Has Christmas come early?
Posted on 13 November 2014
Well the clocks have been turned back, the Witches have put away their broomsticks for another year, and the fireworks have been well and truly flying, which means the next big event on the calendar is Christmas! Where has the year gone? Is seems just yesterday that we were welcoming in 2014, looking at pay rises outstripping inflation, the impending arrival of the Mortgage Market Review, a likely rise in the bank rate and the World Cup in Brazil. There’s been a few shocks along the way (though not in the World Cup!)
Wage growth hasn’t outstripped inflation, instead salary settlements have remained low (around 0.7%), while inflation has fallen to around 1.2%, taking pressure of the MPC to raise the bank rate. Also while the headline unemployment rate has also fallen (now 6%) this has largely been driven by a large increase in the self employed over the last year. As numerous politicians have been telling us, the economy may be doing well but few people are really feeling it so far.
The Mortgage Market Review snuck under the press radar and only as it was about to come into force on the 26th April did it start to get some coverage, mostly focusing on some of the more ludicrous questions that lenders were proposing to ask, and the increased amount of time it would take to see an individual lender about a new mortgage application.
The MMR and the soaring house prices in London and the South East (in comparison to the rest of the country) has definitely led to a slowdown in the mortgage market, although it looks as if it’s hitting the high street worst of all, particularly remortgages.
With prices in London still up at around 18.4% according to the latest Land Registry figures, it’s no surprise that purchase business should be slowing down, as would be buyers and movers adopt a more cautionary approach. However in September the British Bankers Association highlighted that remortgage business was down by 24% year-on-year, which caused few raised eyebrows here. Our remortgage business has been remarkably constant over the past few years with no significant reduction, so perhaps the stricter rules and longer timescales are hitting the high street lenders harder than brokers.
So what does this mean for borrowers as the festive season looms? It may be that many borrowers feel trapped with their current lender, by existing criteria or a change to their circumstances, however a nice turn of events has meant that mortgage rates have been falling to date like autumnal leaves from a tree, and it isn’t quite a gloomy as it may seem. There are still some low rates to be had, especially in the longer term fixed rate arena. For those thinking about buying for the first time or moving, it’s a time to be careful about getting good value for your money, but for remortgages, this should be a prime time to take advantage of low rates.
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