely, helping clients to find the best possible options for their circumstances. Speak to us today to see how we could help you find the solution that’s right for you.

To discuss your mortgage requirements today contact Springtide Capital on 020 8154 7280.

Sources

https://www.idealhome.co.uk/news/zoopla-average-brit-moves-home-181281

https://www.ftadviser.com/mortgages/2022/12/22/the-outlook-for-mortgages-in-2023/?page=2

https://www.mortgagesolutions.co.uk/news/2019/08/19/lenders-decline-a-third-of-customers-using-comparison-sites-experian/

Mortgage Outlook for 2023

All experts are predicting a bumpy ride for the economy in 2023. However, even just a few weeks into the year, we are beginning to see more positive signs that the picture won’t be as gloomy as was forecast at the end of last year. While consensus is that the UK will go into recession, the hope is this won’t be as deep as was feared. The Bank of England base rate, currently at 3.5%, will probably still rise, but HSBC have revised their forecast, predicting it won’t go higher than 3.75%.

The outlook for the housing market is similarly uncertain for 2023.There is consensus across the board that prices will drop, but by how much is still very much up for debate.

House prices fell in the last four months of 2022 and this trend is expected to continue, but the fall between November and December was just 0.1%. The market was quiet at the end of last year, as many people decided to wait and see what would happen with mortgage rates.

How much they will continue to fall in 2023 is uncertain. The most pessimistic warn the fall could be between 15% and 20%, but most believe it will be much less drastic than that. The Nationwide are predicting a slide, rather than a crash with a 5% reduction in prices.

What is clear is the housing boom fuelled by measures taken during the pandemic is over. British banks and building societies expect to lend 23% less to homebuyers in 2023 and the number of properties being sold is likely to be around 1 million, down from 1.27 million in 2022. However, there are reasons to back the more optimistic view of the year ahead and that the fall will be softer than some forecast.

These rate increases will only affect a limited proportion of the market. Around 85% of mortgage balances are on fixed interest rates, so they will be only affected by rate increases once they come up for renewal. According to the latest figures from the ONS, 1.4 million households in the UK are facing the prospects of interest rate rises when they renew their fixed term mortgages in 2023, but it is looking like their payments will go up substantially less than was feared.

While there will be some who will struggle to cover their mortgage payments, it is predicted that a relatively low number of people will be forced into moving in 2023. This is due to rising wages in the private sector, currently up to 7.2%, covering much of the price hikes caused by inflation. The unemployment rate is also predicted to increase only marginally, up to 5% from the current 3.6%, still low by historic standards.

There is no pretending 2023 will be a bumper year for the housing and mortgage markets. However, commentators believe that the decline will be temporary and modest growth will return in 2024.

At Springtide Capital our experts monitor the market closely, helping clients to find the best possible options for their circumstances, considering not the current situation but likely future outcomes. Speak to us today to see how we could help you find the solution that’s right for you.

To discuss your mortgage requirements today contact Springtide Capital on 020 8154 7280.

Sources

https://www.reuters.com/business/finance/hsbc-cuts-uk-terminal-rate-forecast-375-425-2022-11-04/

https://www.reuters.com/world/uk/uk-house-price-growth-slows-december-nationwide-2022-12-30/

Nationwide predicts 5% house price falls in 2023 – Your Mortgage

UK lenders see 23% slide in mortgages for home-buyers in 2023 | Reuters

https://www.ftadviser.com/mortgages/2022/12/22/the-outlook-for-mortgages-in-2023/?page=2

How increases in housing costs impact households – Office for National Statistics (ons.gov.uk)

Average weekly earnings in Great Britain – Office for National Statistics (ons.gov.uk)

https://www.cbi.org.uk/media-centre/articles/no-new-year-cheer-for-uk-economy-with-productivity-and-business-investment-weakening-cbi-economic-forecast

 

Securing a mortgage in a volatile climate

On September 21st, the Bank of England raised the base rate to 2.25% which in turn has increased mortgage rates. The Bank of England may continue to increase interest rates in a bid to stem surging inflation to reach its target of 2%. The continued rises are unsettling both first-time buyers and those remortgaging, with mortgage deals being removed from the market at a pace.

How do base rate increases affect my mortgage?

The amount a rise in the base rate of interest will cost you will depend on what type of mortgage you have.

A Tracker mortgage: an increase to the base rate means your monthly mortgage payments will increase.

A Standard Variable Rate mortgage: your lender decides how much, if any, of the increase they would pass on.

A Fixed Rate mortgage: you will only see a change in your repayments when your fixed term ends. If your fixed-rate deal is coming to an end soon, you ought to plan ahead, as acting quickly to secure rates is advised as rates could be pulled and replaced with new higher rates at any time.

What can I do?

Firstly, don’t panic. Lenders are keen not to be caught out by a sudden rate rise and so are taking a cautious approach, lenders still want to lend and they have the money to do so.

