February Newsletter

While plenty of experts predict a downturn in the property market in the coming year, predictions regarding how badly prices will be affected vary from “ A Slight Market Adjustment”, to “Disaster for Scotland” depending on their take.

What should dampen the blow to the prices from the last major “Crash” in 2008 onward is the liquidity of the banks. They could not lend to would-be buyers from 2008-2012, so the lack of available mortgages helped drive down the demand for house purchases.

The banks are in a much better position now, although the interest rates have risen recently.  I asked our preferred mortgage adviser, Angela, of Fisk Mortgage Services to give us some insight into the current mortgage market.

Angela writes,-

Unsettled mortgage market – confusing!

Due to the quick succession of Bank of England rate increases, it’s no wonder that most people are concerned about either their current mortgage payments or new mortgage payments if they are planning to move home. Even those who didn’t pay too much attention to mortgage interest rates are really starting to sit up & take notice, which in my opinion is no bad thing.

The good news, if there is any,  is that mortgage interest rates have come down slowly over the last couple of months in particular 5 years fixed rate deals allowing cautious borrowers to lock in the rate for long periods as well as giving the lenders more stability in their lending books.  However, it is an ever-changing market which means that lenders are constantly repricing their mortgage deals offered to reflect these changing conditions.

There are many factors which are reflected in the mortgage rates so getting into the details of what’s likely to happen is a tricky road to try to travel on, although it doesn’t stop many of our so-called “experts” trying to do exactly that.

All that we can ever do when thinking of arranging a new mortgage whether we’re buying a new home or our first home, restructuring our current mortgage where borrowing additional funds or not, is that you consider our circumstances at the time & make our decision based on this.  Here are some things to consider:

• Do you need the peace of mind of knowing how much you will pay for a certain time by fixing the rate?
• How long would you like your payment fixed for i.e. are you planning any future changes which could affect this decision such as moving home or paying off the mortgage?
• What if rates were to increase in the future – you need to consider the “what if’s” & prepare for increased payments so that you don’t leave yourself overstretched financially in the future.
• What happens if things go wrong – how can you protect your payments ensuring you don’t lose your home?

As long as we understand that things can & do change in this unpredictable “world of mortgages” and by arming ourselves with as much information that is available to us at the time of making the decision then I don’t believe we should allow this uncertainty to stop us from making the decision to move home or borrow more money to fund building that extension etc otherwise how do we progress…..?

I would just like to thank her for her thoughts.

In a recent conversation with Angela, my main takeaway was- not to place all your faith in the interest rate alone but to take the whole mortgage package including all the fees into account as well as the projected affordability.

I am reminded as well that the interest rate when I bought my first home in the 1990s was 9 per cent.

If you would like to know more about mortgages, then contact us and we will pass your questions on to Angela.