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May 2024
Newsletter

All in all April has been a positive month with the property market looking a bit more buoyant and inflation reducing to 3.2%.

However, because of this slow movement of inflation The Bank of England has kept the base rate the same at 5.25%.

We've also seen property prices reduce for the second month in a row by 0.4%. 

In this months update, we'll be giving a overview of the UK mortgage market. 
We'll also be covering what to expect from your first mortgage payment. 

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The market is still feeling nice and stable, Inflation is dropping but a bit slower than expected.

 

The impact of this is that market projections on the reduction of the Bank of England base rate have reduced from 6 reductions of 0.25% to 2 reductions of 0.25% for 2024, that's a big change.

This unfortunately has had a knock on effect with how mortgage interest rates have been priced for 2 and 5-year fixed rates. Because of the smaller and slower reductions the banks have increased their rates to reflect this. I have given an indication of todays rates below. 

Politicians seem to have reached new levels of desperation with the current economic situation, especially ahead of this years election. Some have explicitly called for the Bank of England to reduce rates and have spoken about market projections publicly. 

Monetary Policy is completely out of governments jurisdiction and for good reason. For monetary policy to work and to get the UK back to long term stability, their decision making must be independent, based on fact and not influenced by the preferences of politicians. 

Quite simply, it will take as long as it takes regardless of the people or politicians opinion and will.

What I have noticed for our region is that the property market is still moving, regardless of rates being a bit higher. 

People are getting on with life, buying their first properties, upsizing when they need to.

 

And so they should!

 

Yes, interest rates are higher and affordability is slightly less generous, but life goes on, and with the help of a good mortgage broker, things can feel a bit more doable. 

Mortgage Rates Today

How much will my first mortgage payment be?

First mortgage payments will often be higher than your usual monthly payment. This is something that caught me off guard when I bought my first home and caused a lot of stress. So, it's something I try to always bring up with my clients to avoid that nasty shock. 

Why is it higher? 

Interest on a mortgage is charged daily and is chargeable from your completion date. 

 

However, by law, your first direct debit cannot be taken for a minimum of 14 days from the day you are given notice of payment, and in most cases a preferred payment date is selected during the mortgage application.

After you complete you will be sent a letter from the lender which will detail your first mortgage payment, this is when you will have the confirmed amount to be paid. This will be the interest accrued during the month you completed on the purchase and the following months payment.  

 

As an example, If you complete on the purchase of your new home on May 3rd and have selected a preferred payment date of the 1st of the month, your first mortgage payment will be on June 1st but will include both May (for the 28-days of interest) and Junes payment. It may feel like a double payment, but really it will be accurate to the day.

 

What I would always recommend is to set aside the payment for the month you move as if it's a full months mortgage payment. This way you will have provisioned for the higher payment the next month and if there is anything left over then all the better. 

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

Jen Boulter

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