With Brexit seemingly just around the corner and the possibility of further increases to the base rate, 2019 looks set to be a volatile year for the mortgage market.
While this could be a cause for concern in the long run, current uncertainty means that competition between mortgage lenders is fierce and opportunities for you to grab a great deal are plenty. So, whether you’re a first-time buyer or a buy-to-let landlord, being proactive in the early part of the year could end up saving you thousands. Here’s a rundown of the trends we expect to see emerge in the mortgage market over the course of 2019:
The number of first-time buyers being accepted for mortgages with low deposits is increasing, signalling that now could be a good time to land a great deal if you’re looking to get on the property ladder. This price drop for 95% mortgages is in contrast to the current trend at lower loan-to-value (LTV) levels, where rates have been rising. The battle for new mortgage customers should continue, meaning even more competitive rates could potentially become available. Here are some other possible changes which would also benefit first-time buyers:
Young people are finding it increasingly difficult to save a deposit and, in response, the Building Societies Association has been trying to convince its members to be more lenient when it comes to first-time buyers. Since the financial crisis in 2008, 100% mortgages have disappeared. Whilst bringing them back would be a controversial move, there’s a good chance of these deals coming back to the market in 2019. If they do, they’ll probably be reserved for people in certain professions or those with a very strong credit record and proof of significant income.
Professional mortgages started to make a comeback towards the end of 2018, and they should continue to grow in number over the next 12 months. Lenders usually cap their offers around 4.5 times the annual income of the applicant (combined income if it’s a joint application), but professional mortgages allow those in certain professions (e.g. doctors and dentists) to borrow up to 6 times their salary. Lending at multiples of over 4.5 is considered to be a risk, however, the high levels of competition could see more lenders offering these types of deals in the future.
Second steppers can often have a harder time finding a mortgage for their next home than they did finding their first. Low wage growth and increasing house prices have created an affordability gap which can be hard to overcome. With uncertainty around Brexit becoming a major concern, many are resolving to stay put, which could mean that lenders are incentivised to offer low-cost remortgage deals in the near future.
If you’re looking to remortgage, you’re most likely looking for a deal with an LTV ratio around 60-80%. Historically, these LTV levels have offered great rates. However, they’ve been creeping up in price in recent months. With further increases to the base rate on the horizon, the chances of rates coming down are low. Longer-term fixes will offer the best value in this area of the mortgage market and cashback/fee-free incentives will grow in number as lenders look to woo remortgage customers.
Everybody knows by now that staying on your lender’s standard variable rate (SVR) costs you thousands more than the best deals. If you’re looking to remortgage, now represents an opportunity to do so at a great rate. Five-year fixed-rate mortgages are increasing in popularity and, as such, offers are becoming more competitive. With switching offering savings of up to £4,000 per year, many people are likely to opt for a deal of this kind in 2019.
Last year, lenders began offering remortgaging products to those with Help-to-Buy equity loans. Most of the deals on offer, however, require you to pay off your equity loan in full, with little available to those who can’t afford to do that. More people are coming to the end of their fixed terms in 2019, and as such, we expect to see more lenders launching mortgages for those with Help-to-Buy loans.
Landlords have had a tough time over the last couple of years, but 2019 might just offer some relief. New affordability criteria introduced in Autumn 2017 have made it harder for some landlords to secure loans, with lenders increasing the minimum interest cover ratio (ICR) to 145% or more. This means that rental income has to be at least 145% of the proposed mortgage repayments before they’ll approve a loan. Lenders are beginning to relax their ICRs, with deals now available at an ICR as low as 125%. This should encourage more lenders to follow suit, meaning the buy-to-let mortgage market could become a little more enticing to would-be landlords.
In October last year, five-year fixed-rate mortgages for landlords hit an all-time low of an average 3.4%. Lenders also began to offer ten-year fixes on buy-to-let mortgages, another proposition which could increase in popularity throughout 2019. As with remortgages, fee-free deals are growing in availability, as lenders seek to tempt landlords who are looking to refinance their portfolios. Cashback offerings on buy-to-let mortgages also look set to increase over the coming year.
The easiest way to find a great mortgage deal is to speak to a broker with access to the whole of the mortgage market. Whether you’re buying your first home or looking to grow your property portfolio, Key Mortgage Advice can help you find a mortgage perfectly suited to your circumstances, usually at no extra cost! Visit the Contact Us page and fill in our simple form to get a free callback!
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