This month we’re pleased to report the mortgage market is looking more positive than it has for a little while as we see a return of mortgages under 4%. This is excellent news and another sign that lenders are responding well to the recent Bank of England base rate increase. We’re also seeing competitive mortgage options across all borrowing, including 95% Loan to Value (LTV), fixed-rate, flexible, tracker, offset & discounted deals.
Many options are exclusive to mortgage brokers and subject to individual circumstances. Contact us to book your free no-obligation initial consultation with flexible appointments across Oxfordshire or online meetings.
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NEWS & UPDATES
Mortgage repayments to fall by 25% by the end of 2023 says expert
Monthly mortgage payments could fall by 25% by the end of 2023, according to analysis by wealth manager Quilter. If inflation follows expectations and falls this should lead to interest rates stabilising and potentially even dropping, and mortgages following suit, said Quilter. And this could mean mortgage rates fall to 4% by the end of the year and possibly even lower in future, said Karen Noye, Quilter’s mortgage expert. She added: “[This] will have a real impact on monthly mortgage costs, particularly for those on variable rate mortgages, and could see more people considering buying a new home as the prospect becomes more affordable.”
SOURCE - WHAT MORTGAGE
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The time is now: Three reasons to invest in buy-to-let
Would-be landlords may have been put off investing in a new property because of soaring mortgage rates. But, says Richard Campo, there are some market forces that are making buy-to-let an attractive prospect right now. While we are now into a new year, there’s no question that the mortgage market is continuing to feel the effects of 2022, and very specifically the final quarter.
The market underwent a major shock following the mini-Budget from the then-Chancellor Kwasi Kwarteng. While there were a host of likely challenges on the horizon at that point – high inflation, rising interest rates, the potential for job losses – the mini-Budget only succeeded in pouring fuel on to the fire. The result was that lenders dramatically hiked their rates, which has caused many of those who were in the process of purchasing – whether as an owner occupier or investor – to hit the pause button.
While this is understandable, I would suggest that rather than stepping away from investing in property, now actually represents a terrific opportunity for landlords to add to their portfolios and benefit over the long term.
1. House prices are falling
The market upheaval following the mini-Budget is already feeding into house prices. With so many would-be buyers putting off their purchases, we have seen house prices drop for four consecutive months according to the house price indices from both Halifax and Nationwide.
What’s more, the consensus among the property industry appears to be that there will be further falls to come this year. However, this is unlikely to be a long-term trend.
With London for example, Savills has suggested that while prices will drop by 2% this year, they will then go up for by 2% in 2024, 5% in 2025, 4% in 2026 and 4% in 2027. Sure, there’s some short-term pain, but that very quickly turns into a compound gain of 13.5%.
Now, I’m not saying that this is exactly what will happen, nor that what we see in London and the South East will be replicated elsewhere. But what is true is that the factors which have driven the incredible house price growth seen over the last decade or more – namely the underlying shortage of property – is not likely to be addressed in a material way any time soon.
That presents investors with a real opportunity, the chance to take advantage of a lower purchase price and then enjoy greater capital growth in the years ahead.
2. Rents are rising
The shortage of property extends to the rental market too. As some landlords have exited the market, it has meant that even those renting their homes face a slimmer range of options, with the inevitable result rents being driven up.
New figures from Hamptons show that the average rent on a newly-let home in December was £1,216 per calendar month (pcm), up 7.7% from the year prior.
That’s the strongest annual growth recorded by Hamptons for a December, since it started tracking the data in 2013, and represents a growth of more than £1,000 a year for the typical tenant.
But while demand has grown, data from Rightmove shows that supply is lagging behind – between Q3 of 2021 and 2022, rental supply dropped by 5% across Great Britain.
This imbalance is only likely to push rents higher, meaning that brave investors can not only take advantage of capital growth but an enviable rental income to boot.
3. Mortgage lenders are keen
It’s worth reflecting on what’s happening in the mortgage market, and why that should provide ambitious investors with hope. The mini-Budget upheaval saw big reprices from mortgage lenders, taking some fixed rates to 6% or 7% – the sort of rate that’s unthinkable for many borrowers.
Yet we are now seeing fixed rates come down significantly, to the point that you can now get a five-year fixed rate at much more attractive levels.
Variable mortgages continue to represent arguably even better value. They are often around 1% cheaper than their fixed counterparts, and with little expectation that the base rate will increase by that level this year, they could offer a smart way to keep your buy-to-let costs even lower.
We have recommended variable mortgages to our clients more over the last few months than at any point in the last 10 years, precisely because of that value they offer should base rate move in line with expectations.
Ultimately it will come down to the individual borrower and their attitude to risk, but the reality is that should you invest in the right buy-to-let property, profits can be made with either a fixed or variable rate deal.
Mortgage lenders are keen to attract business, which is making them price deals ever more competitively.
SOURCE - WHAT MORTGAGE
IS your current mortgage deal ending before 1st SEPTEMBER 2023?
It's time to start thinking about remortgaging. It's worth shopping around for a new rate as you can secure a deal up to six months in advance. Stratton Thorpe Mortgage Solutions provide:
· Free no-obligation initial consultations
· Flexible appointments at a time & location to suit you
· Simple, hassle-free service - we take care of everything to ensure a smooth transition to your new mortgage
If you have longer to run on your mortgage, switching rates may still be worth considering. This may involve paying exit fees or early repayment charges on your outstanding loan. However, if you save significantly by switching, these extra charges could be worth considering.
Bank of Mum and Dad lends £17bn a year
Parents are parting with £17bn a year in gifts or loans to help their adult children fund major life events such as getting on the housing ladder. However, the generosity of the Bank of Mum and Dad is increasing economic inequality among young adults, according to a report from the Institute of Fiscal Studies (IFS).
Young adults whose parents are wealthy and own their own home tend to be higher earners and also benefit from more frequent financial gifts of a higher value from their parents.
Children whose family income puts them among the highest-earning fifth in the country receive an average of £6,300 over an eight-year period while those in the lowest-earning fifth receive an average of £240.
Buying or improving a home is one of the most common reasons children are given financial help from their parents, receiving on average £20,000 to fund their plans.
SOURCE - MORTGAGE SOLUTIONS
WHY CHOOSE STRATTON THORPE MORTGAGE SOLUTIONS?
Free no-obligation initial consultations
Over 50 years of industry experience.
Located in Oxfordshire, covering Banbury, Brackley, Bicester, Kidlington, Oxford and all surrounding areas
UK wide coverage remotely via telephone and video appointments. We offer a vast range of rates including exclusives not available elsewhere
Full guidance through the home-buying process at every stage. Specialists in remortgage, Help to Buy, new homes, first-time buyers, shared ownerships and much more
Costs of moving appointments available
Flexible appointments to suit you in your home, your workplace or a chosen location.
Tailored advice service specific to your own individual situation. Protection experts
Referral incentive scheme available
Search and compare quotes for products based on an analysis of a number of insurers.
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