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March 2024
Newsletter

February has been an interesting, more stable month in the economy, albeit with the UK dropping into recession and our ever stubborn inflation.
Is it just time for us all to get on with it, and not allow the market to interfere with life plans? 

In this months update, we'll be giving a overview of the UK mortgage market. 
We'll also be covering the impact of a limited credit profile on your mortgage application and how different lenders will view your case.  

Latest News

In February we saw a much more stable month when it came to the mortgage market. It's good to see, and is a relief from the constant ups and downs of previous months. 

You will have likely seen the news of the UK moving into recession which was a bit of blow, but not unexpected. This is apparently a shallow recession. In fact Richard Bailey, a Bank of England Governor, has said  "this is the weakest recession by a long way," he also said that he believes the recession may already be over, which is positive. 

That's certainly how it feels here in the south, I'm not seeing many empty restaurants or bars in my local town and not too many business closures, thankfully, although I'm aware that this is happening. 

 

Anyone from 30 and above will have lived through so many economic downturns at this point and can spot a serious recession a mile off. This one certainly has the feel of downturn, but it really doesn't seem too bad yet, although those may be the famous last words! 

Aside from that we've seen Inflation remain flat, not a particularly good sign given that the Bank of England held the base rate at 5.25% expecting the rate of inflation to drop. 

 

Even with the rate of inflation being so stubborn, Swati Dhingra a member of the MPC who helps make the decision on whether the base rate increases or decreases pushed for an immediate reduction in borrowing costs, in part this is due to concerns of recession. 

It's difficult to imagine the justification for a decrease in the base rate given that nothing much has changed in the past few months. 

Despite the base rate remaining the same, many lenders have actually increased their own interest rates. This is due to increases in wholesale lending costs, so a decrease to the base rate may not make too much difference anyway. 

The economy in general cannot be predicted, we can all try to put forward an educated guess of what might happen based on market trends and past behaviour.

But then, things like Liz Truss' mini budget comes along and makes a fool of us all.

They key in any market is to make financial decision based on the present options available to you and to ensure that the chosen solution fits your lifestyle and budget. 

Mortgage Rates Today

If I Have No Credit History Will That Affect My Mortgage Application 

 

The old adage "No Credit is Better Than Bad Credit"  still rings true today. 

 

As with most personal circumstances, different lenders will take different stances. We have the likes of HSBC who has accepted cases where a client has moved to the country the day of application, and others, like Halifax who will decline a simple first time buyer case because they cannot evidence enough of a credit history.

The key is to work with someone who knows these lenders and can place your case with the best lender for your situation. In my experience there are very few instances where a client would need to hold off applying for a mortgage based on limited credit usage alone. 

A credit history is very useful, lenders will use this history to evidence that you are financially responsible but you don't need to start taking out loans and credit cards when you're thinking of buying a house. This can sometimes do more harm than good depending on the level of lending. All commitments will be considered when calculating your maximum lending amount and so too much of a balance can reduce the amount you can borrow. 

If you are starting from scratch, a low balance credit card that you use for fuel or food etc can be a good way to evidence positive credit usage over time without building debt.

Areas that will also help would be to ensure your official documents such as bank statements & your drivers license are registered to you home address. Its also useful to add yourself to the electoral register if you haven't already.

 

If you do need to discuss any aspect of obtaining your own mortgage, please do always feel free to get in touch,   

Jen Boulter

Schedule a Time to Discuss Your Options Today

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