Great Mortgage News!

First Time Buyer Mortgages at 10 Month High – Peter Gordon of A.J.Buckley reports.

The number of mortgages taken out by first time buyers reached a ten month high in June according to data from the Council of Mortgage Lenders.

There were 18,100 loans to first time buyers worth £2.2bn in June representing a 24% increase and almost 30% higher than the preceding month. This must effect all estate agents whether selling to first time buyers or not as it will stimulate the buying chain across the board. We all know that the £2m properties are less likely to complete unless other properties lower down the chain sell first. This news must only be considered as a stimulus to the housing market.

The popularity of fixed interest rates continues to edge up with 63% of borrowers in Q2 opting to fix compared with 46% for the same period last year. We have, for some time, advocated longer term fixed and recent downward movements in SWAP rates have seen five year fixed interest rates below 4%.

A more innovative mortgage scheme has been launched this month for those borrowers who are undecided between ‘tracker’ or ‘fixed’ rates.

This scheme tracks Bank Rate for the first two years and then switches into a competitive fixed rate for the remaining three years of this five year deal. On the assumption that economists’ predictions are correct, this would give the borrower the benefit of enjoying lower variable rates

for the first two years and a guaranteed fixed rate for three years after.

The alternative would be to select a two year tracker now and choose from a fixed interest rate in two years time when they could be less attractive.

Those wishing to fix now can lock into a 4 year term from 2.99% per annum.

It would appear that sales are getting more and more difficult to hold together in the current climate and affordability is crucial to those teetering on whether now is the right time to buy. It is a fact that most buyers return to their existing lender for their next mortgage and asses their ability to buy their next home on those monthly repayments. Strange though that the same people will challenge their credit card, gas, electricity and car insurance, but not their mortgage which is, invariably, their highest commitment.

We can do this for them and look to the whole of market. If they feel more comfortable with their budget there is a greater chance that they will proceed further with their purchase.

Peter Gordon. A.J.Buckley. 01483 426300