mortgage Archives - Choice Mortgages UK

The Evolution of Mortgage Lending in 2024

15th March 2024

Notable shifts in mortgage lending in the UK are poised to impact the real estate market in 2024. As we anticipate a return to pre-Covid lending levels, understanding these changes is crucial for anyone looking to purchase property and with the help of this comprehensive overview, we’ll explore what lies ahead.

Current trends and predictions

In 2023, UK mortgage lending experienced a significant downturn, with a staggering 23% decrease. As we move through 2024, projections suggest an additional 8% decline, signalling a challenging period for the industry. This decline is expected to continue until a modest recovery in 2025, when figures may return to mid-2010 levels, ranging between £120-130 billion.

Factors influencing the decline

Affordability challenges

Affordability remains a primary concern driving the decline in mortgage lending. Factors such as higher interest rates, elevated house prices relative to income, and increased cost-of-living expenses have created a constrained borrowing environment for prospective homeowners. The current Bank of England base rate is 5.25%.

In navigating these challenges, individuals and families can benefit from partnering with Choice Mortgages UK, an independent mortgage broker committed to offering tailored solutions and accessible support. Additionally, Choice Mortgages has over 30 years of experience with finding clients the perfect mortgages, taking into account their financial well-being and the current market conditions.

Uncertainty ahead

The prospect of a general election before 28 January 2025 adds further uncertainty to the housing market. Historically, such events have prompted a temporary pause as buyers and sellers await clarity on how political changes might impact the economy and property values.

Transaction volumes

The impact of affordability challenges and uncertainty is reflected in transaction volumes, which are predicted to hover around 1 million in 2023, 2024, and 2025. This represents a 15% decline compared to pre-Covid averages.

For those entering into a property transaction, Choice Mortgages UK’s team of experienced advisers stands ready to address both straightforward and complex queries, ensuring a seamless process tailored to your individual needs. Choice Mortgages will get to know you and understand your requirements.

Also, you won’t have to deal with lots of different people and departments – you’ll get a same-day response whether it’s answering a call, responding to your email, or inviting you to leave a detailed message.

Expert perspectives

Despite these challenges, Emma Cox, managing director of real estate at specialist lending bank Shawbrook, has a positive outlook for the year ahead, referring to the dip in residential property transactions as, “a minor speed bump in an otherwise positive start to the year.”

Furthermore, James Tatch, Head of Analytics at UK Finance, acknowledges the difficulties faced by mortgage borrowers and anticipates a gradual improvement in affordability by 2025.
Remaining with a bright outlook, Lucian Cook, Head of Residential Research at Savills, highlights the stabilising effect of falling inflation on mortgage rates, suggesting that the housing market may have passed its peak difficulties.

Looking into the future

As we forge forward, it’s vital to stay informed and seek expert advice. Choice Mortgages UK offers free consultations, flexible communication options, and access to a wide range of lenders, ensuring unbiased and personalised solutions for every client.

So, while challenges persist, proactive decision-making and strategic partnerships can help you to navigate the real estate market with confidence. For reliable guidance and support, trust Choice Mortgages UK to help you find the right mortgage solution.

How Long Should I Fix My Mortgage For?

20th February 2024

If, in these uncertain times, you’re a first-time buyer, you might be grappling with whether you should fix your mortgage and, if so, for how long. To help make your decision easier, we’ve weighed the pros and cons of fixing your mortgage interest rate in this helpful guide.

Fixed-rate mortgages

First and foremost, what does it mean to fix your mortgage? A fixed-rate mortgage is where the payable interest rates are the same for a set time, typically between two and five years. During this time, the monthly repayments will remain the same and won’t be affected by the Bank of England base rate.

What’s better, a two or five-year mortgage?

Choosing between a two- or five-year mortgage largely depends on your personal preference and circumstances. By fixing your mortgage for two years, you have assurance over the short term, and if you plan on keeping your home only for a short while, this option could be right for you. Additionally, if the rates drop, you can switch to a preferred rate once your deal ends.

Alternatively, with a five-year fixed rate, you have certainty over those five years, which could be the better option if you plan to settle into your property for longer. However, a lot can change in five years, not least of all mortgage rate fluctuations, which may result in higher fixed rates than live rates.

Should I fix my mortgage for longer?

