What will influence the property market this year?

These blogs and the information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation. If you require any further clarification please contact Derngate Wealth.

Your home may be repossessed if you do not keep up repayments on your mortgage

There are several factors that will influence not only house prices, but the availability of homes for sale this year:

Low interest rates

In late spring it is expected that rates will rise by an additional 0.25%, taking the base rate up to 0.75%. With more than 50% of all borrowers on fixed rate mortgages, most homeowners won’t notice this rise. There aren’t any further rate increases expected and mortgages will remain cheap, although inflation will outpace wage rises.

A rise in house building

Home building has increased; 217,000 new homes were coming on to the market in 2016-17, which is a rise of 20% on the previous year. Although this brings us back to the levels seen before the financial crash, it’s still short of the government’s 300,000 target. If migration numbers continue to fall and there is a continued increase in construction, supply could start to meet the demand for affordable homes.

First time buyers will triumph hover landlords

Buy to let lending is in decline, freeing up homes for first time buyers. In 2015, landlords bought almost 120,000 houses with buy to let finance but this is expected to fall below 80,000 this year. A rise in taxes and tougher lending criteria has tipped the balance in favour of homeowners.

Stamp duty cuts and Help To Buy

Stamp duty has been abolished for all properties up to 300,000 bought by first time buyers. This could save 20% of first time buyers up to £5,000. The Help To Buy scheme has also been given a boost of £10bn providing financing until 2021.

Relief for tenants

For many years landlords have been consistently increasing rents, but they are finding that they can longer push up prices. The average UK rents rose by less than 1% in 2017, and actually fell in London. Salaries are under pressure from inflation and therefore it is expected that rents will remain the same throughout 2018. There is also a new ban on letting agency fees, which will also help to keep rents down, although there is still no fixed date for the ban to be introduced, although it is expected to be this year.

If you are thinking of buying a property, whether it’s a first property or you wish to move up the property ladder, contact Derngate Wealth today.

https://www.theguardian.com/business/2017/dec/26/six-factors-influencing-the-property-market-in-2018

 

February 23, 2018adminBlog

When will interest rates rise?

These blogs and the information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation. If you require any further clarification please contact Derngate Wealth.

Your home may be repossessed if you do not keep up repayments on your mortgage.

It looks like there will be an interest rate rise in May, after the Bank of England announced in February that it will need to raise rates in order to tackle high inflation, which remained at three per cent in January 2017.

We have enjoyed historically cheap mortgages for almost ten years, but this could be coming to an end given that over the last 18 months, mortgage lending has been propped up with over £100bn from the Term Funding Scheme and this will end very soon.

Some banks have already increased some rates on some of their mortgages but this doesn’t mean that the market isn’t still extremely competitive. This is stopping rates from rising too sharply.

A rise in rates will be a shock to many people; especially those who have never experienced a rate rise before. However, a rate rise will have been factored in when they bought their first home in the past ten years given that new rules were introduced four years ago to curtail high risk lending.

In terms of how it will stack up, if you have a mortgage of £200,000 you will need to find an extra £300 per year if rates rose by 0.25 per cent. Borrowers need to understand that we have had an exceptional period of low interest rates and many now believe this is the norm, and that before the financial crisis in 2008 the Bank of England Bank rate was five per cent and average mortgage rates well over six per cent.

Mortgage rates are very unlikely to return to five or six per cent again, even if rates go up a few times a year. Many experts believe that it will settle at two per cent given that the economy is still recovering and Brexit is causing further uncertainty.

Those with a fixed term rate will be unaffected for the term of their mortgage (usually around two to five years). As rates are expected to rise rather than fall, a fixed rate could be a safer bet for those seeking mortgage products especially for those with limited income.

If you are nearing the end of your mortgage term, you need to consider remortgaging to avoid paying the lender’s variable rate. In fact, you should really get advice around six months before your current rate expires.

Talk to Derngate Wealth today to find the best mortgage deal for your own circumstances.

https://www.theguardian.com/money/2017/aug/08/mortgage-rates-rise-borrowing-costs-bills

Interest rate rise could mean an increase in your mortgage payments

These blogs and the information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation. If you require any further clarification please contact Derngate Wealth.

Over four million homeowners will see their monthly mortgage repayments rise following the announcement that the Bank of England has increased interest rates for the first time in over 10 years. Interest rates have risen to 0.5% from 0.25%, reversing the emergency action that was taken immediately after the Brexit vote.

The move by the Bank of England comes amid householders increase in rising prices, which is outstripping the growth in earnings, following the devaluation of the pound since the EU referendum.

The average rise for those on a variable rate will £22 per month, although the recent popularity of fixed-rate mortgages (due to the competitive deals that have been available) means it will initially affect less than half of households.

