Blog

Private Finance's Weekly Mortgage Memo - 17th August 2020

This is our summary of news in the mortgage market over the last week that we thought was particularly interesting. Our views are often cited in several national publications, including; BBC News, The Times, Telegraph, City AM, FT Adviser and Daily Mail, as well as a number of key trade publications, so this should keep you ahead of the curve. If you have any questions on any of these stories, or would like further information, please do not hesitate to get in touch. 

At a glance:

  • The perfect storm for rate rises...
  • The new key battleground for lenders: low LTV products
  • Physical valuations are back... but so are delays

 The perfect storm for rate rises...

Over the course of the last few days, several issues have compounded to create what we believe is the perfect storm for rate rises. High levels of uncertainty in the market, increased risk appetite from lenders, huge demand from borrowers seeking capital, lower processing capacity from lenders and swap rates increasing for the first time in over a year all indicate a sharp rise in rates is on the horizon.

  • We believe rates have bottomed out. Despite this, there will be rate cuts for lower LTV products. However, we are likely to see rate rises across the board as lenders look to increase their margins
  • With a number of people set to struggle due to the economic downturn, further difficulty could arise for borrowers due to rate rises increasing costs for them in the long run.

 The new key battleground for lenders: low LTV products

Lenders will continue to cut rate and fees on lower LTV products to attract lower risk borrowers. HSBC did this this week, reducing their 2-year fixed to 1.14% and their 5-year fixed to a market leading 1.34%, both with a £999 product fee at a maximum of 60% LTV.

  • Any savings gained by increasing rates on higher LTV products can be passed on to those who are less risky borrowing propositions, including existing homeowners with large equity positions and those with large cash deposits.
  • This space will be the key battleground for lenders moving forward. We expect to see further product innovation in this area.

 Physical valuations are back... but so are delays

During the height of lockdown, we commented on how efficient lenders were in the face of the huge increase in online valuations. We believed this indicated a new normal going forward. However, many lenders are reverting back to physical valuations and relying on valuers’ comments.

  • The market is being driven by trepidation at the moment. This could be a measure of high levels of uncertainty and extra lender caution due to large predicted house price falls in the coming months.
  • This is leading to delays in processing and extending offer times with some lenders.
  • Once market activity stabilises, we hope more lenders will return to using online valuations as they benefit all parties in the mortgage process. 

Private Finance's Weekly Mortgage Memo - 17th August 2020

ARRANGE CALL BACK

Leave this field blank
*  =  Required field

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

© Private Finance Limited, 2020. Private Finance provides independent mortgage advice and arranges individual mortgage solutions for clients. Private Finance is a trading style of Private Finance Ltd, 29 Lincolns Inn Fields, London, WC2A 3EG, registered in England no. 3855776 and its Appointed Representatives. Private Finance Limited is authorised and regulated by the Financial Conduct Authority (FCA registration number 310566).

Private Finance Ltd is rated 4.96 stars by Reviews.co.uk based on 940 merchant reviews

4.96 / 5 Rating
940 Reviews
I didn`t know I could get a mortgage, and a competitive rate, so quickly - Sean (Hirschle) was friendly, approachable and very efficient. As a first time buyer Sean was very helpful. I would definitely recommend!
Fantastic service. Truly outstanding. Luke has, at all times throughout the process been Professional, prompt, efficient and helpful. But most importantly the deals Luke put forward were extremely competitve. Can't recommend highly enough.
Excellent service, it really felt like they took the time to understand what we were trying to achieve and then worked to develop a bespoke solution that worked for us. It really felt like they were on our side throughout the whole process and our broker, Simon was knowledgeable, friendly and proactive. Thanks so much team!
The British Mortgage Awards 2015 back to top