Category: Mortgage

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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Experts say Labour’s plan to make the mortgage guarantee scheme is a good first step, but doesn’t address key issues first-time buyers face.

Labour announced that it would make the mortgage guarantee scheme permanent, noting that it would help a further 80,000 young people on to the property ladder.

The mortgage guarantee scheme was launched in 2021 and was supposed to end in December 2023, but was extended in last year’s Autumn Budget to 2025.

Since the scheme went live, 42,387 mortgages have been completed through the scheme. This accounts for 1.3% of all residential mortgage completions, and 85% of the purchases were made by first-time buyers.

Kate Davies, executive director of Intermediary Mortgage Lenders Association (IMLA), said that a shortage of 95% loan-to-value (LTV) mortgages was “not the issue in today’s market”, with more than 300 deals available at this tier currently.

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Labour says it will make permanent a scheme designed to ensure low-deposit mortgages are available for first-time buyers, if it wins the general election.

The mortgage guarantee scheme was introduced by the Conservatives in 2021 when Rishi Sunak was chancellor of the Exchequer.

It was extended until July next year by current Chancellor Jeremy Hunt.

Labour leader Sir Keir Starmer said he wanted to “turn the dream of owning a home into a reality”.

The measure sees the government act as guarantor for part of a home loan – to encourage lenders to offer low-deposit deals.

The Labour Party says its plan will help more than 80,000 young people get on to the housing ladder over the next five years.

But according to the Office for National Statistics, external, some 40% of 16.5 million people aged 15 to 34 in the UK were living with their parents in 2022 – about 6.7 million people.

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Homeowners are warned that if the Conservatives get elected in the upcoming General Election, there could be a “second mortgage bombshell” on the way.

Britons could face £4,800 in extra mortgage payments over the five years they are elected.

Rishi Sunak announced a £17.2billion package of tax cuts, including a further 2p reduction in employees’ national insurance on Tuesday.

However, Reeves said Labour’s analysis suggested the Tory plans required an extra £17.4billion of borrowing in 2029-30, and a total of £71billion over the whole five-year period.

The Shadow Chancellor has alleged that the Conservative manifesto contains £71billion of unfunded commitments and could result in “a second Tory mortgage bombshell” as the parties continue to clash over tax and spending.

If the Conservatives borrow this amount, it could result in the Bank of England putting up interest rates by 56 basis points.

This means that someone with an 85 per cent mortgage on the average house in England risks facing £4,800 in extra mortgage payments over the five years if Conservatives are elected she explained.

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Almost three in 10 (28 per cent) young UK adults with a mortgage do not have life cover to protect them and their families, research from Beagle Street has revealed.

This means nearly 1.7mn UK homeowners aged 18-40 who have mortgages  do not have the safety net of life insurance to support them if they passed away.

Beagle Street director of protection, Ryan Griffin, said: “It’s really important for people to put plans in place and protect themselves and their families if the worst were to happen.

“We understand life insurance might not be something people want to think about, but it really can make a huge difference to those who need it.

“We know that almost half of those with a mortgage and life insurance took out a policy after speaking to a financial adviser. So, advisers are vital in making sure people have life insurance that is right for them.”

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The UK’s prospective home buyers and sellers are in ‘wait-and-see’ mode as house prices held steady in May amid uncertainty about the general election and interest rates outlook, new figures show.

But experts predicted a surge in demand could be on the way soon, once the general election is out of the way and interest rates start falling.

The latest House Price Index from the country’s biggest mortgage lender Halifax shows that the average house price across the UK ticked down by just £170 in May. A number of estate agents reported quieter activity in what is traditionally a busy month for property moves.

The average house price across the UK came to £288,688, close to flat month-on-month and up 1.5% from last May. In London, prices were close to flat year-on-year, with the average home costing £536,821. With average wages growing by 6% year-on-year, according to the ONS, the figures suggest properties are getting more affordable.

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