The current view is actually the opposite, mortgage rates are, at the moment, expected to fall. They were certainly doing that prior to the credit crunch with HSBC coming out with a 0.99% mortgage which was fixed for two years for those buying and re-mortgaging up to a 65% Loan to Value. You can pay off up to 10% of the mortgage each year without paying an early repayment charge (ERC).
The view is that if anything pressure on mortgage rates will fall because interest rates could go below their current 0.5% and although some banks are suffering with shares plummeting, much of the mortgage market is provided by building societies who are in a good financial position.
What mortgage should you choose? Read - How to Secure the Right Mortgage for You
Andrew Montlake, Director of broker Coreco, says “we could well see rates from some lenders fall over the next couple of weeks as they look to show that it is business as usual after the Brexit vote. The real question however, is how long lenders will be able to sustain these low rates especially within an uncertain environment, so it makes sense for borrowers to review their options and take advice at the earliest opportunity”.
In an informative article from the ‘This is Money’ team it is even possible to tie into a fixed rate for the next 10 years…hopefully helping you to ride any issues in the economy over coming years….and according to the article, “the top ten-year rate is TSB’s 2.89 per cent if you have a 40 per cent deposit. The fee is £995.” However, these often have redemption penalties, so check these out beforehand.
However, scary stories of those investing in Buy to Let being asked to increase their deposit levels have spooked many an investor.
Will lenders be demanding more money from you?
We spoke to Andrew Montlake Director at Coreco, “Given the tax changes that are coming in over the next few years, lenders have begun to increase their rental stress test requirements, which means that landlords will find they cannot borrow quite as much as they could have previously.
“Many landlords are continuing to invest without too much concern, especially post-Referendum when they feel there could be some buying opportunity. However, all landlords should be reviewing their portfolio now to ensure it is structured correctly and they do not get any nasty shocks in the next few years”.
What are other experts saying?
The Financial Services Expo in Cardiff asked the question – will this be another credit crunch from a bank and building society’s perspective. So far the view is definitely ‘no’, demand will fall back for the next few months, but as long as lenders lend, it would be find.
For more read the feedback in the Financial Reporter.
Should I buy now or wait with Brexit on the way?
This really depends on two things:-
Whether you are starting out on the housing ladder or owning outright
How long you intend to stay in your property for
What mortgage deal you can get now
If you are a first time buyer, then read my special article for you on the three different scenarios which may happen and work out what to do for yourself.
If you are likely to be selling and buying at the same time, then it matters less what happens to the market.
If you are selling your own home and trading up, falling prices can actually mean you get a better bargain as although you may sell your own property for less, if you pay the same percentage less for your next property, you’ll be quids in.
For example if your property is currently worth £100,000, but falls to £90,000 you lose £10,000. However, if the property you are trading up to is £150,000 currently buy falls by 10% to £135,000, you save £15,000, so potentially you are £5,000 better off.
If you are trading up – or trading down – what’s more important than what’s happening to prices is making sure you have a good buyer to sell to who doesn’t mess you around and also making sure the next property you buy is the home you want as you are likely to stay in it for 10-20 years.
Are you looking to trade up? Read our Trading Up Checklist
What’s the real downside of buying now if trading up or down?
But, it’s really important to make sure that if you are married or have a partner, you protect your home ownership just in case one of you gets sick, someone dies or indeed you sadly end up splitting up and prices fall so much it means that if you sold it would be at a loss.
Huge numbers of people in the last property recession during the credit crunch who got divorced ended up having to live together for months, if not years as they just couldn’t afford to sell up or provide two roofs over their heads.
Looking to trade up? Read our Trading Up Checklist