With a longer fixed rate, you can rest assured as you’ll know your mortgage repayments for the next five years or longer. This provides you with some peace of mind and consistency in your financial planning. If you’re expecting to keep your property for the long run, a long-term fixed-rate mortgage could be right for you.

A risk associated with fixing your mortgage for longer is current mortgage rates may become lower than your fixed rate. This means your repayments could be more than the actual interest rates. If you find yourself in this position, you could move to a new rate, but you could be subject to an early repayment charge (ERC) and a penalty to exit your deal before it expires, which can be an expensive exercise.

What are the pros and cons of fixing your mortgage?

Pros of fixing your mortgage:

✅Protection against interest rate increases.

✅You may save money on fees.

✅If your situation changes, you’re protected.

Cons of fixing your mortgage:

🛑Your monthly payments may be higher.

🛑You may pay a penalty if you move.

🛑You may face an early repayment charge if you pay your mortgage off early

Is it worth getting a fixed-rate mortgage?

Ultimately, whether a fixed-rate mortgage is worth it depends on you, as does the length of term. Your financial situation, your feelings about risk and stability, and your long-term plans or objectives will help you determine your next steps toward home ownership.

If you’re ready to begin your journey and are seeking trustworthy advice, that happens to be obligation and cost-free, give us a call at Choice Mortgages. We provide independent mortgage and insurance advice based on your specific requirements. Whether you’re a first-time buyer or seasoned in the housing market, we can find the best solution for you.

Is Now a Good Time to Buy a House?

16th January 2024

Like many of life’s big milestone moments, deciding to go ahead and buy a house can be exciting and nerve-wracking. Knowing when is the best time to buy is also tricky. If we lived in a perfect world, you’d time your purchase perfectly when property prices and mortgage rates were at their lowest. However, predicting when such conditions might occur isn’t easy.

Using data is a great way to make an informed decision in your buying process. As of December 2023, the Independent reported the average house price at £287,105, a slight increase from £282,305 in December 2022. Concurrently, the average two-year fixed mortgage rate fell below 6%, as reported by BBC News. In July, the rate reached a high of 6.86%.

Weighing up the pros and cons

Pros

Price discount: With the economy being a bit unpredictable, rising mortgage rates, and the ongoing cost of living challenges, there’s been a noticeable dip in the demand for home buying. This means property sales slow down, and with fewer offers on the table, buyers are able to leverage discounts from the initial asking prices.

Reduced fixed mortgage rates: As we’ve mentioned, fixed mortgage rates are more attractive now than in previous months, providing better value overall than discounted and tracked mortgages.

Rachel Springall, Finance Expert at Moneyfacts, explains:

“The consecutive reductions to the overall average two- and five-year fixed mortgage rates will greatly relieve borrowers looking to refinance this year. The volatility surrounding mortgage rate pricing eased as the average mortgage shelf life rose from 17 days to 21 days, the highest figure recorded in over six months. There are big expectations for fixed mortgage rates to fall in the coming weeks, so some borrowers may choose to wait patiently for the right time to change their deal or buy their first home.” Visit Money Facts for more about mortgage deals on the rise and the decline in rates.

Cons

The danger of negative equity: The value of your property can determine negative equity. This could happen when property prices drop, you still need to complete the transaction, and you buy with a 5% or 10% deposit.

No more ‘Help to Buy’: Aimed at first-time buyers, the Help to Buy scheme no longer accepts new applications. Buyers who need a helping hand up onto the property ladder won’t have government assistance, although shared ownership schemes are still available.

Weighing up the pros and cons and borrowing rates will be your compass as you venture forward with your property purchase decisions.

Will house prices plummet this year?

Throughout 2024, house prices are expected to drop. Savills Estate Agent predicts a 3% fall in UK property prices before a recovery in 2025, but as we’ve learned, buying a property isn’t an exact science.

Also, the Bank of England is expected to cut interest rates around the middle of June 2024, following 14 consecutive hikes in a bid to combat inflation. This means mortgage rates could also fall this year, according to The Times, Money Mentor.

If this plays out, prospective buyers could find themselves in that ideal position of lower house prices coupled with lower mortgage rates.

Be guided by independent mortgage advice

When you’re ready to begin your home-buying journey, rest assured there is help at hand.

