The UK housing market is as predictable as the dismal English weather, with the consistently stable 0.5% base rate firmly installed. But how long will it last? What does it mean for UK consumers?
Whilst many are taking advantage of the record low interest rates, others have suffered at the hands of the recession.
The number of mortgage products available is slowly creeping up again as banks crawl out of the woodwork, offering tempting deals to entice first time buyers.
However, mortgage choices would still appear to be limited compared to the pre-recession days.
As the storm clouds clear, banks and lenders welcome first time buyers with open arms. The latest research found that the number of new mortgages approved for August was at the highest level since December 2009.
The Bank of England revealed that over 52,000 mortgages were approved last month, 3,000 more than July and the highest rate for 20 months.
This is good news for first time buyers who may have previously had very few options. Those looking to re-mortgage may also want to take advantage of the current deals on offer.
Who is more likely to lend to a first time buyer?
House prices have risen significantly faster than wage rates and with the majority of cautious lenders now asking for a 20% deposit, many FTBs are unable to get onto the property ladder. However, banks and lenders are starting to ease up on their tight requirements and some mortgage lenders will accept a 10% deposit.
Research from e.surv found that lending at high loan to value (LTVs) rose to its highest level this year. It can be difficult to compare mortgages as it depends on your personal circumstances and timing. In order to try and find one which is best for you, compare mortgages with Money Expert.
As a first time buyer you might be looking for a mortgage that offers a greater LTV. For example, Norwich & Peterborough are currently offering a discounted mortgage with an LTV of 85% and an initial rate of 3.10%, then 4.90% typical APR.
Leeds Building Society are currently offering their lowest ever two year fixed-rate mortgage on 75% LTV, however fees are £1,999.
Who is more likely to lend to buy-let?
The demand for renting in the UK has dramatically increased, as many cannot afford to own a property. Due to tight lending criteria and the inability to obtain a large enough deposit, many have been forced to rent.
The buy-let market has seen a significant boost in interest since the recession and shows few sings of slowing. According to Assetz, the property investment advice group, three quarters of buy-let investors intend to expand their portfolios in the next 12 months. As the demand for rent remains strong, the good news for landlords is that rent rates are increasing. However, this is obviously not so great for the tenant.
Buy-let is booming and if this is something you are interested in it is important that you get the best deal for your money. With the base rate so low, and experts claiming that it will remain low for another year or so, it could be worth taking the risk and going for a variable rate mortgage. Ecology Building Society is offering a Buy-let mortgage with an LTV of 70%. The variable mortgage offers an initial rate of 4.90%.
However, in comparison you could be tempted by the low fixed rate mortgages that are also floating around the mortgage market. Whiteaway Laidlaw Bank are currently offering a 5 year fixed rate Buy to Let mortgage with an LTV of 70%, fixed at 5.66% for the first 60 months and 6% thereafter.
The National Landlords Association found that more than 50% of buy-let offers processed were for loans of more than 70% LTV, with an average of 67%.
Is now a good time to remortgage?
While some homeowners may have had the door shut on any chance of remortgaging in the past, the low rates may now open many more opportunities.
Experts claim that the base rate is not going to rise for a year or two and those enjoying the a tracker mortgage for now may be tempted to remortgage. taking.
It is a risk and homeowners face the challenge of either banking on rates to stay low and benefitting further from low interest rates, or face difficulty if the rates become crippling. It is really up to the lender as to where their variable rate should lie. This means that the fate of your mortgage lies in the hands of the lender, not necessarily the Bank of England.
Some lenders, according to a remortgaging website, pulled their best rate tracker deals off the market in reaction to the instability of the global economic market.
However, if you feel that remortgaging is for you, compare mortgages with Money Expert.