Category: Mortgage

Demand for bridging loans continues to be buoyant, with £196.2m transactions in the first quarter of 2024, according to contributors to the Bridging Trends data. 

Overall gross lending was up 0.4% when compared to the last three months of 2023. The most significant increase was in demand for bridging loans for business funding. These proportion of loans for this purpose almost doubled from 8% in Q4 2023, to 15% in Q1 2024 — the highest it has been since Q4 2021. 

The most common reason for arranging a bridging loan was to purchase an investment asset, accounting for 21% of loans in the quarter. This was down from 24% in Q4 2023.

However there was an increase in bridging finance to prevent a chain break in the property market. This was the second most popular purpose for obtaining bridging finance over the quarter, rising to 19% from 16% in the previous quarter.

With conveyancing delays leading to protracted home purchase transactions and the potential for a greater number of broken chains, more homeowners are turning to bridging to secure the home they want to buy. 

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The Bank of England held its Bank Rate at 5.25% in May, as was widely expected. It’s 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 will be on 20 June 2024.

The plateau in interest rate rises has been made possible by continued cooling inflation. The Office for National Statistics shows that inflation tumbled from 3.2% in March to 2.3% in April. As recently as last September, the figure was 6.7%.

Experts reckoned that continued falls in the rate at which prices are rising will prompt the Bank of England to cut its Bank Rate – which helps determine mortgage rates – possibly as soon as June when the next decision is announced by its Monetary Policy Committee (MPC), or in August at the following meeting.

The next inflation figure will be announced on 19 June with the latest Bank Rate figure coming out the following day. But the significant fall in April’s inflation rate has already prompted lenders to make cuts to mortgage costs.

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HSBC is among the major banks and building societies in the UK cutting mortgage rates in a boon for homeowners and prospective homebuyers.

The bank is making changes to around 140 mortgage products with rate cuts of up to 0.18 per cent.

Here is full list of the changes to mortgage rates being implemented by HSBC, as of today:

• New Business residential rates cut by 0.04 per cent to 0.18 per cent
• Buy-to-Let (BTL) new business rates cut by between 0.04 per cent and 0.14 per cent
• Residential Switchers, customers who already have a mortgage with HSBC UK and are getting a new fixed interest rate, are seeing cuts by up to 0.11 per cent.

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A building society has launched a new mortgage deal designed for foreign nationals and expats returning from overseas.

Many people moving to the UK are shocked to learn they cannot get a mortgage on arrival, instead they have to overcome multiple hurdles put in place by lenders.

Most providers want foreign nationals to have been in the UK for at least two years and have built up a good credit file in the country, in order to demonstrate they can manage payments responsibly.

To combat these obstacles, Nottingham Building Society is offering a new mortgage deal where there is no minimum time of residency required in the UK.

There is also no minimum time remaining on a visa as borrowers are often required to have at least one year remaining on their documents. It will also require no minimum income and no UK credit history as it can access overseas credit files from 13 different countries.

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I’m a first-time buyer and hope to get on the property ladder this year.

I had an offer accepted on a flat in one of the cheaper areas of Greater Manchester. It is within easy commuting distance from the city centre where I work, and being sold at a price I can afford. I paid a £2,000 fee to reserve the apartment.

The property is an off-plan new build due to complete in three months, so I didn’t think there would be any issues. Neither did my mortgage broker who provided an agreement in principle.

However, the mortgage valuation has now come back stating there is ‘a lack of/no owner occupiers living in the immediate area’ and that it is ‘not in a saleable location.’ The application has therefore been declined.

My broker said they could try again with a different lender, but that the application would be at the mercy of the next valuer’s comments, which could say the same.

Does this mean no lender will offer me a mortgage? Could I lose my £2,000 reservation fee? Would it be unwise to proceed anyway, in case future buyers face the same issue and I am unable to sell the flat in future?

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Young homebuyers are facing huge challenges when it comes to getting on – and staying on – the housing ladder.

Nicola Webb, a 34-year-old nurse, felt she had little choice but to opt for an ultra-long mortgage when purchasing her first home last year.

It’s set to end when she is 68, but she says stretching out the repayments is “the only way I can just about afford my mortgage as a single homeowner”.

“I’ve not known lower mortgage rates so I just accept what it is.”

Despite the fact that she managed to save a chunky deposit for her £147,000 two-bedroom flat in Gloucestershire, Nicola’s five-year fixed rate mortgage costs £598 a month – about a third of her monthly wages after tax and student loan deductions.

Once her student loan is paid off – or eventually written off – she hopes to reduce the length of her mortgage term from 35 years, or look at using any extra disposable income to overpay it.

She says she’s grateful she has been able to get on the housing ladder at all. While mortgage costs take up a large part of her income, she thinks it is still cheaper than renting in her local area.

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A mortgage scheme designed to increase the number of deals available to homebuyers with a low deposit or limited equity is running until mid-2025. Several major lenders are taking part in the Government’s mortgage guarantee scheme, where want-to-be homeowners have access to 95% mortgages. However these are not special mortgages and they’re certainly not the cheapest – here’s what you need to know.

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Three UK banks have announced cuts to the cost of fixed-rate mortgages, reversing some of the price rises seen in recent weeks.

Barclays Bank has announced it will reduce the price of five-year fixed-rate deals for new borrowers and remortgagors by up to 0.45 percentage points from Friday. Its five-year fixed-rate for borrowers with a 40% deposit is decreasing from 4.47% to 4.34%.

At HSBC there will be cuts to two-, three- and five-year home loans, and the bank has withdrawn the 10-year fixed-rate mortgages it offers to remortgage customers.

TSB will also make changes on Friday, and cut two- and five-year deals for house purchases by up to 0.10%.

In recent weeks lenders had been increasing the price of mortgages as the prospect of a spring interest rate cut from the Bank of England receded.

However, money market “swap rates” on which most fixed-rate deals are based have started to fall this week.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “This latest round of mortgage rate reductions from some big lenders is great news for borrowers.

“They come on the back of a decline in swap rates, which underpin the pricing of fixed-rate mortgages, over the past week.

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Support for the housing market, particularly in terms of support for homebuyers, often tends to be couched in terms of stamp duty reform or, more recently, a replacement for Help to Buy, or a further extension of the government’s mortgage guarantee scheme.

However, you might well argue that for certain borrower demographics – perhaps first-time buyers – this feels a little like tinkering around the edges, although who wouldn’t want to see more affordable housing built, particularly in the house price, wage and rental environment we currently have?

Clearly, there remain some – often insurmountable – hurdles for would-be first-time buyers, not least in terms of their ability to get on the ladder, especially if they don’t have the support of parents or grandparents, or if they want to own a home in fewer than five years. 

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The Bank of England says one in four mortgages will end when the mortgage borrower is in retirement, as more people extend mortgage terms to make repayments more affordable.

The Bank says over half (51%) of mortgage borrowers now opt for a 30-year mortgage or longer, while between 2021 and 2023, the average mortgage term length for a first-time buyer increased by a year, from 28 years to 29.

Remortgaging has seen the biggest increase in average term length: in 2021 the average mortgage term for remortgaging was 21 years, whereas by 2023, the average mortgage term for remortgaging increased to 23 years, an increase of two years.

The average property now costs seven times the average person’s salary. This is significantly higher than the four-to-five times salary cap that many mortgage lenders use as a guideline.

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