As the nation collectively bemoans the sluggish progression of the UK’s departure from the European Union, those looking to move house could be forgiven for delaying their decision until there is more certainty. We speak to Rob Clifford, chief executive at national mortgage network, Stonebridge, for his take on the current market and what you should consider when looking for your next mortgage product.
It would be easy to suggest that the ongoing Brexit pantomime, and talk of an economic downturn in the event of a disorderly departure, could prompt would-be homebuyers to hold off making a mortgage application.
However, while the country’s political progress may seem woeful, the mortgage market hasn’t been idly standing by. Recent figures from UK Finance show that lenders approved just over 14,000 more mortgages in the first six-months of this year, compared to the same period of 2018, which demonstrates encouraging confidence in the market.
As a prospective buyer, conditions certainly look favourable, despite the fact that the UK has not yet struck a Brexit deal.
At this point, we are in no doubt that Brexit has been a factor getting in the way of any significant growth in house prices, with London in particular experiencing a marginal decline in property values over the past two years according to figures released by Nationwide. Depending where in the country you are looking to buy, now could be a great time to get a good deal. However, with Bank of England governor Mark Carney warning of potential drops in house prices in the event of no-deal, it is natural to be nervous.
The thing to keep in mind with any purchase of this magnitude, is what house prices will do over the long-term, rather than within the next 12 months. If you’re planning on living in your next home for a number of years, as the vast majority of people do, then a short-term dip in value is hardly likely to impact the eventual sale price.
With the Bank of England’s base rate remaining unchanged from its current 0.75% level, a mere 0.25% increase from where it bottomed out in 2017, mortgage products remain exceedingly good value for buyers in the short term. If you do decide that now is the time to purchase your next home, there are a few things to keep in mind.
Believe it or not, the Brexit process won’t last forever, and it is wise to plan for a gradual increase in interest rates and therefore the cost of your mortgage. So, shop smart. Whether or not you take advantage of the Government-backed Help to Buy scheme, or have a sizeable deposit, make sure your plans factor in any potential rate increases. This is especially important with new build homes on the government scheme, as you will obviously need to be able to pay back your equity loan, as well as the mortgage on the property.
More good news for borrowers is the fact that many lenders are reducing mortgage product fees and rates. Research from moneyfacts.co.uk shows that 95% loan to value (LTV) mortgage products have one of the lowest average fees at £914, down £46 from 2018’s average, while interest rates have also fallen on this product over the past 12-months from 3.98% to 3.25%.
As a buyer, this means you may be able to get into your next property sooner than expected, but it is crucial that you properly consider the many dozens of lenders (banks, building societies and specialist lenders) competing for your business and the myriad of deals available. Alongside affordability in the face of potential interest rate rises, be mindful of your LTV and work with your chosen broker to ensure the deal suits your lifestyle and circumstances.
While it may seem a confusing time to be buying a property, there are plenty of opportunities amid the uncertainty. Whether you’re a first time-buyer or moving to another property, building a relationship with a trusted mortgage broker can pay dividends. With access to exclusive deals, and expert knowledge of the markets, they will guide you through the thousands of mortgage products available in the market, helping you pick one that meets your current and future needs.