Is mortgage availability improving?
August 14, 2013
In our own recent experience as IFAs it would appear that this is in fact the case. Lenders appear to be saying “yes” more than they have been in recent years and are being slightly more flexible with underwriting criteria.
In recent weeks, we have also seen improving data for both house prices and mortgage approvals. In addition, Mark Carney (Governor of the Bank of England) has issued “forward guidance” that interest rates will not rise until the unemployment rate falls below 7%.
Does this all point to a potential housing market recovery being underway?
Not necessarily, as the picture does appear to be mixed across the UK, with the South East market in particular appearing to be very strong with other regions still struggling to record consistent positive data.
Whilst lenders are generally being more positive, the picture would still be regarded as cautious as they still prefer applications with larger deposits, good credit histories and good affordability.
What could be underpinning the positive data is a return of consumer confidence, as people become more confident about their ability to service borrowing and are therefore more inclined to move house, remortgage for improvements or to purchase an investment property.
The Buy to Let market remains strong, as does the appetite to lend to landlords, especially those with experience. With a generation of young people unable to get on the housing ladder easily, demand for good quality rental property and therefore rental yields remains stable. This is an attractive mix for investors looking for yields ahead of those available on cash deposits with the potential for longer term capital appreciation from a tangible “bricks and mortar” asset.
Of course, Buy to Let property investing is not without cost or risk. Property values can fall, maintenance costs can soar, tenants can default and there are income and capital gains tax implications to consider. Like any other form of investment, due consideration should be given to the risks and costs and whether you are financially or psychologically able and willing to accept them!
If you are considering moving house, remortgaging or buying a property to let, it is just as advisable to find a lender that will accommodate your requirements and circumstances as it is to target the most competitively priced deal.
Chiks’s Financial Planning Team can help you with this process, using our experience and research capability to advise you on your options and find the right solution for you from the marketplace.
If you would like some more advice on this topic, please call 01524 62801.