MORTGAGE MATTERS JULY 2023

By Lee Langridge on

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MORTGAGE MATTERS – JULY

With the Bank Rate at a new 15-year high, mortgage rates have risen again. In light of stretched affordability, the majority of lenders are committed to supporting customers and increasing flexibility. Despite persistent inflation, consumer confidence in June was at its highest level in 17 months (GfK) and property demand continues to be high.

The average rate for a five-year fixed-rate deal has reached above 6% for the first time since November (Moneyfacts), as more Bank of England rate rises are anticipated. Although deals available are still being pulled, lenders are still trying to support their customers, deliver flexible deals and good levels of service. The number of mortgage approvals for new home purchases in May stood at 50,524. Despite this being 15% lower than the longer-term average(2010-2019), it is a jump up from January this year, where mortgage approvals were around 34% lower, indicating growing acceptance of a new lending landscape (Dataloft, Bank of England).

With an estimated 1.4 million homeowners on expiring fixed-rate deals this year (Zoopla/Hometrack), lenders are increasingly offering highly competitive products for mortgage switching, meaning many borrowers are choosing to stick with their existing lender. This simplifies the process for customers and allows them to delay their decision until the last moment.

The Treasury’s Mortgage Charter, designed to support residential borrowers, has gained the support of 85% of the industry. Customers who are up to date with payments will be able to move to an interest-only basis for six months or extend their mortgage term, with the ability to change back to the original term within six months. Those reaching the end of a fixed-rate deal will be able to lock in a deal up to six months prior, with the ability to change this for a better deal until their new term starts. Unless there are exceptional circumstances, customers will not be forced to leave their home in less than a year from their first missed payment.

Although interest-only mortgages currently account for just 8% of new mortgage lending, compared to 40% in 2017, we may see a resurgence in times of strained affordability (FCA). Switching temporarily to an interest-only mortgage would save £289 pcm, based on the average UK first-time buyer price of £218,000, an 85% Loan-to-Value, 25-year term and a 5.5% mortgage rate (Nationwide, Dataloft, FCA).

Mortgage arrears and defaults remain below pre-pandemic levels, with just 0.86% of total residential mortgage balances in arrears in the first quarter of 2023 (FCA). 5.4% of disposable income is currently spent on mortgage payments, significantly lower than 10% in the 1990s, prior to the financial crisis (UK Finance). In times of rising costs, the shared ownership market is booming. Often less expensive than renting, shared ownership is helping thousands of first-time buyers get onto the property ladder.

Disclaimer: The above is for information only. Independent regulated financial advice should always be sought when considering mortgage matters.

Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.

Lee Langridge
Lee is an experienced Mortgage and Protection Adviser with over 15 years’ experience in the financial services industry. Lee finds no better satisfaction than helping clients to achieve their dreams, no matter how difficult it may be. Lee prides himself on delivering an efficient and personal service.
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Kevin and Beccy have been extremely helpful - firstly in exploring viable options to suit my situation and secondly keeping me in the loop and dealing with queries that arose along the way. This is my second mortgage with them, both of which had possibly unusual elements and they were able to navigate me through them and find me good mortgages.

  • 5 star review on TrustPilotThea E

Kevin and Beccy provided a wonderful service and I highly recommend utilizing them for your mortgage needs. They worked diligently for us especially as we were international buyers. 5 stars!

  • 5 star review on TrustPilotMyles T

Throughout my process I have liaised with Toby and Louis. Always professional, friendly and informative every step of the way. Keeping me updated at all times in what is a most exciting time for me. Am so very grateful. Thankyou!!!

  • 5 star review on TrustPilotCaroline

Amazing experience!!! I can't thank Jack and Russell enough for all they have done!!! Kept informed every step and felt very supported by them thank you!!

  • 5 star review on TrustPilotKerry S

Toby was absolutely a knight in shining armour. Every step of the way he explained everything, he understood my situation and it felt like he was holding my hand through some turbulent times. I can't thank him enough.

  • 5 star review on TrustPilotSarah J