In July, we wrote a blog regarding how the referendum vote had affected the mortgage market and how we thought the landscape may look in the coming months.
So 4 months on, we thought it might be useful to have a quick review and see how things are looking.
In truth, it is still a very difficult question to answer but a number of trends are beginning to emerge. Once the vote to leave was announced, the Bank of England were very quick to try and maintain liquidity in the mortgage market and this has certainly worked. Mortgage rates have fallen to what look to be historic lows and there are some incredible fixed rates now available across all loan to values. Unlike the downturn in 2008, lenders’ attitudes to lending have barely changed and the market has continued to function as normal.
However, the fall out between Unilever and Tesco last month highlighted that there may be a few hurdles to overcome on the horizon. The weakening of the pound suggests that inflation will inevitably rise as goods cost more to bring into the country, and this may have an effect on interest rates.
Many industry commentators were predicting prior to this “dispute” that the next interest rate move may again be downwards following the rate cut in August – this now looks as though it might be a mistake and therefore the next change may be upwards.
With this in mind, these historic fixed rates may not last too much longer.
It is estimated that around 25% of mortgage borrowers are paying a lenders standard variable rate, which is very likely to be higher than fixed rates currently available in the market.
If you are comfortable that you can afford to take the risk, then taking advantage of the very cheap 2 year fixed rates may be for you. Alternatively, if you have a family and need longer term security, 5 year fixed rates might just save you some money on your monthly mortgage payments and tie you into a rate that is unlikely to be seen again in the near/mid term. Either way, there has probably never been a better time to seek local, face to face, independent mortgage advice to understand what options might be available for you and your family.
Paul Hardingham and Tony Ibson are Mortgage and Protection Advisers at Innovate Mortgages and Loans. Both have over 20 years of experience advising individuals and businesses across the North East of England. They can be contacted for bespoke advice at firstname.lastname@example.org or email@example.com or call 0191 223 3514.
Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it