The average price of a newly marketed UK home has dropped by more than £5,000 month-on-month in August, as the distractions of school summer holidays traditionally bring a dip in prices.
Read MoreUK house prices drop by more than £5,000 in August
Category: Mortgage
Should I use my pension lump sum to pay off the mortgage on my buy-to-let? DAVID HOLLINGWORTH replies
I have a second home, a small two-bed flat, which I own with a £93,000 repayment mortgage fixed at 2.69 per cent until October 2025.
The mortgage is set to be paid off in October 2035, and my main home is already paid off. Currently, my daughter lives in the second home rent-free.
Once she moves out later this year, I need to consider whether to change the mortgage to buy-to-let and rent the property out.
Early rental valuations indicate that the rent will cover the mortgage.
I have recently retired, although I am not due to get my state pension for another seven years.
Should I use the tax-free pot from my private pension to pay off the mortgage and use the rental amount as monthly income? What should I take into consideration?
Read MoreMortgage shelf-life plummets, and product choice dips too
The average shelf-life of a mortgage product has dropped to just 17 days, down from 30 days a month, according to Moneyfacts.
Average mortgage rates on the overall two- and five-year fixed rate deals fell month-on-month by 0.18% and 0.15% respectively, halting five consecutive months of rises. These rates are now at their lowest level since March 2024.
The overall average two- and five-year fixed rates fell between the start of July and the start of August, to 5.77% and 5.38% respectively. The average two-year fixed rate is 0.39% higher than the five-year equivalent. The two-year fixed rate has now been higher than the five-year equivalent since October 2022.
Read More500,000 UK households warned mortgage rate will be hiked to 9.24 per cent
Half a million homeowners are on ‘rip-off’ mortgage rates of up to 9.24 per cent due to easy mistake. Borrowers who fail to take out a new mortgage in time before the term ends are automatically shifted on to their lender’s Standard Variable Rate (SVR) where costs can top 9.24%.
The average two-year fixed rate is currently 5.66 per cent, according to data site Moneyfacts.co.uk, while the average five-year fix is 5.3 per cent. In comparison the average SVR is a whopping 8.16 per cent, the Sun newspaper has reported.
Read MoreWhen does it make sense to refinance your mortgage?
There are a few scenarios where refinancing your mortgage could make sense:
It will allow you to get a lower interest rate. You might refinance if doing so will allow you to lower your interest rate, either because “interest rates have dropped since you first obtained your mortgage” or “your credit score has improved since taking out your current loan,” said Bankrate. Ideally, your new rate will be “one-half to three-quarters of a percentage point lower than your current rate” to offset costs associated with refinancing.
You want to change your loan term or structure. Refinancing can also make sense if you’d like to change your loan’s term or structure. For instance, maybe you want a longer repayment term to lower your monthly payments or maybe you want a shorter term to lower the amount you’ll pay in interest. Or, maybe you “have an adjustable-rate mortgage that’s about to convert to the variable-rate period,” in which case “you could refinance to a fixed-rate loan to guarantee predictable monthly payments,” said Bankrate.
Read MoreHousing market demand surges following interest rate cut
The housing market experienced a surge in activity following the Bank of England’s recent decision to cut interest rates, according to a leading property website.
Estate agents reported a 19% jump in enquiries about properties for sale after 1 August, when compared with the same period last year, research by Rightmove found.
It came after the Bank cut rates for the first time in more than four years from 5.25% to 5%.
Rightmove’s Tim Bannister said it was clear that the Bank’s decision had “sparked a welcome late summer boost in buyer activity”.
He added: “While mortgage rates aren’t yet substantially lower since the rate cut, the fact that the long-hoped-for first cut has finally arrived, and mortgage rates are heading downwards, is positive for home-mover sentiment.
Read MoreHalifax joins Barclays, HSBC, NatWest, and Nationwide in slashing mortgage rates below 4%
Halifax has joined the ranks of top lenders slashing mortgage rates below 4 percent, a move anticipated to boost property sales. This week saw Barclays, HSBC, NatWest, and Nationwide also trim their leading home loan interest rates below the 4 percent mark.
These offers are currently tailored for buyers with substantial deposits and often come with hefty application fees. Yet, there’s optimism that these benefits will extend to the broader mortgage market shortly.
Halifax’s latest offerings include a five-year fixed-rate mortgage at 3.99 percent for a 60 percent loan-to-value (LTV) ratio, carrying a £999 fee. Additionally, it’s presenting a two-year fixed-rate deal at 4.36 percent with a £999 fee for up to 60 percent LTV.
Read MoreFirst Time Buyers purchase further away to find affordable homes
Moving further away from family, friends and familiar places to get onto the property ladder is becoming more common for first-time buyers, according to new research from Santander UK.
Extrapolating a survey it commissioned, it claims two thirds of Britons who bought their first home in the last two years had never seen their new neighbourhood before buying, compared to just over half (51%) of those who bought more than five years ago.
Read MoreMartin Lewis warns UK households who have ‘fixed mortgage ending in 2024’
Fixed-rate mortgage deals have dropped below 4% for the first time since April – though only for those with at least a 40% deposit or equity in their home. However, mortgage brokers say rates could continue to fall as the year goes on.
Read MoreRate cuts to fuel house price rises, Halifax says
Lower mortgage costs and more interest rate cuts could fuel a rise in house prices for the rest of this year, Halifax has said.
The mortgage lender’s prediction came after property prices ticked up in July following a flat few months.
Halifax said recent mortgage rate drops were “encouraging” for first-time buyers, those moving along the housing ladder or those refinancing.
But it warned affordability challenges and lack of available properties still posed problems for buyers.
“Against the backdrop of lower mortgage rates and potential further [Bank of England] base rate reductions, we anticipate house prices to continue a modest upward trend throughout the remainder of this year,” Amanda Bryden, head of mortgages at Halifax said.
Last week the Bank of England lowered interest rates to 5% – the first cut since the start of the pandemic in March 2020, but its governor warned not to expect a flurry of further reductions.
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