Mortgage Trends – What’s Changed over the Years?
Time to Fix a Deal
Much has changed in the mortgage market since the first fixed rate mortgage deal was launched in 1989. According to Moneyfacts, the best rate on offer then was a three-year fixed deal from NatWest at 12.4%.
Back then, the average house price according to the Office for National Statistics was £55,000. Fast forward to the early years of the new millennium, and in 2009 the lowest mortgage rate on offer was 3.89% from the Principality Building Society. Since then, rates have remained low, fixed-term mortgages have increased in popularity amongst borrowers, and the average house price in March was £227,8711.
In the past, mortgages were most likely to be for a term of 25 years. However, as house prices continued to rise, lenders came to acknowledge that borrowers needed longer-term loans in order to make their monthly repayments affordable. By 2017, figures from the Bank of England showed that almost 16% of new mortgages were for terms of 35 years or more.
Low deposit lending
Lenders are now offering more options for first-time buyers who have a lower amount saved for a deposit. In March, the number of 95% loan-to-value deals on the market exceeded 300, the first time this had happened since April 2008. The market remains very competitive, and many of these 5% deposit deals come with additional incentives such as free valuations or cashback options.
Remortgaging to get a better deal
With the monthly mortgage payment representing a major household expense for many families, it’s not surprising that borrowers are becoming more rate-aware and are remortgaging to save money. With the Bank of England sending strong signals that interest rates may rise later this year, figures from UK Finance show that 49,800 remortgages were completed in January,
19.1% more than in the same month in 2017. Many borrowers are choosing to lock into two and five-year fixed-rate deals which enable them to budget effectively for the period of the loan.
Getting the right advice
If you’re looking for a mortgage, your current mortgage deal is coming to an end, or if you’ve been with your existing lender for a while, this could be a very good time to get some mortgage advice from our specialist Swansea mortgages team and remortgaging brokers.
We know the marketplace well and can recommend the most appropriate deal for your financial circumstances.
1 Halifax House Price Index, Apr 2018