Most months, I begin writing this regular column and have to check myself regarding the range of changes that have tended to happen in the time since I last put down my thoughts.
So much can happen in any given week, let alone a month, and in recent times the constant shifting and to-ing and fro-ing of events that impact our market regularly seems to have ramped up to unprecedented levels.
Just from a political point of view, we have of course seen huge developments with the resignation of Keir Starmer as Labour leader and PM, and as I write, it looks odds on that Andy Burnham will be taking up both roles in a couple of weeks.
Political uncertainty risks putting the market on pause
This has the potential for serious changes and, as we wait for those changes, something of a void which is often filled with gossip, rumour and hype. Just what the mortgage and housing markets don’t need at present, and we certainly don’t want to repeat the mistakes of last summer, when all of the above resulted in many would-be buyers and sellers simply sitting on their hands for months on end.
Burnham has made one speech on his potential economic roadmap, but there is already a lot of filling in of gaps, trawling back through everything he has said and done, and suggestions he wants to replace stamp duty and council tax, for example, with a property land tax, are unlikely to do anything for the certainty the market craves. We could simply have a repeat of last summer as people, quite understandably, wait to see what a Burnham Government is going to do.
A market that is beginning to recover
Conversely, this does appear to have come at a time when the mortgage market at least has started to ‘heal itself’ after facing the geopolitical turmoil we saw, particularly in March and April. Again, as I write, we have seen swap rates stabilise and many lenders have taken the opportunity to both cut rates from their higher levels and reintroduce some of the products they were forced to pull when the uncertainty about inflation and costs of funds was at its highest.
Again, this is the yin and the yang of the British housing and mortgage markets. Just as we have a more competitive environment for borrowers to take advantage of, the carrot of potential tax savings in the future is dangled, and this will more than likely lead to potential purchasers not moving forward with plans, just in case there is a huge saving to be made by deferring this decision.
If, or rather when, Burnham does take up the post of PM, one of the first things I would suggest he do is give as much clarity as possible on this, because these are better mortgage market conditions and it would be a travesty if they couldn’t be taken advantage of by those who want to make that move.
Product choice continues to improve
Which moves us neatly on to my regular monthly look at the provision of high LTV (95%+) mortgage products currently available in the market, based on the most recent Nationwide average annual house price, which is currently £277,484, requiring a 5% deposit of just under £13.9k.
On that very fact, it is interesting to note this has barely changed throughout the year, which may be viewed as helpful to first-time buyers who are not having to live through a period of rampant house price inflation, and which hopefully means they can save for deposits with some degree of certainty about what they are going to need to find in order to buy a home.
Anyway, there is further good news once again in terms of 95% LTV product choice, with 268 products available this month, up again on June. This is split between 240 fixes (up 15), and 28 trackers, discounts and variables, up eight from last month.
As we might also imagine, given the recent headlines on product price cuts, we have some new names appearing at the top of the best buys. For two-year fixes, we have Progressive’s Northern Ireland-only product available at 4.99%, Coventry has a 5.05% product, and Leeds has a 5.08% product. The best rate last month was 5.22%.
We have a similar trend in five-year fixes, led by Progressive again with a 4.95% offer, followed by Skipton at 5.07% and Barclays at 5.09%. Again, last month the best rate was 5.22%.
For discounts, trackers and variables, there are also some new products to be aware of including Ecology’s lifetime variable deal at 4.19%, Skipton’s two-year tracker at 4.64% and Bath’s two-year discount at 4.74%. Finally, in the 100% LTV space, we now have 19 products, up from 12, across eight lenders, with Progressive offering a 4.89% two-year discount, Vernon’s lifetime discount at 4.90% and Bath’s 4.94% two-year discount.
Don’t let rumours outweigh real progress
All in all, there are a number of mortgage reasons to be cheerful for first-time buyers with lower, or indeed, no deposit. Product choice has pushed on again and rates have fallen. What’s not to like? Well, perhaps that rumour mill which, if unchecked, has the potential to put a hold on many people’s actions while they wait to see if they could make a big tax saving.
I certainly don’t blame them, but it’s going to be a summer of both stifling heat and stifled activity if the clarity we all require on such a big part of the market is not forthcoming.