Henry Knight, Managing Director of Springtide Capital commented:

“Given the current ongoing situation, it’s vital that people are aware of the terms of their mortgage and the details of their current deal. This is especially important given that the cost of living is increasing so rapidly and may play a part in meeting mortgage payments. Being prepared and looking ahead will be vital in securing the best possible rate and protecting from payment increases.”

If you are a first-time buyer, it is clearly a very challenging time. One of the key things, particularly for first-time buyers is to make sure that your credit record and your finances are in as good a state as possible. Be in a position to supply all the requested supporting documentation for your mortgage application as quickly as possible.

The benefits of choosing a mortgage broker

Brokers will play an integral part in helping buyers through the technicalities and financials of their mortgage process, beyond simply accessing products. In a quickly changing market they are best placed to keep up with product variations and will be in close contact with lenders. By contacting a mortgage broker early, you can explore your options and potentially lock in a more favourable rate before future increases. Over the coming months, both lenders and brokers will be dealing with high volumes of business as economic uncertainty is set to continue.

Henry Knight comments: ‘It is a complicated time in the mortgage market and the place for advice has never been more vital. The role of the adviser has never been so important, and as always, regulated financial advice will help individuals make an informed choice. At Springtide Capital we are with you every step of the way.”

With many variables to consider, whether you’re a first-time buyer or experienced property owner speak to one of our experienced, friendly advisers today to discover the right option for you.

Contact Springtide Capital on 020 8154 7280.

Sources:

Bank Rate increased to 2.25% – September 2022 | Bank of England

https://www.msn.com/en-gb/money/other/which-lenders-have-removed-their-mortgages-as-hundreds-more-deals-pulled/ar-AA12Fz7w

About mortgages | Springtide Capital

 

The current mortgage market – our brief overview

The present uncertainty around mortgage rates and the general economic outlook has understandably caused some nervousness amongst buyers and homeowners.

What is happening to mortgages?

The Bank of England recently raised the base rate to 2.25% and made it clear that it is prepared to continue to raise rates in order to reduce inflation to its target of 2%.

In response to this, mortgage lenders have increased their rates, therefore making it more expensive for homeowners to borrow money. Furthermore, many lenders temporarily withdrew some of their mortgage products from the market as they wait for the economic situation and interest rates to reach a more stable position.

Lenders are cautious by nature and will take some time to take into account the current and future expected rate rises and, until new products are released which reflect the new cost of debt, there is likely to be a tightening of lending until early 2023.

If a lender has processed the application of a borrower and formally offered them a mortgage, these offers are being honoured. Despite some media reports, lenders are not withdrawing mortgage offers from applicants that have already been approved.

What is expected to happen next?

It seems pretty certain that, with inflation still close to 10%, mortgage rates will rise over the coming months and this will make it more expensive to buy a property with a mortgage. This will undoubtedly deter some would-be buyers from buying at all and cause others to re-think their budget.

Around 300,000 people come out of fixed rate mortgages every three months. These people will need to remortgage at a higher rate than they were previously fixed into. For some, this may not be affordable, and they may need to sell their property and buy something that is less expensive. Others will choose to restructure their borrowing by doing things like utilising ‘interest-only’ mortgages or extending the term of their mortgage to reduce repayments.

During the 2008 global financial crisis and the recent pandemic, lenders worked with borrowers to avoid default or serious financial stress by offering them a raft of temporary reliefs such as payment holidays and penalty-free switches to interest-only mortgages. If necessary, we would expect lenders to do the same again in response to the rapid rate rises.

What should you do?

The property market is cyclical in nature and it is almost impossible to buy or sell property at exactly the ‘right’ time, and the vast majority of people buy and sell based on their personal and financial situation. The market over the next few months will be very different from what we have experienced over the past couple of years, but people will continue to buy and sell property regardless of whether prices are going up or down.

We are here to help.

By engaging with clients early, mortgage brokers can help set expectations, help create a clear understanding of affordability and risks. And while brokers cannot drive down costs, they do have up to date information and visibility on the whole range of products that are available in the market. At Springtide Capital in addition to accessing products, your broker supports you through the whole process, completes the administration for your application and you have access to a case manager who is with you every step of the way. We offer a personal service and are here to help every client find the best possible deal at the best possible rates. Speak to one of our friendly and experienced advisers today.

Contact Springtide Capital on 020 8154 7280.

Sources

https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2022/september-2022

Banks withdraw hundreds of mortgages: the best rates still available for home movers and first-time buyers – Which? News

https://www.bankofengland.co.uk/monetary-policy/inflation

Experian plc – Switch and save: New Experian data finds households could save up to £5,200 on existing credit

 

House Price Update

Despite the general doom and gloom around the UK economy, the housing market continues to buck the trend. According to the Nationwide House Price Index, house price growth was up again in July, standing at 11% compared to 10.7% in June. After considering seasonal effects, prices rose 0.1% month-on-month, representing the twelfth successive monthly increase.

Since the market reopened after the first national lockdown, prices have boomed. This was fuelled largely by the stamp duty holiday and the mortgage guarantee scheme. The Rightmove House Price Index shows the average asking price reached £369,968 in June, a record high.

