1. MESSAGE FROM SIMON DURANT BA, CeMAP, CeRER
There has been plenty of talk about mortgage rates this week, and I know figures around 6% can feel unsettling, especially if you are coming to the end of a much cheaper deal. At the same time, the latest house price figures suggest the market is fairly quiet, and there have even been a few rate cuts from individual lenders. It is a mixed picture, rather than everything moving in the same direction.
If we were chatting over a coffee, I would say the same thing I always do: try not to make a big decision based on one headline. The important questions are what you can comfortably afford, what your options are and how those options fit your plans. That is what we are here to help you work through.
2. MORTGAGE MARKET REVIEW AND CHANGES
Average fixed mortgage rates are now around 6%
Figures reported on 5 October by Mortgage Solutions, based on Moneyfacts data, put the average two-year fixed mortgage rate at 5.98% and the average five-year fix at 6.00%. Both were at their highest levels in roughly three years. The number of fixed-rate deals priced below 5% had also fallen sharply during September.
These are market averages, not the rate everyone will be offered. Your deposit or equity, credit history, borrowing amount and chosen deal all make a difference. Some individual lenders are still reducing selected rates, even while the wider market has moved upwards.
What this could mean for you
If your current fixed deal ends in the coming months, it is sensible to check what a new monthly payment might look like before the change arrives. There is no need to panic or guess where rates will go. Giving yourself time to compare an offer from your current lender with other options can be worthwhile.
How Durant & Co can help
We can look at your existing mortgage, compare suitable options and explain the overall cost, including any product fees or early repayment charges. A lower headline rate is not always the cheapest deal for your circumstances.
Source: Mortgage Solutions.
House prices are holding steady overall
The Lloyds House Price Index, published on 7 October, showed no change in average UK house prices during September and no change compared with a year earlier. Its average UK property price was £298,441.
That national figure hides local differences. Prices in Wales were 1.2% higher than a year earlier, while the West Midlands was up 0.8%. Some areas of southern England recorded annual falls. So it is worth looking at the area and type of home you are actually interested in, rather than assuming the whole country is behaving alike.
What this could mean for you
If you are buying, a quieter market may give you a little more time to view properties properly and make a considered offer. If you are selling, realistic pricing matters. Neither buyers nor sellers should assume that a national average tells them what an individual property is worth.
Source: Mortgage Solutions. Source: Financial Reporter.
A £5,000 deposit mortgage has become a little cheaper
Accord Mortgages reduced the rates on its new residential fixed-rate range by 0.10 percentage points from 6 October. That included its £5,000 Deposit Mortgage, which can allow eligible buyers to purchase a property valued up to £500,000 with a £5,000 deposit. The fee-free five-year fixed rate for that product fell from 6.88% to 6.78%.
What this could mean for you
If saving a larger deposit is the part of buying a first home you are struggling with, a low-deposit mortgage could be worth exploring. But borrowing such a large share of the property's value can mean higher monthly payments and less room for house price falls. You still need to meet the lender's affordability, credit and other criteria. It will not be suitable for everyone.
How Durant & Co can help
We can look at whether a smaller deposit is realistic for you, and compare the longer-term cost with other options rather than focusing on the amount needed up front.
Source: The Intermediary.
3. PROTECTION MARKET REVIEW AND CHANGES
A new way to protect some mortgage payments if illness stops you working
National Friendly launched a product called Mortgage Protect on 5 October. It is a form of short-term income protection intended to help with mortgage payments if illness or injury stops you working. It is available alongside an active mortgage or remortgage application and does not ask health or lifestyle questions at application, or require upfront medical underwriting.
The cover can provide a mortgage-related monthly benefit of up to £2,500, with a possible extra amount for other household costs, subject to an overall limit. You can choose how long you wait before payments may start, and whether a successful claim pays for up to three, six or 12 months. Premiums are reviewable every three years.
What this could mean for you
It is another option for households worried about covering the mortgage if somebody becomes too ill or injured to work. But no health questions at application does not mean every claim will be paid. Eligibility, policy wording, exclusions and claim conditions still matter. It is also worth checking how long your employer would pay you if you were off sick, and whether short-term or longer-term income protection would be the better fit.
How Durant & Co can help
We can talk through what your household would need if an income stopped, then compare different types of protection against your budget and existing sick pay or savings.
Source: The Intermediary.
4. THANK YOU
Thank you for taking the time to read this week's update. There is a lot going on in the mortgage and protection markets, but not every headline needs to change your plans. If something we have covered has raised a question about your home, mortgage or family protection, please feel free to get in touch. We are always happy to talk it through without any pressure.
The Durant & Co Team