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The pros and cons of extending your mortgage – and whether it help with rising costs – has been revealed. It is estimated that 1.6 million households will be remortgaging this year from deals which were lower than two per cent.

Pete Mugleston, MD and mortgage expert at Online Mortgage Advisor, warned : “This can provide significant breathing room, particularly when the cost of living is at an all-time high.

“Lower monthly payments can also improve cash flow, allowing homeowners to allocate funds to other essential expenses or savings.” He added: “This flexibility can be a lifeline for those struggling to get on the property ladder.”

But discussing the cons, he went on and explained: “By spreading payments over a longer period, you end up paying more interest, which can significantly increase the overall cost of your home.” He added: “This extended financial commitment can impact long-term financial planning and delay milestones such as retirement or significant investments.

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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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