Mortgage rates falling, repossessions doubling, and rents increasing – This week's property post:
1. Mortgage rates fall below 4%:
Competition between lenders has seen fixed-rate mortgages drop below 4 per cent since the September mini-budget. It means that homeowners can now fix their mortgages below the Bank of England base rate.
Over the past week, HSBC, Lloyds and Virgin Money have launched sub-4% fixed-term mortgage deals, and other lenders may follow suit. As the competition in the mortgage market heats up.
Virgin Money has launched a 10-year fix for 3.99% available for re-mortgage at a maximum loan to value (LTV) of 65% or for purchase with a 75% LTV, and both come with a £995 fee. It's also offering a five-year fixed deal of 3.99% for purchase, with a 75% LTV and a £995 fee. HSBC has introduced a 3.99% five-year fix for anyone re-mortgaging at 60% loan to value (LTV), which comes with a £999 fee.
Aaron Strutt from the mortgage broker Trinity Financial states that "banks and building societies still have huge lending targets to hit, and they want people to be able to borrow enough money to purchase the properties they want". As lenders begin to battle, there is an expectation that we could see rates fall close to 3.5% as we head into the spring, according to Which?
2. Repossessions double, raising fears more mortgage holders could lose homes:
According to the data released by the Ministry of Justice, repossessions more than doubled in the last three months of 2022. The data showed a spike in the number of homes repossessed by banks increased from 313 to 733 between October and December of last year, an increase of 134 per cent.
While the figures are small relative to the millions of homeowners across the UK, the significant increase in repossessions could indicate that many more are falling behind with their payments.
3. Rents reach record high and are set to rise even further:
The average rent outside London reached £1,172 per calendar month, up almost 10 per cent when compared with last year, according to Rightmove. Rents in London averaged £2,480 per calendar month, another record high.
Demand for rental properties is still up by 53 per cent above where it was before the pandemic, while the number of properties available to rent has fallen by 38 per cent since 2019. It indicates that rents will continue to rise due to an imbalance between demand and supply.