The Governor of the Bank of England, Mark Carney, has reassured consumers that it wasn’t the start of a sustained upward trend in rates. He stated:

“To be clear, even after today’s rate increase, monetary policy will provide significant support to jobs and activity. And the monetary policy committee continues to expect that any future increases in interest rates would be at a gradual pace and to a limited extent.”

According to The Telegraph, experts are expecting two further quarter-point increases in interest rates by 2020, which would leave them at 1%.

The rise in rates has raised questions over the ability of homeowners to repay their outstanding loans given that there has been a steady rise in personal borrowing and credit cards in order to offset higher prices.

According to accountancy firm Moore Stephens (The Telegraph) over the first year of this rate rise, households are expected to face around £1.8m in additional interest. In addition, Moore Stephens has estimated that households will pay around £465m in additional costs on credit cards, overdrafts, personal loans and car finance as a result of the rate rise. In fact, in recent months there have been some signs of consumers using their savings or borrowing money via bank loans or on credit cards to keep up with day-to-day spending.

On the flip side, savers will benefit from the rate rise, with the increase in rates already being passed on by some banks.

If you would like to find out how the recent rate rise will affect you, contact Derngate Wealth today.

Your home may be repossessed if you do not keep up repayments on your mortgage

– https://www.telegraph.co.uk/personal-banking/mortgages/happens-fixed-rate-mortgage-ends/

 

 

What will happen when your fixed rate ends?

These blogs and the information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation. If you require any further clarification please contact Derngate Wealth.

Every month there are hundreds of thousands of people who’s fixed term mortgage deal has ended. For most, if not all of them, their monthly repayments will rise and for some people this increase will be considerable.

When a fixed rate ends, a borrower will automatically move on to a variable standard rate, also known as a SVR mortgage. The interest rate on this type of mortgage is far higher than most fixed rate deals, and can be as much as 5%. A lender can offer a borrower a two-year fixed rate deal at a vary attractive rate of less than 1%, but once the deal ends it can jump up by hundreds of pounds more each month.

SVR mortgages don’t track the bank rate directly, but is set by the individual lenders and can rise and fall at the lender’s discretion. However, they do tend to move more or less in line with wider interest rates as set by the Bank Rate. Therefore if you notice that interest rates are rising, you can expect your SVR to go up too.

When your fixed rate mortgage does come to an end, you can do nothing and stay on the SVR rate, or you could remortgage to a new deal. If you wish to try and remortgage, make sure you look into this before your fixed rate ends so that you have something in place when your deal ends otherwise you could shift to a SVR without knowing.

Make sure you get good advice and use a broker who can compare the whole of the market, rather than sticking to the same lender, as this may not be the best deal available to you. If your property has risen in value since taking out the mortgage you will have more equity and can benefit from more competitive rates.

If you want to make overpayments on your mortgage, you might want to stay on the SVR as there will be no early repayment charges attached. This means you can pay off your entire mortgage without any penalties. In addition, if you have a small mortgage you may find that the fees associated with a new mortgage outweigh the additional repayments if staying on SVR. It’s also worth noting that you will need a good credit score in order to remortgage.

If you are nearing the end of a fixed term mortgage deal and would like to know what your options are contact Derngate Wealth today.

Your home may be repossessed if you do not keep up repayments on your mortgage

– https://www.telegraph.co.uk/personal-banking/mortgages/happens-fixed-rate-mortgage-ends/

 

What an interest rate rise could mean for you

These blogs and the information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation. If you require any further clarification please contact Derngate Wealth.

For the first time in a decade, the Bank of England has hinted that there will soon be a rise in interest rates.

Bank of England’s rate-setting committee member Gertjan Vliegh has argued for a rate rise to be put in place in the next few months in a recent speech to the economists in London.

If interest rates were to rise, there would be a rise in householder’s monthly bills, provided they have variable or tracker mortgage. For those on a fixed rate mortgage, although they are protected, their mortgage will rise once the deal comes to an end. If you are on a variable rate there will be a buffer in place to help you to cope with an increase in rates.

The rise in costs will all depend on the terms of the mortgage. The average standard variable rate mortgage at present is 4.6% according to Moneyfacts. Those with a repayment mortgage of £200,000 would pay an extra £28.72 based on a mortgage term of 25 years, if rates rose by 0.25%.

With a rate rise possibly imminent, now could be the time to remortgage onto a fixed deal or take out a fixed rate mortgage if you’re about to buy a property.

For savers, this is great news. The average saving account pays just 0.4% interest, down from 1% five years ago. We have had years of rock bottom rates, with a £20bn fall in the amount invested in the last 12 months alone. However, the expectation is that many banks will want to be seen to be passing on the full rate rise to savers.

If you would like advice on how any rate changes could affect you, contact Derngate Wealth today.

Your home may be repossessed if you do not keep up repayments on your mortgage

https://www.theguardian.com/business/2017/sep/15/uk-interest-rate-rise-what-it-could-mean–savers-mortgage-holders