The economist published last July suggested that a significant increase in house prices could see some affordability restrictions relaxed. In the meantime, we will see more lenders offering higher income multiples to select groups of first-time buyers, based on either their profession or income.
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The comeback of a two-year fixed to dominate the market in 2020.
A Five-year fixed-rate deals were huge last year, with cheap rates and economic uncertainty leading buyers and re-mortgagers to lock in their deals for longer. However, there’s only so far that rates can drop before banks begin to look elsewhere for profits. Cash-strapped first-time buyers taking out 90% and 95% mortgages could be the next beneficiaries, as two-year fixes still have plenty of room to fall in price at high loan-to-value (LTV) levels. You’ll be able to borrow for longer Mortgage terms of up to 40 years are becoming more common, and with first-time buyer affordability remaining stretched, it’s likely that this trend will continue. In 2020, we could see more lenders loosen their upper age limits to make longer-term borrowing options available to more than just the youngest first-time buyers.
January property sales to be record high over the last 6 months. This trend in sales is a great news for anyone looking to re-mortgage in the first half of the year, as you’ll usually be able to lock in a new rate up to six months before your current deal expires. When comparing mortgages, ensure you consider upfront fees and early repayment charges, and don’t just focus on cheap initial rates.
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