Progressive changes in the mortgage market have occurred for many years, including policy updates, criteria, affordability, and product accessibility. These changes are why we are examining how to approach the mortgage market. However, due to the pandemic, these adjustments are now happening quickly, affecting borrowing needs and personal finances, such as employment and income opportunities.
Our world has become more complex, and the mortgage market has grown even more intricate. Mortgage rates began to stabilise at the end of 2022 after years of significant fluctuations. As a result, securing a mortgage has become more complicated than it was in previous years.
The Bank of England’s decision to increase the base rate to 4.5%, the highest borrowing costs since 2008, will likely leave homebuyers and mortgage holders facing larger bills than last year. There are also fewer mortgage products available in the market.
That said, there is no need to feel discouraged now that the situation is clearer. With careful planning and expert advice, you can still find an offer that suits your needs without stretching your budget.
Is now a good time to buy?
While some reports highlight a decline in the housing market, property website Rightmove has revealed that first-time buyer asking prices have reached a new high of £225,000.
According to the Nationwide Building Society, house prices dropped by 2.7% in the year leading up to April. However, Halifax and Rightmove reported increases of 1.6% and 1.2% in house prices over the same period.
The Royal Institution of Chartered Surveyors suggests there could be a recovery in house prices within the next year. However, prices are expected to remain weak in the short term.
Should you wait for the market to stabilise before buying a property, or should you buy now? The answer depends on your personal circumstances. Much like choosing the best lender, the right time to buy is when it suits your financial situation. If you need a mortgage, it is unlikely to be something you can delay.
The rising cost of living has not stopped people from buying essentials. Similarly, falling house prices can create opportunities for good deals. For instance, there are competitive mortgage options for buyers with a 5% deposit. That said, a larger deposit provides access to more choices and better rates.
How To Navigate The Mortgage Market
If you want to be ahead of the game, exploring your options as soon as possible is best. For borrowers feeling overwhelmed and confused by their choices, seeking advice from a mortgage broker with access to all available mortgages is an ideal place to begin. These professionals will search tirelessly for the most advantageous deal that fits precisely within your budget and lifestyle.
Save now and secure a great deal on mortgage rates up to six months ahead. Then, if come the time that you need it, interest rates have dropped even lower than when you booked, your reservation is non-binding, so there’s no pressure to stick with what you’ve got. This is a good option on how to navigate the mortgage market.
Getting a decision in principle (DIP)
Before you can apply for a mortgage, obtaining an Agreement in Principle (AIP) or Decision in Principle (DIP) is essential. This is because AIP/DIP provides information on how much of a loan a lender can offer, and many sellers or estate agents will ask for this assurance before giving any form of approval.
When estate agents and vendors see that you already have a principal decision from the lender stating how much of a loan amount you can borrow, they will take your offer seriously. Get this essential paperwork taken care of first so that when the time comes to submit offers, all there is left to do is make the complete mortgage application.
Sourcing the best rate for your situation
Although rates are still much higher than a year ago, the average five-year rate has dipped below 5% for the first time since September. The market continues flirting with the idea of dropping interest rates, making it an opportune time to source the best rate.
Last September, the market was upended when many mortgages were withdrawn in reaction to the government’s mini-budget. This caused two-year fixed mortgage rates to skyrocket back to levels not seen since 2008 during the global financial crisis. Fortunately, things have settled down again, and today you can find some of the most affordable deals hovering around 4% – 5%.
UK interest rates, what’s happening?
The mortgage market offers various opportunities for borrowers. Despite recent interest rate increases, mortgage rates have dropped from their peak of 6.65%. Moneyfacts reports that the average two-year fixed rate is currently 5.6%, while the average five-year deal stands at 5.42%. These figures depend on loan-to-value assessments.
Consumers now benefit from a wider range of mortgage products. The market has reached its highest level of options in over a year, providing borrowers with more flexibility and choice.
Rachel Springall, a finance expert from Moneyfacts, stated, “Although lenders showed mixed interest rate competition last month, fixed mortgage rates are expected to decline in the coming months. However, this will depend on fluctuations in swap rates and lenders’ willingness to lend.”
Why should burrowers seek advice from Connect Mortgages?
To avoid costly standard variable rates from your lender, it’s essential to start researching a new remortgage deal approximately six months before the expiration of your existing one.
With a vast selection of options, you can uncover an incredible deal for your mortgage if you’re willing to dedicate time and effort to a comprehensive go, thorough fact-find with our expert mortgage brokers. An equally important part of this endeavour is our experience of making the process less daunting.
When looking for great mortgage deals, comparing multiple lenders and quotes is prudent. That is where Connect Mortgages comes in. With access to an array of exceptional loan opportunities, having over 170 lenders to choose from can make the difference. Ultimately, this is how to navigate the mortgage market.
Thank you for reading our publication “How To Navigate The Mortgage Market | Talk to Connect.” Stay “Connect“-ed for more updates soon!
