Mortgage rates and low deposits
As the end of furlough nears, we review where the mortgage market currently stands for homebuyers.
Unfortunately, a deposit smaller than 15% of the property value is going to really reduce your options. HSBC have, for now, dropped out of the 90% market. Also, to stem the flurry of applications they have increased 85% deals to at least 2.54%. Around a 0.5% increase compared to last week. A 10% deposit may get you a rate of 3.24% but you will need to be a First Time Buyer and the property will need to be a house, not a flat.
The reduction in stamp duty is helping people increase their deposit size, but with house prices still on the rise (Nationwide house price index ) so is your deposit size.
A lot of lenders are tightening the criteria for people on furlough. Some will require the applicant to already be back at work before they can consider using their income for affordability. There are only a few who will still accept a letter from the employer confirming the return to work details
The available rates are creeping up slowly. The demand for low deposit/high loan to value mortgages has put extra strain on the limited lenders who offer these products. That coupled with the additional underwriting checks for furloughed applicants and the self-employed has extended the processing times for nearly all lenders. One way a lender can slow down the demand is to increase their rates and this has been felt the most with lenders offering 85% loan to value products. HSBC, Natwest & Nationwide have all seen a recent increase in these deals
However, if you are lucky enough to have a 40% deposit you can still secure a decent deal – around 1.30% for a 2 year fix or 1.50% for a 5 year fix. So, if you wanted some peace of mind you can secure a great low rate for 5 years.
The mortgage market is moving constantly, call IMA for up to date advice 01174 446753
Your home may be repossessed if you do not keep up with repayments on your mortgage