8 May 2017
Why election fever is not having a negative impact on mortgages
Prime Minister Theresa May’s announcement that there would be a general election next month took everyone by surprise but it is not adversely impacting the lending market. The message is the same from all lenders – none of them are overly happy with the level of business they are doing and want to do more.
The debt market is over-supplied and when supply outstrips demand, the simple economics is that mortgages become cheaper. This is what we are seeing with lenders having to lend – even at rock-bottom rates they are still making money, particularly those with access to customer savings.
March saw a very slight dip in approvals for loans for house purchase and remortgaging compared with the previous month, according to the Bank of England, suggesting the market is ticking along, buoyed by lenders offering rock-bottom rates.
With HSBC launching the cheapest five-year fix on the market at 1.69 per cent this week and Yorkshire Building Society introducing a record low two-year discounted rate at just 0.89 per cent, the market is more competitive than ever. Atom Bank’s five-year fix – the cheapest ever seen, pegged at just 1.29 per cent – was withdrawn less than a week after it was launched, proving that there is strong demand from borrowers for exceptional deals.
With lenders keen to attract business from first-time buyers, home movers and those remortgaging, it is a good time to get a mortgage. However, affordability criteria remain tight so it is important to get good, independent mortgage advice before taking the plunge.