Preparing For Battle
Nothing gets the juices flowing like a good rate of interest, just me? OK, so our bread and butter business isn’t the most exciting subject matter in the world but, for anyone who might be needing to access funds secured against their home it is important to be aware of what is going on.
So what is going on?
Well, for the last 12 months or so the property market has been a bit…mental. That may not be the term you hear Andrew Bailey mutter at his meetings but it is the one I am sticking to.
Fuelled by the melting pot of a desire for more space, increased savings (due to lack of spending in lockdowns), the normalisation of home working and a cut to the rate of stamp duty – the demand for properties has soared.
This is, of course, all underpinned by a lack of stock in the first place.
The net result has been a bit of a bunfight for the right properties- demand of flats has no doubt fallen in some areas.
But how lenders have operated over the last 15 months has been interesting.
During the first half of the pandemic mortgage lenders -like many of us- panicked. Faced with the fallout of a never before see global catastrophe they reduced their offerings to customers – starting with those who had lower deposits.
Their PR teams will tell you the reason they did this was due to the disruption of having to move staff to working from home, system issues and absences due to sickness. The cynic in me would suggest that they were concerned that there could be a major ‘correction’ to the market and they didn’t want to be left with a bunch of customers in a negative equity position…but I could never be that cynical…🙄
Over the deep dark times of the autumn and winter we were regularly having to explain to clients that unless they came armed with a 15% deposit – either for a new purchase or a simple remortgage, their choices were limited and the rates were comparatively high.
But that is all in the past and the vaccination programme combined with the global outlook thawed lenders cautious approach somewhat. Buoyed by the governments help offsetting the risk for 95% mortgages, lenders started to come out of their shell – their stomachs hungry for the business they had lost out on (or should that be turned their back on?)
And so today, there is somewhat of a rate war taking place.
We have been recently arranging 5 year fixed rates at 1.09% (in my 14 years doing this, I cannot remember a time when they were so low) and the, headline grabbing, sub 1% 2 year fixed rates are back.
Where does this leave you?
Well, with the ability to secure interest rates up to 6 months of having to need the funds, it is a pretty good time to start planning ahead. Be that for an impending purchase or simply just to remortgage your current rate to avoid paying more.
The rate war won’t last forever, lending targets will be met, back office processes will be damaged through overeating and the PR teams will trot out the party line as to why the interest rates have edged back up.
But, through a bit of planning and the right approach, it could pay to sneak in whilst they are fighting.