UK Mortgage & Property Related News
Over the last few years, high inflation and the Federal Reserve’s aggressive interest rate hikes pushed up mortgage rates from their record lows around the pandemic. Since last summer, the Fed has consistently kept the federal funds rate at 5.25% to 5.5%. Though the central bank doesn’t directly set the rates for mortgages, a high federal funds rate makes borrowing more expensive, including for home loans.
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UK mortgage approvals increased more than expected to a 17-month high in February as markets expect interest rate cuts this year.
Mortgage approvals for house purchases rose to 60,400 in February from 56,100 in January, the Bank of England reported Tuesday. This was the highest since September 2022 and also exceeded the forecast of 57,000.
Net approvals for remortgaging also increased in February, to 37,700 from 30,900 in the previous month.
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House prices fell unexpectedly last month despite mortgage approvals rising more than forecast as lending rates fell from their peaks.
The average price of a home dropped 0.2 per cent from February to March, to £261,142, according to figures from Nationwide Building Society.
Separate Bank of England data showed net mortgage approvals for house purchases rose to 60,400 in February from 56,100 in January.
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Mortgage rates will not go back up. That is my prediction.
I believe that the large banks and other mortgage lenders have sussed the Bank of England and realise they are wrong in the way they have handled and continue to administer monetary policy (interest rates).
They may not all agree with me that Andrew Bailey and his mostly stubborn Monetary Policy Committee colleagues were terribly wrong to raise interest rates 14 consecutive times in a very short period to combat our mainly non-consumer-driven inflation, which always falls by itself.
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Remortgage approvals rose 22% from 30,900 to 37,700 month-on-month.
Homeowners borrowed £1.5bn of net mortgage debt in February compared to £1.1bn in January.
The average interest rate on newly drawn mortgages fell by 29 basis points to 4.9% compared to the previous month.
Simon Gammon, managing partner at Knight Frank Finance, said: “The recovery in housing market activity is taking hold despite an uncertain start to the year for mortgage rates. Hotter-than-expected inflation data in January and February prompted a few lenders to notch up mortgage rates, which knocked sentiment, but not enough to kill the market’s momentum.”
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The UK’s upcoming general election could cause great challenges for the mortgage industry in the coming year, the Building Societies Association has suggested.
Paul Broadhead (pictured), head of mortgages and housing at the trade association, warned against politicians staging vote-grabbing stunts which could disrupt business.
“The biggest challenges in the next year may very well be as a result of the pending general election,” Broadhead told Mortgage Introducer. “The potential for this to cause disruption is high, and we can only hope that politicians refrain from any posturing or stunts in an attempt to win over voters in the lead up to the election.”
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A woman who bought a house at 25 has revealed she was able to qualify for a home loan by cancelling her Afterpay account.
Bridget Carkeet, now 28, bought a four-bedroom house in Ipswich, 40km south-west of Brisbane, for $500,000 in 2021.
But to qualify for the loan, she had to close down her Afterpay and Zip Pay accounts.
‘They were not really in use but I still had them active,’ she told Daily Mail Australia.
Experts warn a credit card with a $15,000 limit – even if it has nothing outstanding – could cut your potential maximum available loan by $71,000 if it’s not cancelled.
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More people will still be making payments well into the 70s and even 80s, it has been warned, with four in 10 set to pay mortgages well past retirement.
40 year mortgages will see OAPs weighed down with monthly repayments, it has been warned. More people will still be making payments well into the 70s and even 80s, it has been warned, with four in 10 set to pay mortgages well past retirement.
The Bank of England found just under 50 per cent of home loans issued in the fourth quarter of 2023 were for terms of 30 years or more. Pensions minister Steve Webb said he was “genuinely shocked” by the figures this week.
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Homeowners seem to be finding it harder to afford their mortgage, as searches for interest-only products has risen by 9%, data from Legal & General Ignite has found.
Some 15% more are also searching for the minimum required period of employment when taking out a loan
‘Satisfied defaults’ moved up to the second highest search term – from third in January – as searches increased by 7%.
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Since the start of September 2023, the average two-year fixed rate has fallen from 6.70% to 5.76% and the average five-year fixed rate has fallen from 6.19% to 5.34%. T
These average rates have, however, risen from 5.56% and 5.18% respectively since last month.
On a 10-year fixed rate mortgage, the average rate has risen from 5.82% to 5.98% since September 2023. The rate has risen from 5.87% since the start of February 2024.
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