Market Update: May 2022
The cost of living crisis is affecting everything, so of course also affects mortgages.
Whether you are buying or reviewing your current deal, rates you might have seen last month are gone and replaced by higher products. A lot of clients who are coming out of their current fixed deal and need to secure a new product are finding their monthly costs increasing. With 25% equity in the property, a 2 or 5 year fix is likely to come in around 2.50% to 2.90% (lower rates attracting a £999 fee).
Purchasing with a 10% deposit will see rates from 2.60% to 3% (lower rates attracting a £999 fee) which is not a big difference from a remortgage with 25% equity. In fact, for higher loan to value cases there has only been a small increase in costs. But the so called "cheap" lending that was around 1-2 years ago seems to have disappeared for now.
There is still a willing to lend from the banks and building societies. Even with affordability calculators being tweaked to fit the ONS data for the cost of living and increase of the Bank of England Base Rate, you can borrow just as much as you could pre pandemic. In fact, for select cases you can borrow more as lenders are thinking outside the box to secure their clients. This might not be good news in the long term as house prices are still rising. But for professionals in certain roles, higher income earners and large deposit buyers you can still get 5 to 5.5 x your income. When remortgaging, if you are not borrowing any more and your current lender is offering a poor retention deal, then affordability calculators are often very generous.
Hopefully, there will be some good news on the horizon, not just for mortgages.
Your home may be repossessed if you do not keep up with repayments on your mortgage.