This is our take on what is currently happening in the mortgage market. Our views are often cited in several national publications, including; BBC News, The Times, Telegraph, City AM, FT Adviser and Daily Mail, as well as a number of key trade publications, so this should keep you ahead of the curve. If you have any questions on any of these stories, or would like further information, please do not hesitate to get in touch.

  • Purchase market slowing
  • Increased enquiries from UK nationals looking to capital raise for overseas purchases
  • Further long-term products introduced

Purchase market slowing

Despite the fact our business levels were up 30% compared to last February as borrowers rush to remortgage and get ongoing purchases over the line in the wake of rapidly rising interest rates, we are seeing a distinct slowdown in new purchase enquiries and we have spoken to a number of other brokers, who have reported this trend. We have heard from clients that this is more supply led rather than due to economic headwinds affecting us all, however we suspect that this will play a greater role in quelling demand in the coming weeks and months, especially when combined with quickly rising interest rates and rising costs of living.

  • In addition to the slowdown, constrained affordability, and the fact we are also just emerging from 2-years of global pandemic means we are seeing a significant rise in more complex enquiries and suspect this to increase going forward.
  • Despite the slowdown in the residential sector, we have seen and expect to see a continued uptick in BTL enquiries. This could be on account of the fact rates remain very low and that investors are looking for assets to hedge against the rampant inflation.

Increased enquiries from UK nationals looking to capital raise for overseas purchases

In recent weeks, as the last of the Covid restrictions came to an end and travel restrictions are following suit, we have seen increased demand from borrowers looking to capital raise on UK assets to purchase overseas second homes. These types of enquiries had been close to non-existent throughout the pandemic for obvious reasons and thus there is like to be a lot of pent-up demand, with people not only having delayed second home purchases, but also having delayed moving or retiring overseas full-time.

  • Given the complexity in arranging overseas mortgages it does often make sense for UK borrowers who have equity and whose circumstances suit to consider capital raising as an option to finance an overseas purchase.

Further long-term products introduced

Despite recent rate rises in the 5- and 10-year fixed rate categories we are continuing to see further long-term products introduced, with West One the latest lender to do so in the BTL space with a 7-year fixed. As interest rates continue to rise and there is long-term uncertainty in the economy, these longer-term mortgage’s appeal continues to increase with borrowers.

  • One of the main issues for borrowers however is the lack of flexibility that comes with long-term fixed rates, which is why we are seeing innovation in this regard from lenders. West One’s 7-year fixed for example comes with ERCs only for the first 5 years of the term, something which we feel will appeal to many borrowers and thus we expect more lenders to follow with similar products.
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