Choice Mortgages, is a mortgage and insurance broker focussing on exceptional customer service. We offer free, no-obligation consultations in person at our office or over the phone. We have access to all lenders and insurance providers, so you get the best product that suits your requirements. Our team of experienced advisors are ready to help with your queries, whether straightforward or complex, we can help.

A Step-by-Step Guide to Buying a Home in the UK

20th November 2023

Deciding on buying a home is an exciting time, but it can be riddled with uncertainties, making the process time-consuming and complex. The UK’s average timeline for purchasing a property is about six months [link to: https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/how-long-does-it-take-to-buy-or-sell-home/], and based on different factors; this can vary. Still, things like your financial situation, the type of property you’re investing in, and the seller’s circumstances can all impact your timeline.

We’ve broken the process down into steps to help provide a picture of what you can expect along the way.

Step 1: 24 hours – Application for a Decision in Principle

A Decision in Principle is your initial step in the home-buying process. It estimates how much you could borrow, giving you a clear idea of the budget for your property search. Most lenders offer the convenience of applying online, with many providing instant decisions, typically within 24 hours. This crucial step ensures that you start clearly understanding your financial boundaries.

Step 2: Varies – Search and make an offer on a home

The time it takes to find your ideal property can vary significantly, ranging from a few weeks to several months. It’s important to take your time during this phase, researching your preferred area thoroughly to make an informed decision. Once you’ve found a property, the following steps may differ between regions.

In England, Northern Ireland, and Wales, making an offer is typically done through an estate agent, who should provide information on the response time.

In Scotland, you’ll need to engage a solicitor to help you prepare a bid. Since a successful bid in Scotland can legally commit you to the purchase, it’s crucial to have a Decision in Principle and be ready to proceed with a mortgage application.

Step 3: Up to 2 weeks – formally applying for a mortgage

Once your offer is accepted, you can apply for a formal mortgage offer. We recommend your mortgage application is submitted as soon as possible, although there may be exceptions based on specific circumstances. Processing and receiving a formal mortgage offer can take approximately 4-6 weeks. To expedite this phase, ensure you have all the necessary documents ready for review. The application includes thorough checks of your finances and a mortgage valuation of the property you intend to buy carried out by the lender.

What is the time between the mortgage offer and completion?

Typically, you can expect the completion process to take around 12 weeks once your mortgage offer has been accepted. However, it’s important to note that each property transaction is unique, and the timeline may vary. Your journey to homeownership may take less or more time than the standard 12 weeks.

Step 4: 6 to 12 weeks – conveyancing

Appointing a solicitor or a licensed conveyancer is essential for handling the legal aspects of your property purchase. The conveyancing process may range from approximately six weeks to a few months, particularly if you become part of a property “chain”. A chain forms when multiple transactions need to happen and involve other buyers and sellers in the process.

Step 5: 2 to 3 weeks – property survey

Conducting a property survey is advisable to identify potential issues with the property. Surveyors provide a report within a couple of weeks of conducting their inspection, which generally takes a few hours. This survey differs from the mortgage valuation, which is typically for the lender’s use.

Sellers in Scotland would provide a Home Report containing an energy performance certificate, a survey and a property questionnaire, which a solicitor would then review.

Step 6: 1 to 4 weeks – contracts exchange to completion

Once you have your mortgage offer and your solicitor or licensed conveyancer is satisfied with the property’s search results, enquiries, and legal title, you’re all set to exchange contracts (the specific process differs in Scotland).

If you’re part of a property chain, all buyers and sellers involved must be prepared, which could cause delays.

You’ll provide your deposit upon exchanging contracts, and the agreement becomes legally binding. At this point, you’ll need to have buildings insurance in place. The completion date is agreed upon during this phase, often set approximately two weeks after the exchange, but it can be adjusted as needed. You’ll usually receive the keys to your new home on the completion date.

Moving forward with Choice Mortgages

At Choice Mortgages, we provide independent, professional guidance and advice tailored to specific requirements. Feel free to use our no-cost and no-obligation consultation by phone or in person at the office. Our team of experienced and friendly advisors can handle all of your queries. Whether they’re straightforward or more complex, we’re on hand and ready to help. Remember, your home may be repossessed if you do not keep up repayments on your mortgage.

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