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Thank you for taking the time to read our April newsletter! Please feel free to send and share this newsletter with friends and family – we would be delighted to assist them if they have any questions.
Over the last month, the Bank of England raised interest rates one again. The base rate is now 4.25%, however lenders have been fiercely competitive to try and win your business, so their rates have remained relatively steady. We believe, albeit things could change, that interest rates will remain stable for the next 12 months and we’re unlikely to continue to see too many further rate rises. If your mortgage is set to expire or you know someone that needs assistance, we would be delighted to help.
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What’s happening with housing?
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Rising rates dominated the news around housing and mortgage markets throughout 2022, setting the tone for an expected market downturn in 2023. After the latest Bank Rate rise in February increased repayments for those on variable rates, how will the mortgage and housing markets react?
Up and down
On 2 February, the Bank of England (BoE)’s Monetary Policy Committee (MPC) voted for a tenth consecutive increase to Bank Rate, taking the central rate to 4%. With inflation still close to record highs, Bank Rate is expected to keep rising until the middle of 2023, at which point market-watchers suggest it could peak.
In the short term, the latest rise will affect anyone with a tracker or variable rate mortgage through higher repayments. Between September 2022 and January 2023, a quarter of mortgage holders saw their monthly costs go up1. Those with longer-term fixed-rate mortgages are protected for now but could be forced to pay more when their current deal ends.
More positively, however, the number of providers offering fixed-rate mortgages below 4% has risen in recent weeks. Competition between lenders is driving fixed-rate deals to their lowest point in months. By the end of 2024, two-year fixes could drop below 4%, experts predict, before falling as low as 3% in 2024.
Boost for FTBs
Many first-time buyers (FTBs) will have breathed a sigh of relief in December when the government announced an extension to its Mortgage Guarantee Scheme until the end of 2023. Initially scheduled to run out at the end of 2022, the scheme supports lenders to offer 95% loan-to-value (LTV) mortgages by providing a guarantee for credit-worthy households.
Demand for high LTV products remains very high, meaning the outlook for FTBs with low deposits is now much better than it was a few months ago.
House price growth slows
The start of 2023 saw a further slowing in annual house price growth to 1.1%2, a marked drop from 2.8% recorded in December.
With ongoing cost-of-living challenges affecting many, experts predict further slowing in the months ahead. Raising the money for a deposit remains an obstacle for many first-time buyers, especially with the Help To Buy Equity Loan scheme due to end in March.
Despite slowing growth, “the overall affordability situation looks set to remain challenging in the near term,” according to Robert Gardner, Nationwide's Chief Economist. The latest figures show that affordability has fallen across all the UK, with average mortgage repayments as a share of take-home pay now at or above the long-run average in all regions.
Your home may be repossessed if you do not keep up repayments on your mortgage
1Office for National Statistics, 2023, 2Nationwide House Price Index, 2023
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If we can assist you with any of your mortgage or protection needs, please don't hesitate to get in touch! |
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pat@mcdaidmortgages.co.uk 07968 155 176
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ryan@mcdaidmortgages.co.uk 07746973929
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damien@mcdaidmortgages.co.uk 07810 001750
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patrick@mcdaidmortgages.co.uk 07715255908
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Equity release on the rise again
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Increasing numbers of older homeowners are choosing to release equity, latest figures1 reveal, with cost-of-living pressures the main reason for tapping into the value of their home.
In total, homeowners used equity release to borrow £6.2bn in 2022, a 29% yearly rise and a doubling in the amount borrowed since 2017. It’s not only higher amounts being borrowed; there are now more individual equity release plans too. In 2022, 93,421 people chose to release wealth from their property, up 23% from a year earlier.
Cost-of-living pressures continue to be the main prompt for people choosing to release equity.
A lifetime mortgage is a long-term commitment which could accumulate interest and is secured against your home. Equity release is not right for everyone and may reduce the value of your estate
1Equity Release Council, 2023
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Can we help your friends or family?
Most people we're speaking to are worried about the cost of living crisis. If you have friends or family that need mortgage advice, we would be delighted to help.
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Would you like to leave us a review?
We would love to hear your feedback on our service. You can click the link below to leave us a review on Google.
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Your property may be repossessed if you do not keep up repayments on your mortgage. As with all insurance policies, conditions and exclusions will apply. You may have an early repayment charge to your existing lender if you remortgage. Not all Buy To Let Mortgages are regulated by the Financial Conduct Authority.
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40
Coneyville
Derry
BT48 8FW
United Kingdom
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