8 June 2018

Lenders still very much open for business

The residential lending market remains ultra competitive and well supplied in terms of mortgage options. All of the main lenders want to do more lending, and then you have the new entrants keen to carve out their own market share.

Much has been written about how tough affordability criteria have become but while there has not been a softening as such, the harsher stance that came in following the credit crunch is thankfully behind us. Lenders are adopting a more practical view to assessing affordability – take the self-employed, for example, where it is no longer necessary to produce three years of accounts. Many lenders will take two years, some will look at the last 12 months and others will look at projections.

Clearly, it is not 2007/08 again. There is plenty of supply, a more sensible attitude when it comes to criteria and pricing is competitive. Despite widespread expectations that interest rates would rise in May, they didn’t, and our view is that it doesn’t look as though they will for a while. When they do, we expect any rise to be marginal because the economy is so finely balanced. There are still too many variables in terms of Brexit and there only needs to be one set of negative data before everyone panics again.

What this all means is that it is a good time to be a borrower. It is still possible to pick up a five-year fixed rate for sub-2 per cent, which is very competitively priced. Even if you require 90 per cent loan-to-value, the rates aren’t bad – you won’t get sub 2-per cent but you will find sub-3 per cent.

The only blot on the landscape is that service can be patchy as lenders get to grips with new rules in the buy-to-let space around professional landlords, which has had a knock-on effect on the residential side for some. This is just one of the reasons why it is worth seeking mortgage advice, particularly if you need to move quickly to get a deal done.

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