With the latest Bank of England base rate announcement behind us and no immediate change on the horizon, it will certainly be interesting to see how quickly lenders make rate adjustments in the coming weeks. This month has already seen many price reductions and the trend is likely to continue. It’s been positive to see lenders focusing on new options to support affordability, particularly with respect to the introduction of a variety of lower rate/higher fee products. Let’s kick off this month’s round-up with an example of just that.
SUNSHINE AND A RAFT OF NEW PRODUCTS
Here we are already at the end of August and it certainly feels to me as if the summer has flown by. What a month it’s been! Not only did August bring us some hoped-for sun (well, a little more than July at any rate), it also brought a raft of new products to the market. Despite the base rate rise at the start of the month, many lenders have been refreshing their propositions with rate reductions and making additions to their ranges to better support a range of consumer needs.
At the start of the month, Vida Homeloans announced rate cuts of up to 40bps across its standard, HMO/MUB, expat and fee saver 2- and 5-year fixed ranges and its 2-year variable range. Rates now start from 6.29% for a standard 5 year fixed up to 75% LTV in the ‘Vida 36’ tier. This comes with a 4% fee and a maximum loan size of £1m.
IT'S NOT ALL DOOM AND GLOOM
Charlotte Harrison, Interim CEO - Home Finance, Skipton Building Society for Intermediaries, shares her market predictions for 2023 and what they may indicate for borrowers, homeowners and first-time buyers.
As I write on what is referred to as “blue Monday” am I feeling that sense of gloom, with Christmas cheer and relaxation a distant memory? Perhaps.
But a little less daunted by what’s to come and instead, relishing a new set of challenges that face us following the backdrop record levels of lending seen in 2022. In my view the outlook for 2023 certainly isn’t all doom and gloom.
So, looking at the year ahead, what can we expect?
To start with, I think it's likely we will continue to see rises in the Bank of England base rate, but that doesn't necessarily mean customer rates are going to increase in the same way.
THE VALUE ATTACHED TO THE ADVICE PROCESS HAS NEVER BEEN HIGHER
I can’t imagine there are too many transactions in the history of the UK property market which have completed within the ‘expected’ timescale, without any queries or without any combination of doubt, concern, stress, anxiety and complexity. Each and every transaction has their own quirks and this is driven by a multifaced process which contains many moving parts. Parts which include their own set of influencing factors. Then there’s the emotion of the vendors/buyers to take into account, plus the heavy financial burden and, importantly, a lack of knowledge around the purchase process.
YIELD AND TENANT DEMAND – TWO FUNDAMENTAL ELEMENTS IN ANY SUCCESSFUL PORTFOLIO
I’d like to drill down into some of the details which have emerged from Q1 2022 for landlords around yield and tenant demand – two fundamental elements in any successful portfolio.
Yield is an interesting one. It remains a balancing act for landlords who are looking to maximise the return of their investments whilst also factoring in rising living costs for their tenants who, like many homeowners, are feeling the pinch in the current economic climate. Yields will obviously differ when it comes to different property types, hence the current demand for holiday lets, short-term lets and HMOs. However, despite their growing popularity, the vast bulk of the BTL market continues to be dominated by the more ‘standard’ longer-term lets, a factor we have to consider when looking at general trends in rental yield.
IS 2022 SET TO BE THE YEAR OF THE REMORTGAGE?
In recent times, the remortgage market has taken a back seat to a purchase arena which has crackled and popped with activity over much of 2020 and 2021. However, is 2022 set to be the year of the remortgage?
WHAT ARE THE KEY BUY TO LET OPPORTUNITIES IN 2022?
We’re quickly heading towards that time of year when many people tend to have one eye on the past and one on the future. For landlords, 2021 has proved to be an opportunity-laden year and there’s plenty of optimism in the air to suggest that 2022 will see the private rental sector become an even more prominent focal point within the economy, the housing market, the mortgage industry and the intermediary community.
One area already looking well ahead into the new year is the student community which – after a sustained period of uncertainty, remote studying and living far afield from campuses – has seen numbers return in their droves. A move which is bolstering rental demand in the larger, student-heavy areas which really suffered over the course of the pandemic.
GREEN MORTGAGES SET TO PLAY VITAL ROLE IN THE FUTURE OF PROPERTY
In the last few weeks we have seen many world leaders, delegates and famous faces jet in and jet out, stay awake and fall asleep at the COP26 summit in Glasgow. The lasting impact remains to be seen but, if nothing else, it’s encouraging to see such widespread coverage of this event and the awareness being raised around the huge climate-related challenges which impact us all.
THE VALUE OF ADVICE IS ONLY INCREASING
It’s been said many, many times over many, many years but the value of financial advice will only continue to rise. Trust, perception and professionalism remain key elements within this process and, with this in mind, it was interesting to see YouGov’s analysis of the UK’s most recommended brands over the course of the pandemic year rank MoneySavingExpert.com as number one.
The consumer finance advice website was said to have had a string of strong endorsements from its customers and reaching the top spot was a testament to the depth of loyalty felt by its members. It topped brands such as John Lewis, Monzo, Brewdog and Starling Bank to achieve this coveted accolade.
DEMAND GATHERS PACE IN CITY RENTAL MARKETS
As lockdown restrictions continue to ease, more people are returning to their offices and regular – if still not daily for many – commutes are becoming more commonplace. As a result, activity appears to be on the rise in the more urban areas and we are starting to see city living become more appealing after something of a shift away from this during the pandemic.
Of course, this largely depends on a mix of individual outlooks, lifestyle choices, family, work and finances. What we do know is that the market did experience a demise in rental demand across the UK’s major cities in recent times. And this has raised some questions over people’s appetites for city living and landlords’ approaches to urban properties which have proved highly desirable in times gone by.
