Quarterly mortgage market review: December 2014
David Lauder tells us what's been happening recently in the mortgage market and gives us his top tips for getting a mortgage in 2015
Q. Taking a look at 2014. What was the year like for ESPC Mortgages?
It has been another good strong year for ESPC Mortgages, pretty similar to the previous year, collectively the best for some time. We are now in the traditional quieter part of the year; however ESPC Mortgages are still busy. We could put this down in part to the Scottish Referendum in September where there was a lull before this but activity since then has picked up. This is my own personal experience but I know a few of my colleagues have not been as busy since so each of us are experiencing busy periods at different times.
Q. There were a number of changes introduced into the mortgage market, most noticeably the introduction of the Mortgage Market Review (MMR) in April – what has the impact of this been?
Initially there were reports of teething problems with some mortgage providers adjusting systems and processes in line with MMR and there was negative press about lenders being stricter. Yes the process is a little longer and yes there is a need for more information for a mortgage application such as three months bank statements, proof of deposit, three months’ payslips etc. but if you are staying within your agreed credit facilities, building up your credit score and the amount you are asking for is realistic and affordable then the mortgage providers are still lending money and basically it is just a more common sense approach. The key thing is to have the required documents prepared and keep a good record of bank statements, payslips etc.
Q. Help to Buy Scotland proved incredibly popular in 2014. Have you noticed any increase in the willingness of banks to adopt incentive schemes to encourage people on to the market?
Help to Buy was popular and we were able to help more people Unfortunately The Help to Buy (Scotland) Equity Loan scheme ran out of money half way through the year for 2013/2014 but they are accepting new applications at present for 2014/15, with funds being released in April 2015.
Some lenders that we can get access too are still continuing to lend as we speak on the open market for any property at 95% borrowing also, so just the 5% deposit requirement. In summary if you have a 5% deposit then you can be helped, previously it was 10%.
Q. Interest rates have remained consistent throughout the year, have you heard any rumours of this changing throughout 2015?
Interest rates have been consistent and there was strong murmurings around a month ago of a small increase in early 2015, only a quarter to a half percent so nothing drastic, this may still happen at some point in 2015 but I would be a rich man if I know exactly when!
Q. Are the banks still offering good rates?
Rates at present are probably the best they have ever been, certainly as long as I can remember. Confidence has returned to the market by the mortgage providers, they all want each other's business and that is good for the consumer. I have certainly seen a change in the last two months in terms of the competitiveness of all providers, the better the deposit the better the rate but even with a 10% deposit rates are still decent, these are favourable times that we will look back on in the future that were unique.
Q. Last year you told us that fixed rates were proving popular, with a strong preference for the stability that they offer. Is this still the case?
Fixed rates are still popular and a lot of clients with the bigger deposits are locking themselves in for longer to take advantage of market conditions, but no case is the same and every clients requirements are different and it is just a matter of finding the correct solution for all clients. A tracker rate with more flexibility to overpay for example may also be suitable for some clients. The tracker's and fixed rates do seem to be priced fairly close to each other nowadays so you do find that most clients take the stability for the small difference between both to give them peace of mind.
David’s top tips if you are looking to buy a property early next year.
- Be prepared with your documents - keep a record of your bank statement for at least the last 3 months, keep within any overdraft facility and make your credit card or loan payments on time every-time. Keep your last three months pay-slips, P60, have evidence of your deposit and also the obvious things such as proof of identification and proof of address
- Have a standing order set up for just after you have been paid for an affordable amount for savings to keep building your deposit up to help your borrowing and affordability options.
- Make sure you are on the electoral roll and also get a credit card. Use it and pay it back monthly, this will help build up your credit score which will be required to pass any mortgage lending score. You are evidencing you can manage credit.
- Speak to an independent mortgage advisor who can guide you through the process, and give you a better chance of finding a solution tailored to your circumstances. They will have access to all the main providers and are likely to be able to have your case approved more smoothly and quickly at what can be a stressful time. They will also be a vital source of knowledge for different scenarios and pitfalls that can happen during the buying process.
David Lauder is Mortgage and Financial Planning Consultant who helps clients find the most suitable mortgage solution tailored to their circumstances along with identifying any other gaps they may have in their finances.
Call him on 07810 522 422.
Read some of David's other articles
- How much deposit do I need?
- Predictions for 2014
- What is an offset mortgage?
- Affordability, how much can I borrow?
The initial consultation with an adviser is free and without obligation. Thereafter, ESPC Mortgages charges for mortgage advice are usually £350 (£295 for first-time buyers). YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOANS SECURED AGAINST IT.