This is our take on what is currently happening in the mortgage market. 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.

  • Better 10-year fixed rates than 2-year in some instances
  • Increased enquiry lead time
  • Self-employed borrower market update

Better 10-year fixed rates than 2-year in some instances

We have seen a key Private Bank offering a 10-year fixed at better rates than a 2-year fixed product this week – the 2-year fixed at an LTV of 60% or below is 2.49% and a 10-year at the same LTV is 2.29%. The 10-year fixed rate is better in all LTV bandings.

  • This is remarkable on the face of it; however, SONIA swap rates are lower for 10-year tenors than they are for 1 and 2-year tenors at present.
  • Given the both the economic situation at home, the crisis in Ukraine and the disconnect of the housing market from economic realities we suspect lenders are looking to hedge their risk through less short-term lending. Moreover, longer term rates are better for lenders in terms of overall returns.
  • We are seeing an increasing number of borrowers opt for longer term mortgages (5-, 7- and 10-years), which makes sense if their personal circumstances allow, given the increasing interest rate environment.

Increased enquiry lead time

We are incredibly busy at the minute and had a record February in terms of case numbers, even busier than the February in 2021 which preceded the end of the SDLT Holiday. Demand for remortgages is significantly higher given the changing interest rate environment and this is reflected both in the type of cases we are doing and new enquiries. The interesting fact here is that the majority of purchase cases are from enquiries from 2021 and those who committed to buy in the pandemic are only now able to proceed.

  • The distinct lack of housing supply at present could be putting off sellers and buyers alike. The increased lead time we are seeing from enquiry through to completion, could be obfuscating the realities of the housing market at present with demand being historic rather than current. It could be the case that once this demand that has spilled over from the pandemic and the race for space has waned, we will see a fall or stabilisation in house prices as the market reaches a new equilibrium.

Self-employed borrower market update

Good news for self-employed borrowers as most lenders are now no longer applying any restrictions like they did during Covid to income multiples or loan-to-value ratios for example and now most lenders are understanding of Covid support having been taken, so long as the business can evidence, they are back to normal. Moreover, more lenders, like Newcastle Building Society most recently, are opening-up and adding additional flexibility to their criteria with this lender now accepting 1-year accounts and increasing their potential LTV to 80%.

  • The self-employed market has been trickier one to serve since Covid, and from a broker and client perspective it is great to have more choice for those needing to purchase but not having the classic 2-3 years of accounts figures yet.
  • While a premium is payable above standard high-street rates for these types of clients, it provides a way for clients to purchase and as the years pass and their profits can be evidenced as more sustainable, they will be able to move to a more mainstream lender and more competitive rates.
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