Mortgage market quarterly review
David Lauder, one of ESPC’s mortgage advisers, takes a look at what the past few months have been like across the mortgage market.
How have the last few months been for ESPC Mortgages?
The last few months have been busy for ESPC Mortgages, with plenty of activity in the mortgage market. Generally, this is what we’d expect to see as this is traditionally one of the busier three month periods of the year.
There was a slight drop in activity in August which can happen due to people going away on holiday, but we would expect to see a pick up again in the couple of months before things quieten down again towards the end of the year for Christmas.
It has been anticipated that interest rates were going to increase but we haven’t seen that happen yet. Has the Bank of England given any indication of when they expect rates to begin to go up?
Yes, there were indications of a potential small rate rise at the end of the this year, however more recent speculation seems to indicate it could be spring next year before this increase comes into play, but everyone has their own opinion on this. I think it will come at some stage in the six to nine months but I expect it to be a very gradual increase, as the bank are very conscious not to jeopardise people’s budget.
What initiatives are currently available to help first time buyers?
Recently more mortgage providers advised that they will now offer mortgages for 95% loan to value and only require a 5% deposit. This is a big step forward and will mean, potentially, that more people can become home owners and move up the property ladder.
The rates also seem very fair which should make payments more affordable. As always, this will be subject to satisfying lending criteria and it is too early at this stage to know how strict that will be but it is certainly a move in the right direction. This initiative is not just for first time buyers but also home-movers, so we are potentially going to help more people which hopefully in turn can stimulate the market.
Overcoming strict lending criteria has been an issue faced by a lot of first time buyers over the last couple of years. Is this still as strict as it once was or is there any more flexibility?
I think mortgage providers’ confidence has gradually grown and they have an appetite to lend money again. Generally, the lending criteria is fair. It is based on affordability, which is your income against your expenditure, and factors in your fixed monthly commitments such as loans or credit cards.
Lenders also have their own credit score which needs to be passed and typically the better deposit you have, the easier the score is to pass. If you are paying back financial commitments on time every time and showing you can manage credit appropriately, then mortgage lenders are usually happy to lend money.
Speaking to an independent mortgage advisor is advisable so that they can guide you through the process and highlight any potential obstacles.
How do the last few months of 2015 look for the mortgage market?
I would expect the next two months to be relatively busy with activity before the traditional downturn around November or December. Last year was busy right up until Christmas, but I think that was largely due to the independence referendum and activity picked up after the vote. This year is likely to be more in line with previous years, where September and October should be fairly busy, followed by a gradual downturn.
What are your top tips for someone who is looking to save up enough money to be able to afford a deposit on their first property?
Setting up a regular standing order to a savings account to ensure you are building up your deposit is important. Making this payment early in the month, after your salary is credited to your account, ensures your savings are building up and also gives a good idea of what money is then left to spend for the remainder of the month. This is good practise for when you get a mortgage as by then you will be in the way of making a fixed payment on time every month.
Also try to keep building up your credit score to ensure you will be more likely to meet the lender’s criteria for mortgage purpose. Little things like being on the voter roll, taking out a credit card and repaying it every month will help your score build up.
As independent mortgage brokers, ESPC Mortgages can help with all aspects of understanding your budget, applying for a mortgage and dealing with the relevant insurance requirements. Pop in for a no obligation chat with David or one of the team at our Edinburgh Showroom or give them a call on 0131 620 8680.
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