Mortgage Market Review
Most of the impact of The Bank of England rate reduction has now worked its way into the mortgage market, with lenders across the board cutting rates. This is of course most welcome and just what the economy needs, and there will be a beneficial knock-on effect, undoubtedly.
We now have rates at a level which seems reasonable again, and after two years or so of what felt like torture as people struggled to keep afloat. There is a cautionary side to this good news though, as the money markets have not responded quite as positively as with earlier cuts. There is an underlying feeling that whilst things are going in the right direction, there are still ‘choppy waters’ ahead. Food inflation is a tough nut in particular and this could mean a slightly slower process of recovery.
My opinion, for what it’s worth, is that rates will continue to fall but at a slower rate, and perhaps next year we will reach the bottom. Nobody knows what rates will do (the truest statement ever made on the subject) but there is a consensus we are in for more relief going forward, albeit slowly and cautiously.
I will stick my neck out, and say a base rate of 3.5% is possible by Spring. Whilst not quite at 2018 levels, this is a rate which will give us mortgage rates in the 3% bracket, a million miles away from the horrors of 2023. If the result is anything close to this level it can surely only mean a much more buoyant market with confidence growing again.
It must be said that despite the pain over the last couple of years the housing market has been amazingly resilient. I am very optimistic about what lies ahead, with the caveat of course that ‘nobody knows what rates will do’.
But we can make educated guesses.
Where are we now.
· The government is encouraging lenders to increase their risk profile to open the market to first time buyers. This could be a real stimulus so long as it is done with care and consideration, 2008 will always be a spectre and we should never go back there.
· New buyers mean the properties at the bottom end, the flats, maisonettes and small houses should sell more easily and clear the surplus from left by Landlords bailing out when rates soared.
· The Landlord will slowly return; rental properties remain a great investment and now with rates at a lower level this will reduce mortgage payments and get back the balance between sensible mortgage payments and sensible affordable rents.
Equity Release rates have been very high these past couple of years, and they most certainly are taking longer to drop than mainstream mortgage rates. However, there are now signs that they are catching up with the trend and beginning to fall in line. Equity Release remains a wonderful platform for solving lots of problems. Over the years we have helped hundreds of people in hundreds of different ways. Typical reasons why people have taken equity release include.
· Being able to supplement retirement income by lump sums and/or drawdowns when needed.
· Helping family. This is high up the list, as oungsters often have a real struggle coping with large deposits on expensive properties. Most of us oldies wealth come from the housing booms of recent decades, Equity release can release the money when it is needed and not wait for an inheritance.
· Did you know you can use Equity Release to move home? Typically, a person downsizing by selling a house for £500000 and buying a smaller property for say £350000 can use (for example) £250000 from the house sale and the rest from Equity Release, thus leaving £250000 in liquid funds to buy a holiday home or caravan, gift to the family, spend money on home improvements, it can also help with tax planning (speak with your accountant).
The summary is, the future is starting to look bright, if you need any help or advice, quotes what ever then drop us an email or call John (Equity release) 07778 000032 or Stephen (Mainstream mortgages, buy to let etc.) 07899 753755.
Oh yea, I should mention we are both protection experts too, for personal and business.