The Bank of England published its Financial Stability report this week. New rules on mortgage affordability could force borrowers to prove they are still able to afford mortgage repayment at almost double their normal monthly payments.
Essentially the Bank of England does not want lenders and borrowers to get into a false sense of security with ultra-low interest rates. The report points out that mortgage debt has historically been a source of risk in terms of financial stability within the UK economy.
The latest changes to the rules force lenders to apply an interest rate stress test at 3 percent above the lenders Standard Variable Rate (or reversion rate). Some Lenders Standard Variable rates are as high as 5.75% percent which would result in the lender needing to ensure affordability at an interest rate of 8.75%. This could potentially result in it making it harder to get a mortgage.
Please feel free to get in touch 0333 358 3822
Mortgage Pathways have been chosen again to be the approved advisers to Lovell’s latest project.
The Coppice, Lovell Homes exciting new development of 3, 4 & 5 bedroom homes in the stunning setting of Chapel-en-le-Frith
Nestling in the heart of the captivating High Peak District of Derbyshire, Chapel-en-le-Frith is a tranquil market town with a heritage stretching back to Norman times. Known as the ‘Capital of the Peak District’, the town lies on the edge of the Peak District National Park, famous for its spectacular landscape.
From The Coppice you can pick up a number of walking trails on the doorstep, including one which leads up to the nearby Eccles Pike and its magnificent 360 views. Alternatively, you can stroll down to the golf course to play a round in a striking rural setting or into the town centre to enjoy a coffee in one of the many independent cafés.
People have been visiting this area for centuries and not just for the exquisite scenery: the area is well connected by road and rail and the magnificent Chatsworth House, Hadden Hall and Hardwick Hall are all within easy reach.
Amidst the natural splendour of the High Peak, The Coppice gives you access to the best of both worlds. The town has a distinct sense of identity but is large enough to provide all the amenities you need. You can wander through the weekly market held in the historic, cobbled Market Place, admire the elaborate decorations which accompany the June carnival, and choose to dine in one of the many restaurants and pubs.
The Peak District is known for its outdoor leisure pursuits from walking to climbing and from paragliding to horse riding. In addition, with exquisite natural features such as the Blue John Cavern in nearby Mam Tor to explore, you will spend a lifetime surrounded by natural wonders.
But if the city lights beckon, Manchester and Sheffield are under an hour away; London is only two hours by rail from nearby Macclesfield; and Buxton, with its famous Victorian and Georgian buildings and rich cultural heritage, is on the doorstep.
A supreme collection
When you buy a property at The Coppice you’re not buying somewhere to live – you are buying a home and a lifestyle with a traditional feel. Beautifully constructed and carefully designed, you can choose from three, four or five bedroom detached homes all of which have their own garage and block paving driveway. Quality is our watchword and each dwelling is built to the highest standards.
Each home has been thoughtfully designed with contemporary lifestyles in mind and so, regardless of your stage in life, there will be one to suit you at The Coppice. And, of course, the final touches that give a house that really personal feel are yours to choose from our Inspirations* range, so it feels like home as soon as you step over the threshold.
With Article 50 triggered, two years of negotiations to wade through and now a General Election on the horizon, there is a big question mark over the future of Britain’s economy. Markets react well to stability and have a direct knock-on effect on our housing prices and interest rates. With this in mind, is now the time to change your mortgage to something a little more future-proof?
Negatives of a Standard Variable Rate mortgage
A lenders Standard Variable Rate (SVR) is managed at the bank or buildings societies own discretion and they are not obliged to pass on any Bank of England base rate increases or reductions! As the title suggests this rate is variable and can be increased by the lender at any time, regardless of if there any other movements in the market place or not. As this deal in many instances is also seen as a rate that you revert back to after your initial deal has finished and not one you proactively opt for at outset, there is little or no incentive to keep these products priced competitively. Due to the same reason they will not have benefited from the recent mortgage price war over the last 18 months and are typically priced at sometimes 2% more than other deals available within their own product range.
