The housing market needs first-time buyers to keep it moving. While the average age of first-time buyers has been creeping up and now stands at over 33 years of age, the number of buyers has dwindled, falling by more than 10% between 2021 and 2022. People are finding it harder and harder to make the leap from renting to buying. When buying your first home, it is normal to need to pay a deposit of around 10% of its value. A bank or building society will then loan you the rest. The launch of Skipton’s new product, called the ‘Track Record Mortgage’ could be just what the market needs to reverse these figures.

While 100% mortgages have been available before, this one specifically supports those with a strong rental record. To be eligible, applicants must have paid 12 monthly rental payments in a row over the last 18 months, paid household bills for the past year and be up to date with any loan or credit card repayments. In the current economic climate, with so many finding it impossible to save for a deposit while paying rent, this removes that obstacle, creating fresh opportunities for renters to become homeowners.

Charlotte Harrison, CEO of Home Financing at Skipton:

“We recognise there’s a clear gap in the market for people who have a strong history of making rental payments over a period of time so can evidence affordability of a mortgage – but there is currently no solution for them to buy a property due to lack of savings or access to family wealth. It is time for a re-think on these massive barriers to home ownership, and we’re proud to take the lead on bringing to the market, solutions for such a massive social problem.”

This product is fairly limited in scope, available only over five years at a fixed rate of 5.49%. This will limit Skipton’s exposure, as will the maximum term of 35 years. The maximum loan available is £600,000.

While there is excitement around this announcement there is also some caution, specifically around the risk of negative equity. Skipton will need to carefully consider each applicant and assess their suitability.

Henry Knight MD of Springtide Capital comments:

“100% mortgages have returned to help first-time buyers start their journey on the property ladder. Mortgage applicants and lenders need to keep the potential risks in mind when considering this type of mortgage. However, with applicants needing to show they can meet all their monthly bills consistently, it shows the lender is taking a responsible approach.”

This could be a game changing moment for those who need help the most.

It is very important to consider your options in detail when looking at any type of mortgage. We can help you decide the best option for you. Get in touch on 020 8154 7280.

Sources:

First-time Buyer Statistics and Facts: 2023 | money.co.uk

A simple guide to buying your first home – Times Money Mentor (thetimes.co.uk)

Press Release Article – Skipton Building Society

 

In a month where inflation remains stubbornly high, The Bank of England’s Monetary Policy Committee (MPC) continues to revise monetary policy to meet the 2% inflation target. At its meeting this month the MPC voted to increase Bank Rate by 0.25 percentage points, to 4.5%.

This is the 12th consecutive rise in interest rates. The MPC in its summary, has not ruled out further rate rises to help meet their 2% target in the medium term.

Official bank rate:

Source: Bank Rate history and data | Bank of England Database

Borrowers may be concerned about whether this is the right time to take out a mortgage. Seeking advice is vital to ensure borrowers can comfortably afford to refinance based on their own individual circumstances.

There are however, many positive narratives across the mortgage market this Spring:

Figures from the Office for National Statistics released on the 24th May show that inflation has started to fall, down to 8.7 per cent in April, down from 10.1 per cent in March.

• The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 7.8% in the 12 months to April 2023, down from 8.9% in March; on a monthly basis, CPIH rose by 1.2% in April 2023, compared with a rise of 2.1% in April 2022.
• The Consumer Prices Index (CPI) rose by 8.7% in the 12 months to April 2023, down from 10.1% in March; on a monthly basis, CPI rose by 1.2% in April 2023, compared with a rise of 2.5% in April 2022.

New buyers, who are vital to keep the market moving will be able to access Skipton’s new product, this May. Called the ‘Track Record Mortgage’, it is the UK’s first 100% LTV Mortgage exclusively for renters. The product will enable renters to access the property ladder without a deposit. Tenants who can evidence affordability for a mortgage and have a strong track record of rental payments can borrow up to 100% of a property value.

House price growth shows signs of stabilisation in April according to the Nationwide house price index:

• April saw a 0.5% rise in house prices after seven consecutive falls
• Annual rate of house price growth improves to -2.7% from -3.1% in March
• The average UK house price is £260,441

As global and economic concerns continue to influence the mortgage market, speak to one of our experienced team today to find the right solution for you. Call us on 020 8154 7280.

Sources:

https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2023/may-2023

Consumer price inflation, UK – Office for National Statistics

Press Release Article – Skipton Building Society

House price growth shows signs of stabilisation in April (nationwidehousepriceindex.co.uk)

In the period since the tragic Grenfell Tower fire of 2017, understanding unsafe cladding has been a key issue when it comes to mortgages. Many of those living in similar buildings have been unable to remortgage or to sell their properties. Steps taken in response to the Grenfell Tower tragedy understandably resulted in revised regulation surrounding cladding and fire safety.

Measures included needing an ‘EWS1’ form, when applying for a mortgage. This is a type of safety certificate introduced after the Grenfell disaster. This form requires a professional survey of the property to determine the safety and suitability of the cladding, insulation and other materials used in its construction. Being unable to get this certificate has meant that some leaseholders and freeholders of high-rise buildings have become trapped in their existing mortgages.

