A message from our Mortgage partners Fordon Group
A further sign of stable market activity is the continued resilience of the mortgage market, with the continued rise in the number of approvals. Loan to Value ratios have been rising, with the national average LTV for first time buyers now at 78%, its highest ever post-GFC value. This shows that banks are keen to continue lending. Oxford Economics is now not expecting a base rate rise until May 2020, amid wider economic uncertainty, and mortgage interest rates have stopped increasing. This maintains the affordability of mortgages and supports house prices.
HOUSING MARKET OVER THE PAST YEAR
UK
Over the past year, house prices in the UK have increased by nearly 2%. As a result, a typical three-bedroom semi-detached home in the UK, now costs an average of £303,199. Looking at this in more detail, the UK house price index in August 2017 had grown to 4.5%, in January 2018, growth slowed to 3.8% and in May 2018, the index further dipped to 1.7%.
The growth rate is under the Consumer Price Index (CPI) inflation rate of 2.3% which will hopefully prompt more buyers and sellers into the market. Furthermore, data provided by The Office for National Statistics (ONS) shows that house prices in the Capital are falling at their fastest annual rate since the depths of the financial crisis in 2008. The ONS, have reported that rents have also dropped at the fastest pace in eight years.
London
According to Reuters, London has been the hardest-hit property market in the UK since the Brexit vote in 2016. Buyer appetite in the Capital, has been affected by the concerns over the stability of financial services jobs and tax uncertainty after Brexit. However, there are signs of improvement, as house prices in prime locations of London, such as Kensington, are still increasing by 12.7% annually, showing that confidence in primed-location properties remains strong.
Brexit
The Bank of England increased interest rates from 0.5% to 0.75% in August 2018. Analyst’s have predicted that over the course of the next two years, there will be further interest rate increases as a consequence of Brexit. In the event of a no-deal Brexit, Mark Carney, Governor of the Bank of England has suggested that UK house prices could plummet by up to a third over the next three years.
To conclude, the future of house prices in the UK will depend heavily on the event of Brexit and whether the UK can make a deal with the EU. If the UK and the EU are unable to make an agreement, it may cause Sterling to depreciate, interest rates and inflation to increase, causing mortgage rates to increase tremendously and house prices to plummet.
On the other hand, if the UK could make a deal with EU, the UK could restore its confidence, gradually improving its economy, leading to an overall improvement in the housing market in London.
AT FORDON, WE HELP OUR CLIENTS WITH THE FOLLOWING FINANCE SERVICES
Purchase, Refinance, Rental Properties, Debt Consolidation
Home Improvement, Rate Reductions, Good/Bad Credit
Commercial Lending, Home Equity Loans, 2nd Mortgages and bridging loans
A few examples to share from recent client experiences
EXAMPLE 1
A young couple from London we helped to purchase their first home
First time buyer Best Buy rate is currently 1.29%
Borrowing £250,000
Property value £320,000
Monthly mortgage payments £837
Rate 1.29%
Completion time 4 weeks from application submission.
EXAMPLE 2
Client we helped with a remortgage of their residential home upon renewal of their existing mortgage.
Remortgage residential best rate currently 1.39%
Borrowing £270,000
Property value £590,000
Monthly repayment: £917.32
Completion time: 2 weeks from submission.
EXAMPLE 3
Client we recently helped to purchase a buy to let property.
But to let purchase Best Buy rate 1.68%
Purchase price: £670,000
Mortgage: £502,000
Deposit used: 25%
Monthly repayment: £703.50
Completion time: 4 weeks from submission.
EXAMPLE 4
Client we helped with a remortgage of his existing buy to let property
But to let remortgage Best Buy rate 1.41%
Property price: £790,000
Mortgage: £420,000
Monthly repayment: £493.50
Completion time: 2 weeks from submission.
We value your time and would love to arrange a phone call or a face to face meeting to understand about your financial priorities, needs and mortgage journey. Feel free to contact us on 02030597720 or 07956122207 to arrange a free consultation. Alternatively, you can reach us on info@fordongroup.com
