Wherever you live in the UK, the mortgage market can be a complex, confusing place with thousands of products, hundreds of lenders, and dozens of options even for the most straightforward mortgage and protection applications.
Most people will look at the high street or go online to search for the most suitable mortgage for their needs, but there is a better way.
Why Using a Mortgage Broker is a Good Idea
With so many choices in the housing market, it can be a real challenge to match your specific requirements to the right mortgage. Visiting your bank might give you a good picture, but your options will be limited to the products that your chosen bank sells.
A mortgage broker will have access to the whole market, including products that are not available on the high street or online.
Not only that but a mortgage broker can take a look at your personal circumstances and carry out their research to find the best mortgage product to suit your needs.
The Current Housing Market
There are mixed messages in the media about current performance of the housing market. Are prices falling, or are they rising, is there sufficient housing stock to meet demand, or not?
These are all factors to consider when you’re considering moving home.
What’s most important is to listen to professional advice and look at professional research rather than speculative articles in the media.
According to forecasts from Savills, house prices will fall by around 10% in 2023 and begin to recover from 2024 onwards. They’re a great resource for housing market data. More from Savills here ¹
What’s Happening with Inflation?
Inflation in the UK is based on the Consumer Prices Index (CPI), which rose by 10.4% in the 12 months to February 2023. This was up from 10.1% in January but fell below the peak in October 2022 of 11.1%. The Bank of England is increasing interest rates as a result of this high inflation in its attempts to bring inflation under control. ²
Will the Bank of England Put Interest Rates Up Again?
That depends on whether inflation continues to rise. The Bank of England has increased the base rate of interest consistently over the last few months to slow the rate of inflation. If inflation continues to rise it seems likely that another rise in the base rate is on the cards, but this isn’t a given.
Should I apply now or wait and see?
Mortgage offers typically have a six-month shelf life so if you apply now and borrowing rates increase then you’ve got it covered. If interest rates fall then most lenders will let you take the lower rate of interest.
Are Fixed Rate Mortgages a Good Idea?
We think so. Something to consider is what you can afford now, not what the rate might be in six months or a year’s time. The risk with a fixed rate mortgage is that the interest rate falls and you are left paying more than you should. However, the flip side of that is that you will know exactly what you are paying and can budget accordingly. So you won’t get any nasty surprises. The Mortgage Market 2023
Are Mortgage Interest Rates Rising or Falling?
After an initial sharp rise in 2022 mortgage interest rates are actually falling, and are at their lowest levels for some months. That’s because mortgage lenders anticipated rises in the Bank of England Base Rate last year and increased their prices accordingly. Now that the markets have settled, they are able to bring those prices down again.
Are low interest rates a thing of the past?
It’s unlikely that we’ll return to very low interest rates like those we have enjoyed over the last few years, certainly not for the next few years, but the nightmare scenarios that some people had anticipated have failed to materialise.
Are you planning on moving home in the next 6 months?
If the answer to this question is yes, then it’s a good idea to start looking at your mortgage requirements now. Make contact with a mortgage broker to start a conversation about what you need. Remember, lenders make their offers based on a six-month expiry so if you make a mortgage application and secure a good deal now, it will be in place for six months. If interest rates fall during that period, most lenders will honour the reduced rate so you won’t be paying more than you need to.
Professional Mortgage and Protection advice
Remember that when you apply for a mortgage you are entering into a complex marketplace. Professional advice from a mortgage broker can help you to make the right decisions for you and your family. If you have an issue with your credit rating, or higher than average debt, or want to buy an old or unusual property for example, you may need specialist advice. This could affect your eventual interest rates. The same is true for mortgage protection where there are numerous products available.
Are you protecting the right things? It’s not just about life insurance, but protecting your income if you become incapacitated through illness or injury too. The right advice from a mortgage broker can make all the difference to your eventual costs and coverage.
Liddle Perrett Disclaimer
The information provided in this article was correct at the time of publication (April 2023)
Liddle Perrett Ltd is an appointed representative of PRIMIS Mortgage Network. PRIMIS Mortgage Network is a trading style of First Complete Ltd which is authorised and regulated by the Financial Conduct Authority.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
¹ Savills Residential Property Market Forecast
² Data from Office for National Statistics