Blog

Private Finance's Mortgage Memo - 13th April 2022

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.

  • Lenders increasingly open to later life retirement
  • Wealth managers recommending longer-term fixed rates
  • Mortgage rates stabilise following significant increases

Lenders increasingly open to later life retirement

In a little know and non-advertised criteria change NatWest has changed their maximum retirement age for a person working to 75 years-of-age instead of the previous 70, allowing borrowers to extend their mortgage term potentially giving them better borrowing flexibility. This is not a piece of criteria unique to NatWest, but it is very helpful to have another mainstream lender able to offer facilities of this type at the mainstream rates they offer. NatWest will of course still sense check, for example, if a borrower is employed in a physical role the underwriter may say 67 or 70 is a more reasonable retirement date, but for someone in a non-manual role, if it makes sense, and they legitimately intend to retire later in life then this is a great additional option to take advantage of.

  • With increasing life expectancy, coupled with the increasing cost of housing, we are seeing people having to work until later in life to pay off debts or retire comfortably and believe that mortgages that extend into later life will increasingly become the norm, especially in a higher interest rate environment.

Wealth managers recommending longer-term fixed rates

The cost of short-term borrowing and long-term borrowing has converged, mirroring the cost of borrowing at an institutional level and only 0.15% separates the best 2-year fixed from the best 10-year fixed at present. We are seeing an increasing number of clients opt for longer fixed terms of 5-years and up and are seeing clients who are referred to us through wealth advisors and IFA’s having been advised to opt for longer-term mortgages both on residential and investment properties, allowing investment into funds long term.

  • This approach makes sense for some borrowers depending on their circumstances and requirements. We have seen a paradigm shift in the interest rate environment, from one where it made sense to take the shortest term mortgage possible post-2008 until late 2021 as it was highly likely a cheaper rate would be available when you came to remortgage, to one where rates are rising and it is possible that the base rate could catch up to the best available rates today in the coming year or two.
  • We would like to see more product innovation when it comes to ERCs with more longer-term products giving borrowers the ability to either pay off their mortgage after 7-years on a 10-year term for instance. If this was the case, we believe we would see a significant increase in potential borrowers opting for this mortgage type. There are products like this but often they’ll come at a significant premium.

Mortgage rates stabilise following significant increases

This last week was the first time in a very long while that the market leading rates have remained stable as can be seen in the Best Buy table below. Since talk of inflation and base rate rises began towards the end of last year, we have seen consistent small increases on a weekly basis, punctuated with more significant increases.

  • This is unlikely to remain the case for very long, with the next MPC committee meeting scheduled for early May and record inflation recently recorded in the US, likely to be replicated here we suspect we will see further increases to the base rate in the coming weeks and months, further driving up mortgage rates.
  • We have seen significant changes from lenders implemented at short notice and from a client perspective we highly recommend if you have found a product that suits to ensure all the requisite documentation is delivered as quickly as possible to ensure you do not miss a quoted rate.

Private Finance's Mortgage Memo - 13th April 2022

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, 2022. 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).

The British Mortgage Awards 2015 back to top