October 2024 Newsletter
What a month September was, there are fantastic properties entering the market and those who have been waiting with bated breath to see a change in interest rates have been rewarded with rates below 4% becoming a lot more common.
This month I'll give an update on the mortgage market. We'll also look at the remortgage process, when to start and how it all works.
Latest News
Across the course of September we've seen some really nice rate reductions across the market.
It's not uncommon now to see rates below 4%. This is despite the Bank of England holding the rate at 5%. The reason for the change in the lenders product strategy, is simply a reflection of inflation remaining steady and things like professional services inflation finally reducing. But also lenders are vying for new business and so are more likely to set out a more competitive product portfolio.
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The strategy that we hear in the press is that the reductions are unlikely to be dramatic. The changes will take place over a long period of time this is for the best. The last thing anyone needs are steep climbs and sharp drops. I think we can all agree that a stable economy is preferable.
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As interest rates decrease, affordability is impacted positively. I mentioned Nationwide's Helping Hand product for first time buyers in the last newsletter. This product offers first time buyers up to 5.5x their income for affordability calculations.
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I mention this because during September they increased this income multiple to 6x income.
This, along with Halifax increasing their income multiples and Accord just shows that lenders are being a lot more competitive.
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Another interesting development was with HSBC's criteria towards foreign nationals. They have introduced a similar stance to Barclays in that they require a foreign national to have been in the UK for 12-months and no longer require there to be 12-months left on their visa.
This is a huge change and will certainly help more people onto the market.
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Overall the outlook is really good, settled and steady, that's how a healthy property market should be.
Mortgage Rates Today
I'm on a 2-Year Fixed Rate, What Happens at the End of Two Years? ​
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Whenever I'm working with a client on their mortgage, we'll look at all options and filter it down to the right product for their long-term goals.
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There aren't a massive number of options when it comes to product types. Available are either fixed rates or variable rates. When we are selecting a product, in most instances the rate will end in 2-to-5-years’ time.
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So, what happens at the end of that special rate?
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For our clients, we work on a lifetime basis. Once your rate is set-up, we will set a reminder to get in touch 5-6 months before your special rate comes to an end.
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We'll catch-up again, talk through any changes of circumstances and discuss your future regarding your mortgage.
This will give us the information we need to look at the whole of the market to see which is the best rate.
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Ideally, we want to secure a rate as soon as possible. This discussion will take place 6-months before your rate ends. This approach allows us to protect you from any future rises in rates. On the other hand, if interest rates reduce, we can easily switch out the selected rate for a new, lower rate.
A remortgage is just a new mortgage. This means that you can change big things like the lending amount, who's included on the mortgage, and the term without any penalty.
We have a couple of options when we're looking at getting you on a new product.
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1. Product Transfers
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This is where you stay with the same lender that you're currently with and just move to a new product. We'll always look at this option for our clients in tandem with searching the whole market.
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The product transfer process is simple. We would simply go into your account and update any necessary information. We can make changes to term or lending amount at this stage. We'll select the new product. There may be additional checks the lender will go through, and they may request new evidence. As your broker we would handle that process for you.
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1. New Lender
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Sometimes to obtain the best rate available, or to meet your new criteria/plans we will recommend a new lender.
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This process would simply be a new mortgage application which we would handle on your behalf. We will submit the application with all evidence, the property will need to be valued, and an underwriter will perform the usual affordability and credit checks.
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Once the mortgage offer has been produced your case will be introduced to a solicitor.
In most cases the solicitor will either be provided by the lender, or they will provide cashback to pay for the legal work.
If they do provide cashback, we'll help to get your solicitor arranged within the cashback amount.
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The solicitor will then send you a questionnaire, it's incredibly important that the questionnaire is completed at your earliest opportunity to avoid any delays. You will also be required to verify your ID. With this paperwork, we're here to help and can always go through it all together.
The solicitor will then guide you through the process and will have a target completion date for the day after the end date of your fixed rate.
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You might have different requirements for your solicitor on top of the standard remortgage such as adding or removing someone from the title deed, this can happen during this process at an additional cost. ​
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So, in short, the product transfer if a bit simpler, however, it won't always be the best route. and we'll look at all options at the right time.
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As always, please do give us a ring if you would ever like to talk this through along with any other options.
Jen Boulter