Mortgage market thaw!

The mortgage market is picking up! The deals are getting better and the banks are lending more money. Perhaps surprisingly, the government deserves some of the credit!

Many mortgage borrowers have done pretty well out of the financial crisis. Interest rates have tumbled to very low levels; so as long as you’ve been able to keep your job and meet your monthly repayments, your housing costs should have been on the low side.

Of course, that’s assuming you were able to get a mortgage in the first place. That’s where things have been tough since 2008. Potential borrowers with small deposits or poor credit ratings have often struggled to get a mortgage at all. The same has been 1 for self-employed people as well as anyone wanting an interest-only mortgage.

Thaw

However, the mortgage market is now thawing and we’re beginning to see a ‘best-of- both- worlds’ situation. Lenders are willing to lend to a wider range of borrowers while interest rates remain very low.

To be clear, the mortgage market still isn’t as open as it was back in 2007, but we are definitely seeing a change – the Council of Mortgage Lenders (CML) expects that mortgage lending will reach £156 billion this year, compared to £142 billion in 2012.

One reason we’ve seen this thaw is the Government’s Funding for Lending Scheme (FLS). This provides the banks with extra cash to lend out cheaply to homeowners. Banks are also finding it easier to access cash on the wholesale financial markets, so that has also contributed to the mortgage thaw.

Deals

So, with the market thawing, just how good are the mortgage deals on offer right now?

Well, the really good news is that the deals for buyers have improved greatly, as you will see if you click on our “Mortgage Best Buys” tab.

Interest rates are bound to start rising eventually – maybe in 2015 – so locking in a cheap rate now on a longer term fixed rate makes a lot of sense. We’d suggest that the five year deals are better for the majority of borrowers, because it makes sense to lock in an attractive rate for as long as possible.

What’s more, some mortgages come without an arrangement fee which makes them even cheaper. When you’re evaluating mortgages, it’s tempting just to look at the interest rate, but the fee is important too – some mortgages come with fees as high as £1500 or even £2000.

Brokers

There are some great mortgage deals on the market at the moment, but sorting out the good from the bad and the down-right ugly can be quite daunting.

You could now go direct to a lender and ask for one of the deals – in fact, you have to go direct to the lender if you want one of the HSBC deals. But actually, there’s a lot to be said for speaking to a whole of market mortgage broker before you make a final decision.

Brokers can help speed up the application process and are especially useful if your credit history is less than perfect. We can help you find the deal that is best for you, so why not get in touch with us now, and find out how we can help.