MORTGAGE MATTERS OCTOBER 2023

By Mark Dickety on

Blog

MORTGAGE MATTERS – OCTOBER

Following the Bank of England’s decision to unexpectedly hold interest rates at 5.25% after better-than-expected inflation figures, lenders have been given a boost of confidence. With the increasing economic certainty, many lenders, including NatWest, TSB, Nationwide and Virgin Money are becoming increasingly competitive and cutting mortgage rates. This is good news for buyers reliant on mortgages, as well as homeowners, as rates for remortgages and moves are also being reduced. The average rate of a five-year fixed rate mortgage has fallen below 6% for the first time since early July, currently priced at 5.97% (Moneyfacts). On the back of falling swap rates, the average two-year fixed is at 6.43%, a substantial reduction from 6.7% at the start of September (Moneyfacts). Five-year rates are expected to see the biggest falls, however with two-year swap rates having fallen below 5%, two-year fixed-rate mortgages should continue to reduce over the next few weeks.

Gross lending increased from £19.1bn in July to £19.7bn in August, while gross repayments showed little change at £18.9bn in August. August saw mortgage market activity drop, to 45,000 approvals, 8% lower than the previous month, although not unsurprising for the time of year. However, with the Bank Rate thought to be at or very close to its peak, activity has improved, with a greater degree of market certainty for buyers, many of whom are looking to move in before Christmas. Consumer confidence rose to –21 in September from –25 in August, its highest level since January 2022 (GfK Consumer Confidence Tracker). People are increasingly accepting current rates as the “new normal”, and going ahead with the move, with the view that if rates improve it will only make things easier down the line.

Affordability for first-time buyers (FTBs) has worsened over the last year, with average monthly payments now £1,194 per month, up from £1,048 per month a year ago (Rightmove, on a typical FTB property, five-year fixed rate, 85% Loan-to-Value mortgage). However, many are adjusting to the higher costs of borrowing with flexible deals, longer terms or higher deposits. Looking for flexibility, more people are looking at the tracker mortgage as a short-term option, with the ability to review and move to a better deal if rates come down. Longer mortgage terms are also increasingly popular, as they can bring monthly payments down or allow a higher value property to be within budget. 56% of FTBs have a mortgage of 30 years plus, compared to 33% in 2008-09 (English Housing Survey). More families are also taking longer mortgage terms. Where possible, many are putting down higher deposits to reduce mortgage costs. Many FTBs are receiving help from ‘the Bank of Mum and Dad, or even Grandma and Grandad’, with 27% reporting receiving help from family or friends (English Housing Survey).

Wanting to give people reasons to borrow, lenders are increasing flexibility and opening up on criteria. Nationwide have recently adjusted their income level to allow higher income people to qualify for Helping Hand, a scheme which allows FTBs to borrow a higher loan amount. The lender has also increased the maximum loan-to-value to 95% for self-employed borrowers.

 

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.

Mark Dickety
Mark is an experienced Mortgage and Protection Adviser who has been providing mortgage advice since 2010. He thrives on finding the right solution for each of his clients' requirements ensuring they have the best experience possible.
Back to blog

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

The best mortgage advisors in our opinion. I was kept up in the loop from day one. Extremely friendly and professional service. Thank you once again.

  • 5 star review on TrustPilotPawel W

I would recommend using Mortgage Decisions as they made the process of choosing my first mortgage so easy to understand . They were very knowledgeable on all the products available ,but mostly they were prompt . Thank you in-particular to Toby and Louis.

  • 5 star review on TrustPilotLindsay B

Both Mark and Beccy have been amazing throughout a very erratic and stressful time. They have been professional and attentive, making sure to stay in touch regularly to ensure everything went smoothly. I've been so impressed with their level of detail and service. I would not hesitate to recommend them.

  • 5 star review on TrustPilotMarie B

This is my first experience with getting a mortgage, but Rob explained everything clearly, answering all my questions, and helped me get the best mortgage for me. Louis also helped by keeping me updated with the progress of the application and chasing the lender on my behalf. Overall, a positive experience.

  • 5 star review on TrustPilotMegan