Fixed Rates are attractive too
The average two-year fixed rate mortgage is now 42% cheaper than it was this time in 2014, according to Bank of England data. The UK’s housing market is facing uncertain times, and expectations of lending growth are lowering. Borrowers are choosing longer term fixed rates due to their price and reliability, meaning that the remortgage market is shrinking. All these things are culminating in the only defence lenders have against competition: slashing prices.
The markets are making switching easy
So a lack of re-mortgaging and reduction in the prices of fixed rate deals, coupled with a potentially economically turbulent time in the next few years really points to only one option: start shopping around. Rates are in your favour and lenders are more than happy to have your business. Regular SVRs can be expensive, meaning a simple switch could potentially save you thousands in the long run. For every 1% reduction in your interest rate, for each £100,000 of borrowing you owe could save around £644 per year (based on a 25 year mortgage term on a repayment basis).
How do I know I’ve got the best deal?
Knowing that you’re getting the best rate on your mortgage is a great feeling, and it can be hard to know if the lender you are with has your best interests at heart. Why not give us a call and see how our specialised team can help you with transitioning to a new deal with a fantastic rate!
Challenger bank Atom has reduced it’s rates with a five years fixed rate at only 1.29%. The product is available to borrowers with 40% equity or a deposit and has a £900 fee. Other reduced rates are available to borrowers with smaller deposits.
Maria Harris of Atom Bank says “this move is entirely unprecedented and it is important for us to make this available to customers now”
Stephen Mills from Mortgage Pathways “new lenders are creating competition within the market place, gone are the days of the high street lenders dominating”
The Atom product are available for those looking to re mortgage or purchase a new home. If you are wanting to review which mortgage is best suited to you please call our team on 0333 358 3822
According to the Council of Mortgage Lenders, mortgage Lending reached £20.4 Billion in December 2016, down on the previous month but this would have been down to seasonal reasons. Still this figure is 4% higher than the previous year. Gross mortgage lending reached £246 billion in 2016, the highest figure since the financial crash in 2008. This confirms what we have been feeling in that lenders want to lend again.
Approvals for house purchases have recovered strongly and this should also feed through to lending figures in the early months of this year.
The main issue to purchases is the lack of properties available on the market which adds to the challenges facing buyers moving forward.
Stephen Mills of Mortgage Pathways states “Following the removal of the Help to Buy Mortgage Guarantee scheme we feared that this would have an impact on the availability of credit for would be buyers. We are finding there is more competition in the market place, launch of Atom Bank, Tesco’s bank now working with brokers, HSBC reducing rates, all of these things are making credit cheaper for the consumer”
Halifax have launched a 95% mortgage for specialist New Build brokers such as ourselves where you are allowed to retain and rent out your current homes. This was one of the main restrictions of the Help to Buy mortgage guarantee scheme. No other interest in property was allowed.
If you are looking to purchase a new home or remortgage your current home please contact your local branch.
Atom obtained its banking licence in June 2015 and launched the bank in April this year with two savings accounts, along with SME lending via a panel of specialist business intermediaries.
It’s now adding residential mortgages to its product suite, which will include offerings for the self-employed and contractors, lending into retirement, purchase and remortgage, shared ownership and new-build deals.
Buy-to-let mortgages will soon be added.
Atom’s director of retail mortgages, Maria Harris, says: “We’re delighted to be launching our mortgage proposition through our intermediary partners. We strongly believe that offering mortgages via intermediaries will give our customers the best service and the very best advice when choosing a mortgage.
“Our ultimate aim is to help people get what’s right for them, and for them to have a unique and personalised experience along the way.
“Our technology and systems are all about making the mortgage application process easier for the intermediary and their customer. We’re using digital to change the way that we support a mortgage application today but also to build a platform that supports the technology of tomorrow.
We are human too though. With an experienced field-based team and contact via telephone, email and even twitter, we’ll be providing support right across the UK”
