Good news for borrowers with smaller deposits as 95% mortgages re-enter the market

Monica Bradley, our associate Independent Financial Adviser from Kingswood Law, comments on the latest Bank of England base rate decision.

Not for the first time in recent months the policy setters have chosen the “wait and see” approach presumably while they await fourth quarter 2011 economic growth data and the next set of inflation figures. 

For January the Monetary Policy Committee therefore voted for no change in the Bank of England base rate. The Eurozone crisis remains unresolved and we can only hope that the politicians are able to reach agreement to resolve the situation for the longer term rather than the series of sticking plasters that have left the markets unimpressed.


December saw the anticipated seasonal slowdown in the housing and mortgage market, although activity amongst purchasers and remortgage borrowers was ahead of the same period in 2010. 

 

As you would expect in the current economic climate many purchasers continue to opt for the certainty that fixed rate mortgages offer, with 3 out of 4 buyers electing to fix. Those homeowners remortgaging are also still firmly in favour of fixed rates but the proportion is slightly less, with just under two thirds choosing fixed rate deals.

Moneyfacts report that January saw changes in the average rates available, with the average 2, 3 and 5 year fixed rates and 2 year tracker rate all rising very slightly. The average fixed mortgage rates for January are 4.27% (2 year), 4.53% (3 year) and 4.61% (5 year) all of which are below the same period twelve months ago, although average 2 year trackers at 3.50% are marginally above this time last year.

In line with the seasonal slowdown in mortgage activity, lenders reduced the number of products available during December with the number of available deals dropping to a little over 7,000, down by around 5% on the previous month. Already this year we have witnessed several lenders refresh and re-price their mortgage products for the new year, a new lender in the shape of Accord Mortgages start to offer mortgages at 90% loan to value and Newcastle Building Society re-enter the 95% loan to value market. This is good news for borrowers with smaller deposits or lower levels of equity allowing more potential buyers to access the market.

Monica Bradley is from Kingswood Law.  For further information on how the latest base rate decision affects you, please call 020 8643 7777.

With offices in the heart of Cheam Village, within walking distance of Christies’ Cheam office, and backed by a robust administration team, you can rest assured that you will be in safe hands when Kingswood Law takes care of your finances. As such, when you are considering purchasing a new home, remortgaging or buy to let, Christies recommends using Kingswood Law to ensure you find the best deal and the one most suited to you and your circumstances. In addition, Kingswood Law offers specialist advice on protecting your home, income and family, as well as a comprehensive estate-planning service*.

If you would like further information about their services please call 020 8643 7777 or visit www.christiesworld.com and click on Financial Services. Christies Estate Agents work in close association with Kingswood Law to offer its customers unbiased independent mortgage advice.

*Estate Planning services are provided by the Countrywide Group. Your home may be repossessed if you do not keep up repayments on your mortgage. A fee of up to 1% of the mortgage amount may be charged depending on individual circumstances. A typical fee is £95. Your home may be repossessed if you do not keep up repayments on your mortgage.


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How To Be Top

As we enter a New Year Nick Churton of our global Mayfair Group Network takes a look at what may lie ahead for the property market. 

Although mature estate agents are apt to say that they have seen it all before, this time it is different.  No one has seen this market under this set of national and international financial conditions before.  But what is rather refreshing is that the uncertainty now cuts down the speculation aspect of a house purchase and strips the requirement to buy down to the real and age-old essentials.  This makes for easier choices.

Le Corbusier, the pioneering architect, stated that, “The requirements for a house should be to provide a shelter against heat, cold, rain, thieves and the inquisitive”.  He did not add that a house should also provide its owner with an investment return of seven per cent year-on-year. 

For the first time since the 1960s property investment can take more of a back seat in the house buying mindset and, instead, fundamental life requirements can come back to the fore.  Of course with other financial instruments providing so little in the way of return, property is a natural arena in which to invest.  

But with little or no indication about if or when the market, outside central London, will return in any strength we are left with simpler decisions and choices - does a property suit our requirements in size, location, style and price? 

Our needs have been simplified, perhaps in the way they may have been fifty years ago.  With less frenzy and greater choice, for a while at least, this could be a very good time to choose a primary or secondary home for all the very best lifestyle reasons.

We quickly learn to expect that there is an investment opportunity to be gained from property purchase in a rising market.  But we are rather slow to appreciate the reverse is likely in a poor market and/or in particularly adverse economic circumstances as we have now.

2011 was a hard year in property and this year may not be much better. We may have new American, Russian and French presidents, more ructions in Europe and the Middle East, and greater privations at home before we see improvement. But still there is a reassuring level of market activity that has more to do with need than discretion.  This is the market we have and this is the market we have to deal with – and deal with it we will.

Real buyers and sellers should not be deterred.  Indeed they should be encouraged as the more life there is in the property market the more life there is in the economy.  But those still insisting on the sort of financial profit they may have achieved several years ago should perhaps think again and get real. It will be the enlightened who get to the top of the property class in 2012, not those in denial.

020 8643 7777 - sales@christiesworld .com - www.christiesworld.com