04 Jan London mortgage brokers upbeat about rates in 2013
It’s not just me. I spend a lot of time speaking to other London mortgage brokers and they’re all saying the same thing.
What they’re saying is that right now, mortgage rates are the best they’ve ever seen. This applies to both house purchases and remortgages.
My London mortgage broker peers also agree that, looking forward into 2013, there’s every chance the best mortgage rates will get even better.
The reason for this is the Funding for Lending Scheme is now genuinely starting to have an impact.
Funding for Lending fires up market
If you’re new to it, the Funding for Lending Scheme was launched by the Bank of England in the late summer.
It encourages lenders to offer low mortgage rates to borrowers, as by doing so they will get to borrow funds cheaper themselves.
When the scheme launched, the best mortgage rates were reserved for borrowers with bigger deposits or more equity.
These were the very people who already had access to great rates so the scheme wasn’t much cop. Now, though, we’re seeing some improvements at higher loan-to-values, too.
This is fantastic news as the property market will never truly recover until first time buyers and people at the lower end of the ladder start borrowing again.
Borrowers remain very cautious
But let’s not get ahead of ourselves. Lender criteria remain pretty tough, while demand remains tentative.
What we London mortgage brokers also agree on is that many households remain deeply cautious — even those with decent equity in their homes.
This caution was confirmed earlier today when the Bank of England released some data showing that UK homeowners collectively paid down their mortgage debt by just over £8bn in the third quarter of 2012.
In the pre-crash days, we were taking every last penny of equity out of our homes. Now we’re building our equity up again.
London Mortgage Broker speaks to BBC
I gave my views on this story to the BBC earlier today — you can read the full article here.
The main point I made was that, while many homeowners are unable to move or remortgage, as house price falls have left them with insufficient or zero equity, even those with sizeable chunks of equity are erring on the side of caution — preferring to stockpile cash and pay down debt than borrow more.
You only have to look at the low level of property transactions to see what I mean. People are inclined to sit tight.
A more stable market
However, in the long term, and this is the final thing we London mortgage brokers agree on, the more conservative borrowing environment today will make for a more stable property market tomorrow.
And that’s something everyone wants to see.
For a chat about your mortgage situation, contact Just Us mortgages today.