Why are prices still increasing?

There are several factors that are continuing to push prices up. Low unemployment is a contributing factor and the main factor that continues to push prices up is the shortage of housing stock. For some time now simply not enough houses have come onto the market to meet the demand. This means first time buyers can’t find properties and prospective sellers can’t find suitable places to move to. There are indications from estate agents that listings are beginning to pick up now, which should ease this pressure and slow down prices increases. Despite the recent rise in interest rates, the base rate is at 1.75%, low by historic standards.

When Covid restrictions were lifted last year, there was a sense that life would revert to “normal”. This hasn’t been the case in many areas of life and the economy, and the housing market is certainly one of these.

Will prices continue to rise?

There is a debate over how long the market can stay this strong. There is a growing feeling that the cost-of-living crisis will begin to make an impact soon. As of 10th August, the inflation rate stands at 9.4%, the highest it has been for 40 years. With many people already feeling the squeeze on their finances, demand is expected to fall. Rightmove has stated that the combination of this and more properties coming onto the market is likely to see prices fall slightly in the second half of 2022.

Affordability becoming an issue

While house prices have been rising rapidly over the past few years, wages have grown at a much slower pace. This has increased the house price income ratio significantly. According to the Halifax, between the beginning of 2020 and the end of the first quarter of this year, house prices rose by 16.8%. Over the same period, average incomes increased by only 2.7%. This means the cost of buying a typical home in the UK is now 7.1 times average earnings, its highest ever level.

At Springtide Capital our experts monitor all market indicators closely, helping clients to find the best possible options for their circumstances, considering not just what’s happening now but what is likely to happen in the future. Speak to us today to see how we could help you find the solution that’s right for you.

To discuss your mortgage requirements today contact Springtide Capital on 020 8154 7280.

Sources

https://www.propertynotify.co.uk/news/nationwide-house-price-index-twelfth-successive-monthly-house-price-increase-is-a-slowdown-on-the-way/

https://www.rightmove.co.uk/news/house-price-index/

https://www.which.co.uk/news/article/whats-happening-to-house-prices-aVCwI8I22pBe

Home | Bank of England

https://www.whatmortgage.co.uk/news/housing-affordability-hits-all-time-lo

Think about refinancing well in advance

On 4th August, the Bank of England announced interest rates would rise by 0.5% to 1.75%. This is the largest increase in 27 years. The decision was taken to try and curb the sharp hike in inflation, which stood at 9.4% in the 12 months to June 2022. With predictions this could rise to as high as 13% by October, further increases to the base rate are likely to follow in the coming months.

What does this mean for mortgage rates?

Following this rate rise, many of the lenders and banks increased their rates for customers immediately, which affected anyone on a variable mortgage rate. Those on tracker mortgages, that follow the base rate, will also see an increase in their payments now.
Those on fixed rates are insulated from this rise for the moment. Currently, more than 80% of mortgages are on fixed-rate deals, so the impact will be limited for many people now.

Mortgage rates already on the rise

Even before this latest rise, mortgage rates had begun to creep up. According to financial specialists Moneyfacts, the average cost of a two-year fixed rate mortgage has gone up from 2.59% last June to 3.25% now. The average cost of a five-year deal has gone up from 2.82% a year ago to 3.37%. Independent research organisation Capital Economics have forecast the sharpest rise in mortgage rates since 1990.

Given the current situation, it’s important that people are aware of the terms of their mortgage and the state of their current deal. Being prepared and looking ahead will be vital in securing the best possible rate, protecting themselves from payment hikes, which is especially important given that the cost of living is increasing so rapidly.

Henry Knight, Managing Director of mortgage brokers Springtide Capital, said forward planning is essential to get the best deal:

“When the Bank of England Monetary Policy Committee next meets on 15th September, all the indications are that base rates are likely to rise again and possibly by a larger margin than previously experienced. Lenders will react to this and adjust their products accordingly. It is our role to work with lenders and encourage them to stay as competitive as possible in the current climate. We’ll be flagging this with our clients to help them secure the best possible deal. It is possible to secure rates up to six months before the end of a current plan. We urge anyone coming to the end of their current deal to start talking to a broker at least seven months prior to that deal finishing. Acting early and decisively will be hugely beneficial and could save them a significant sum of money.”

At Springtide Capital we offer a personal service and are here to help every client find the best possible deal at the best possible rates. Speak to one of our friendly and experienced advisers today.

To discuss your mortgage requirements today contact Springtide Capital on 020 8154 7280.

Sources

https://www.bbc.co.uk/news/live/business-62406689

https://www.theguardian.com/business/2022/jun/26/covid-couldnt-cool-house-prices-but-the-economic-chill-might

https://www.theguardian.com/business/2022/jun/16/bank-of-england-base-interest-rate-rise-mortgages-savings-annuities-house-prices-rents-effects

https://www.mortgagesolutions.co.uk/news/2022/04/28/next-year-will-see-sharpest-rise-in-mortgage-rates-since-1990-capital-economics/