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A Good Start to the Year as Property Sales Increased

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Official data shows that residential property sales in the UK were positive at the beginning of the year, with a rise of 0.8% between December and January. Figures suggest that despite Brexit uncertainty, the housing market is actually quite stable and this could be set to improve once those who are ‘sitting tight’ over Brexit fears begin to look at moving after March 29th.

In the UK, residential sales increased by 0.9% year on year, and there were 101,170 residential sales which is a rise of 1.3% compared to January 2018 according to figures from HMRC.

More surprisingly, figures show that non-residential property transactions increased by 0.2% between December and January and were 2.4% higher than the same time last year. Year on year they increased by 3%.

Up until the middle of 2006 transaction counts had slowly risen, but this slumped following the financial crisis of 2007. This triggered a fall in non-residential transactions. There was a peak in 2009 following the end of the stamp duty holiday during which the lower tax threshold was raised to £175,000. There was also a peak in March 2016 which can be attributed to the introduction of higher rates on additional properties in April of that year.

Since then, there has been a general rising trend in property transactions. There is usually a non-residential pattern at the start of the calendar year, and another peak at the end of March when the financial year ends.

There are expected to be around 1.2 million home sales in 2019, as there have been in every year since 2013. This level of activity is consistent with a steady market, which is neither crashing nor booming. It is predicted that house prices should continue to rise slowly during the year in line with wage increases.

Political uncertainty and financial barriers such as stamp duty are still influencing some home owners to stay put and instead improve or extend their existing home.

If you are considering moving and would like to discuss your options, talk to us at the Mortgage Hub.

The Mortgage Hub is an independent mortgage advisor serving the greater Glasgow area. Whether you are planning to buy your very first home and need the right first time buyer mortgage, or are looking to re-mortgage due to a house move or to growing family – we understand your journey is so much more than a financial process, it’s a journey to achieve your dreams, improve your lifestyle and achieve your true potential.

How Much Money Could You Save with a 5-year Fixed Rate Mortgage?

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Economic uncertainty seems to be the order of the day and as a result, borrowers have started to look at protecting themselves from future turbulence in the economy.

Statistics indicate that there has been a slowdown in the property market, with fewer mortgage applications and a fall in house price growth when looking at 2017 and 2018 year on year figures.

Competition among banks has traditionally been centred around two-year fixed rate deals, but with short-term deals at historic lows they have now shifted the focus onto those willing to lock their lending in until 2024.

Those willing to fix for five years can now access loans with interest rates of less than 2%. Research from data provider, Moneyfacts, has shown that competition between banks has intensified at the beginning of 2019 and the average two-year and five-year fixed rate deals have narrowed considerably.

The average two-year fixed rate mortgage has a 2.5% interest rate compared with 2.9% for a five-year equivalent. This percentage point gap is the lowest recorded since 2013, and even in 2016 this gap was 0.65%

Borrowers feel that with the impending Brexit in March, a two-year deal doesn’t offer enough stability to see them through turbulent economic times and that given only a handful of lenders offer three-year deals, a five-year fix is a much more attractive option.

As well as saving money by risking a rise in interest rates after a two-year deal has ended, by locking in your rate for longer you are avoiding paying multiple mortgage arrangement fees for the same property.

What could you save?

Although a two-year deal is likely to be cheaper in the short term due to the lower rate, the savings from fixing your mortgage for longer could be the vest value for money and well worth considering. You could save up to £5,000 by locking into a five-year fixed rate especially when taking into account arrangement fees when your two-year deal ends.

It’s worth remembering that there are also risks by locking in for the long term. If interest rates go down after Brexit you could be left paying more than you need to. Many customers in the past five years could have been better off taking out several two-year fixed mortgages and paying the extra fees, given the continued low interest rates.

With the Bank Rate already at 0.75pc, many industry analysts believe that there is little wiggle room to reduce rates significantly after Brexit, making the five-year fixed rate mortgage deals more appealing.

The Mortgage Hub is an independent mortgage advisor serving the greater Glasgow area. Whether you are planning to buy your very first home and need the right first time buyer mortgage, or are looking to re-mortgage due to a house move or to growing family – we understand your journey is so much more than a financial process, it’s a journey to achieve your dreams, improve your lifestyle and achieve your true potential.

What Can I Do to Improve My Mortgage Affordability? 

Mortgages, Uncategorized

The rules surrounding mortgage affordability have become stricter over recent years meaning that those starting out on their property journey need to save as much as possible for their deposit. But what does this mean in reality?

There was a time when you could simply select the right mortgage, tell the lender that you can afford the repayments and wait for the cash to appear in your account. Lenders were offering self-certification mortgages whereby you simply needed an accountant’s letter backing up your self employed income and some buyers could even secure a 95% interest only mortgage with a cash back option! However the days of irresponsible lending are (thankfully) over.

