Day: June 19, 2024

Homebuyers and remortgagers spend more time choosing home appliances than digesting mortgage deals, a study claims, as homeowners report the fast-paced mortgage market is making them stressed.

A sixth of homeowners said they felt pressured into making a quick mortgage decision due to the rapidly changing market, according to research by Smart Money People, with 57 per cent reporting that they felt stressed as a result.

A quarter of buyers and remortgagers said the mortgage process had left them confused.

On average, homeowners spent less than half a day looking at mortgage options before diving into a deal, Smart Money People said – this is less time than they spend considering which coffee machine or air fryer to buy.

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Rightmove house price index.

Data from the property website shows that the average price of a house being listed dropped by just £21 in June — statistically giving a zero percent change on the previous month.

This means the average asking price of a property for sale is now £375,110, broadly the same as May, which was a record high. Rightmove says this follows seasonal patterns of prices stagnating at this time of year, with election uncertainty adding to this summer lull.

This national average masks considerable regional differences though. Rightmove says there is stronger growth in northern regions where property prices are lower. Five of the six cheapest regions have reached new price records, while the higher-priced East of England and London lag behind, according to its data.

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While mortgage market health is currently being driven by those looking to remortgage, there’s unlikely to be a resurgence in activity until rates start to fall.

This is according to Octane Capital chief executive Jonathan Samuels who points out that gross lending has sunk to its lowest since interest rates increased, driven by a reduction in house purchase lending.

The latest market analysis by Octane Capital has looked at gross mortgage lending by sector and how this figure has changed both quarterly and over the last year.

The analysis of gross mortgage lending figures from the Building Society Association shows that total mortgage lending sat at just £50.5bn during the first quarter of 2024, the lowest level seen since interest rates started to climb in December 2013.

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Mortgage rates are not directly set by the government but rather by lenders influenced from factors such as the Bank of England base rate of interest and general Inflation. Events such as elections can impact interest rates due to the uncertainty.

Data from Mojo Mortgages helps us to understand the changes in mortgage rates since the announcement of the election 2024.

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More homeowners are behind on their mortgages than anytime in the last seven year, according to the Bank of England’s latest data report.

The financial squeeze left from the pandemic and rising cost of living have left many struggling to cover basic expenses, let alone repay debts.

The bank’s report for Q1, 2024 showed that mortgage balances in arrears rose by 4.2 per cent compared to the previous quarter, totalling a staggering £21.3billion.

This is also a staggering 44.5 percent increase from a year earlier.

Additionally, the proportion of total loan balances with arrears relative to all outstanding balances increased from the last quarter from 1.23 per cent to 1.28 per cent.

This is now at the highest level since the final quarter of 2016.

On the other hand, the outstanding value of all residential mortgage loans fell by 0.1 per cent from the previous quarter, marking a 1.4 per cent decrease compared to a year ago.

This saw it falling 1.4 per cent compared to a year ago with the total monetary value of outstanding mortgages currently sitting at £1,654.9bn.

A borrower falls into mortgage arrears when they miss their mortgage payments, which is also recorded on their credit file.

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Those buying a home or remortgaging now have a tough call to make when deciding how long to fix their mortgage rate for.

Last year, most borrowers opted to fix for two years. They believed that interest rates would begin falling during that time, and a shorter fix would allow them to switch to a cheaper rate more quickly. 

However, confidence that rates will fall drastically any time soon appears to be dissipating, meaning that increasing numbers are now choosing to lock in their rate for five years, according to mortgage broker L&C. 

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The Bank of England held its Bank Rate at 5.25% in May, as was widely expected. It was the sixth time in a row the Rate has been frozen since it rose to its current level in August last year. The Rate had previously undergone 14 consecutive rises (between December 2021, when it stood at just 0.1%, and last August).

The next interest rate announcement by the Bank’s Monetary Policy Committee (MPC) will be tomorrow, 20 June. The European Central Bank cut interest rates on 6 June which, in theory, could make a cut from the Bank of England more likely. But the general election on 4 July may delay any cut until the MPC’s next meeting in August.

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