The Bank of England today opted to hold the base rate at a record low 0.1% in order to support the post-pandemic recovery.
Lenders are increasingly confident about the future and are competing for market share, which is great news for borrowers. Mortgage rates remain close to all time lows and there have been few better times to borrow against your home. To understand more about why, here are our latest five things you need to know about the mortgage market right now.
- The economy is recovering quickly
The Bank of England (BOE) today upgraded its forecast for economic growth and policy makers now expect the economy to surpass its pre-pandemic size as early as the final three months of the year.
The economy appears to have adjusted well to lockdowns, shrinking just 1.5% during the first three quarters of the year. The bounce back is already underway, and the BOE expects the economy to expand 4.5% between April and June. The recovery is likely to accelerate over the course of the year, driven by the successful vaccine roll-out and elevated consumer spending.
- Banks are increasingly eager to lend...
Every three months the Bank of England surveys lenders to better understand trends and developments in credit conditions. The latest survey, conducted during the three months to February, suggests lenders are ramping up for a boom in mortgage lending.
A net balance of +37.6 of survey respondents said they planned to increase mortgage lending over the next three months, the highest reading on record.
- ...particularly to buyers with small deposits
The survey also revealed that willingness to lend to those with small deposits has soared, particularly if you have a deposit of 10%. That will be welcome news for first time buyers.
In addition, the government has launched a scheme designed to encourage banks to offer 95% mortgages (for those who have a 5% deposit.) At the moment, rates on two and five year fixed products with the major lenders are around 4%, so if you can stretch to a deposit of 10%, it’s likely you can get a much better deal.
- Product choice is improving for landlords
Products targeting landlords are climbing rapidly as lenders seek to gain market share. Investors can choose from 2,333 products, suggesting the sector has recovered to 81% of pre-pandemic levels, compared to 68% recovery in the wider residential sector, according to Moneyfacts.
Knight Frank Finance clients can enjoy rates of 1.19% on a 2 year fixed rate UK buy-to-let mortgage at 60% LTV.*
- Innovation is drawing new products to Later Life Finance
Product choice in the Equity Release market is also climbing, and there are now more than 500 products for homeowners to choose from. More choice is fuelling interest, and enquiries from eligible homeowners over the age of 55 climbed 30% in the first quarter compared to a year earlier, with growth concentrated among high net worth homeowners, according to Knight Frank Finance data.
Find out more about our Later Life Finance services here.
Do get in touch for more advice on navigating the current mortgage market to meet your current needs and future goals. We'd love to help you.
* Mortgage Advice; please note that all products show an indicative rate only and may not be suitable for you. The choice of interest rate and product terms will depend on your circumstances and the amount of the mortgage. Before you make a mortgage application, we will carry out a full review to establish your needs and preferences and if you meet the criteria, we will give advice and make a recommendation to you. There may be a fee for mortgage advice. The precise amount will depend on individual circumstances but we estimate that it will be up to 1% of the agreed mortgage. All mortgages are subject to status. Please note that these are indicative rates only. Products are subject to withdrawal without notice. You must be 18 or over.