The introduction of new industry guidance in January 2023 issued by the Royal Institution of Chartered Surveyors (RICS), helps valuers assess properties with cladding. As a result of this guidance, owners may now be able to sell and remortgage more easily, due to six major lenders agreeing to lend on affected properties. The six lenders who have updated their criteria are: NatWest, Santander, Barclays, HSBC, Lloyds and Nationwide.

It is a positive step forward in an area of lending that has been challenging. You will however, need to provide evidence that at least one of the following applies for you to get a mortgage from one of the six lenders:

• You are covered by one of the recognised Government schemes – the Developer Remediation Contracts, (buildings 11 meters or taller) the Medium Rise Scheme (buildings between 11 and 18 meters) or the Building Safety Fund (buildings taller than 18 meters) or you are covered by the leaseholder protections in the Building Safety Act.
• If required your building will be fixed by the developer. as developers must agree to remedy serious fire safety defects in their blocks or be banned from starting new developments under the latest government cladding update.

Unfortunately, this means that if there is no remediation plan in place and you aren’t covered by one of the existing Government schemes, it will remain challenging to get a mortgage.

As the evidence required varies by lender, it is best to understand exactly what evidence is required before you apply. So, whilst it is positive that Banks will now lend on properties if the mortgage application meets individual lenders’ policy and regulatory requirements, there is still some way to go. Some lenders remain cautious about the government guidance surrounding higher-risk buildings

Henry Knight from Springtide Capital comments: ‘Existing homeowners who have found finding a mortgage deal on their property almost impossible are in a stronger position now in 2023. It is crucial that more lenders join the six existing banks to give customers as much choice as possible through increased competition’

Our expert advisors are here to find the right financing option for you. We understand the criteria required and can help improve your chances of a positive mortgage offer. Contact us today on 020 8154 7280

 Sources:

https://en.wikipedia.org/wiki/Grenfell_Tower_fire#:~:text=On%2014%20June%202017%2C%20a%20high-rise%20fire%20broke,with%20more%20than%2070%20injured%20and%20223%20escaping

Cladding External Wall System (EWS) FAQs (rics.org)

Valuation approach for properties in residential buildings with cladding (rics.org)

Developer remediation contract – GOV.UK (www.gov.uk)

Medium-Rise Scheme (MRS) pilot opening: leaseholder factsheet – GOV.UK (www.gov.uk)

Remediation of non-ACM buildings – GOV.UK (www.gov.uk)

https://hoa.org.uk/2023/02/government-cladding-update/#:~:text=February%201%2C%202023%207%20minute%20read%20In%20the,their%20towers%20or%20face%20a%20ban%20on%20developing.

https://www.gov.uk/government/publications/developer-remediation-contract?_ga=2.120442056.130233984.1678110522-1149413627.1678110522

With hundreds of mortgages available, it can be daunting getting started on the journey to securing a mortgage. There are many things you can do to make the process as easy as possible. Here we will highlight some of them.

Preparation

Get your paperwork in good order. Having the information to hand from the outset will stand you in good stead and will make the process less stressful for all involved.

A good example of the kind of information you will need to organise is the information required to apply for your ‘decision in principle’. This is often seen as the first step to buying or remortgaging a home. It helps you understand how much you could borrow before you apply for a mortgage.

To get your decision in principle you will need to provide confirmation of your personal details, know your regular outgoings, debt repayments and regular living expenses. Plus your salary and any other income that you receive on a regular basis. You will require at least a months’ worth of bank statements. You’ll need at least your last 3 months of payslips, your last P60 and evidence of any other income. If you’re self-employed you may have to provide several years’ business accounts.

An decision in principle is obligation-free and having one shows that you can, in theory, afford to buy a property. To get one, you’ll either need to approach a mortgage lender directly or via a mortgage broker.

Seek advice – Mortgage brokers

For something as important as a mortgage it makes sense to get expert help from someone who deals with them day in, day out. A mortgage broker has a key role to make sure you never pay more than you need to. They are able to review the mortgage market and apply for a mortgage for you based specifically on your financial circumstances. Due to their knowledge of each lenders underwriting criteria, they can advise you on which lenders are likely to accept you and which ones aren’t. This helps avoid delays and is important as it may have an impact on future applications. Brokers have access to software that allows them to search mortgage deals much faster and more thoroughly than you could yourself. A good broker can save you a lot of time and stress.

For more benefits of using a mortgage broker please read our article.

Get ahead

 If you arrange your mortgage as early as possible, you’ll be in a stronger position with sellers and estate agents. On average, offers typically take 3 weeks to come through, from when you apply for your mortgage to receiving your mortgage offer. Each offer lasts for a fixed amount of time, usually between 3-6 months. If there are likely to be any problems with your application it is best to know at the start and have time to remedy. The best advice is to start the process before you start seriously looking for somewhere to buy.  If you have an existing mortgage, it’s always best to lock in a new mortgage to start as soon as your previous deal ends.

Henry Knight from Springtide Capital advises: “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.”

To help you navigate it all and to discuss your mortgage requirements today contact Springtide Capital on 020 8154 7280

Sources:

 How to buy a home – GOV.UK (www.gov.uk)

Why use a mortgage broker? | Springtide Capital

 

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

 

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 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

 

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 10^th 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

On 4^th 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 15^th 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/