The financial crisis — when the legacy of unaffordable mortgages caused a chain reaction that caused house prices to crash – prompted an overhaul of the mortgage application process known as the mortgage market review. When anyone talks about mortgages the word ‘affordability’ seems to go hand in hand. This protects consumers from being sold loans that they can’t afford to repay – and although this has many advantages that will be felt for generation, it has also locked a large number out of the property market especially those who are self employed or have unique circumstances that don’t conform to the profile of a typical borrower and ’safe bet’.

So how can you improve your affordability?

Cut unnecessary costs

By cutting your monthly outgoings by just £100 you could add up to £10,000 to your maximum loan. This could mean ditching the morning coffee and lunch out, staying in rather than going out or cancelling subscriptions that you can do with out such as a gym membership, an expensive TV package or memberships you don’t use. Check you have the best deal available and try and switch to a different deal or provider if possible. When you come to the end of a contract – such as a mobile phone or cable TV, renegotiate the monthly fee. By making a few small changes you can make a big difference to your outgoings and ultimately the amount you can borrow, or the extra saving can be put towards a deposit.

Plan ahead

Some lenders only want three months of statements and payslips whereas another may want six, it’s best to plan for the worst and hope for the best to give yourself the best chance of getting a mortgage. Some lenders interpret unsecured credit card and overdraft debt differently so it’s better to try and pay these off in advance of applying for a mortgage even if that means delaying buying a property.

Your deposit is key

The size of your deposit is half the battle. The larger the loan to value you need, the more difficult and expensive to obtain so it’s important to prioritise saving for your deposit.

Analyse your lifestyle

Lenders may also look for red flags such as payments to gambling companies, significant one-off payments and overspending. Take a good look at your lifestyle and how you manage your accounts as this can affect your affordability rating with the lender and you can dramatically improve your chances of being accepted by making changes to the way you spend your cash.

Reduce debts

You could find it’s more beneficial to put off purchasing your own home until you can reduce your debts – this will improve your affordability and the amount you can borrow. If you are one of the millions of people who permanently live in their overdraft, now is the time to get back into the black. If you have a student loan it could be treated differently by various lenders.

Keep an eye on your credit score

It’s essential to keep a close eye on your credit score throughout the preparation, application and buying process particularly in case of any errors that could affect a good score. As soon as there’s a change make sure it’s correct and that nothing is adversely affecting your score. 

Lenders won’t take future prospects into account

It’s worth noting that one of the changes in lending attitudes has been that lenders won’t take future prospects into account. Saying you should get a pay rise next year or more freelance work won’t carry much weight. You need to secure the increase before your application is considered.

At The Mortgage Hub we can help give you the best chance of securing a mortgage and purchasing your home. Preparation is key so talk to us today for advice from our friendly, professional team.

The Mortgage Hub is an independent mortgage advisor serving the greater Glasgow area. Whether you are planning to buy your very first home and need the right first time buyer mortgage, or are looking to re-mortgage due to a house move or to growing family – we understand your journey is so much more than a financial process, it’s a journey to achieve your dreams, improve your lifestyle and achieve your true potential.

Remortgaging at Highest Level for 10 Years

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According to UK Finance, in October 2018 the level of remortgaging has hit its highest level for nearly ten years. The fact that the remortgage market is so buoyant is great news for homeowners.

Driven by competition between lenders, around 50,500 homeowners switched their loan during one month, a 23% rise on the same time last year. This resulted in a total of £9.2bn advanced. 

This has been driven by uncertainty prompting homeowners to switch loans, and a whole host of competitive eats on offer as banks were looking to meet their lending targets. This year is thought to be particularly busy given that a large number of people are coming to the end of their two-year fixed rate mortgage deal.  In addition, homeowners wanted to take advantage of cheap rates and the expectation that interest rates will rise again next year, as well as the high cost of standard variable rate mortgages compared with new fixed rate loans are motivating homeowners to lock into a new deal sooner rather than later. There was also a jump in the number of landlords remortgaging, with this rising by 5% year-on-year as landlords are trying to maximise the returns they can make on their property given the recent tax changes. 

Competition is expected to remain strong for some time, with new lenders coming into the market and existing ones keen to expand their market share and with property transactions continuing to be subdued, the competition is pitched at those looking to remortgage. 

Lending to home movers was ahead by only 4% compared to the same time last year, as potential buyers are thought to be waiting out the Brexit negotiations. Lending to first time buyers was 12% higher during October than it was a year go, with a total of £5.5bn advanced.

The Mortgage Hub is an independent mortgage advisor serving the greater Glasgow area. Whether you are planning to buy your very first home and need the right first time buyer mortgage, or are looking to re-mortgage due to a house move or to growing family – we understand your journey is so much more than a financial process, it’s a journey to achieve your dreams, improve your lifestyle and achieve your true potential.

Is the Property Market Finally More Balanced?

Mortgages, Uncategorized

According to figures from a lobby group for the financial industry, UK Finance, in the 12 months leading up to May this year we have seen a rise in first time buyers, yet there has been a fall in buy-to-let mortgages. Could this be a sign that government and tax changes have resulted in a more balanced property market, making it easier for first-time-buyers to get onto the property ladder?
Continue reading Is the Property Market Finally More Balanced? →