2016 was a fantastic year for homebuyers, with mortgage rates falling to historic lows. These sub-zero rates led to a record number of people remortgaging, as people took advantage of the great deals on offer to save some serious money. 2017 looks set to be a little more unsettled ? with rates certain to rise and major political change on the horizon. In this article, Eddison Wells takes a look at the best mortgage deals of 2017, and our predictions for the coming months
2016: Regulation and Record-Low Rates
It was an exciting year for mortgages, as Brexit and technological advancements leading to shifts in the landscape.
Everyone feared the worst following the EU referendum vote on 23 June, but the immediate impact of Brexit was subdued. Mortgage approvals dropped slightly following the vote, but there was no dramatic crash as some expected.
In August, the Bank of England base rate was cut to 0.25%, to the delight of hundreds of thousands of homeowners, who saw their monthly repayments reduced.
Regulation changes saw the buy-to-let market take a kicking, as the Government began phasing in rises in stamp duty. Later in the year, the financial watchdog revealed details of its review into the mortgage market, questioning how fair the mortgage market is for the consumer.
Technological advances saw more people looking to the internet for mortgage advice, and the ?rise of the robo? is set to continue in 2017.
Top 5 Mortgage Deals 2017*
- TSB 1.19%
60% LTV 2 year tracker 1.19% with ?995 arrangement fee.
- Santander 1.19%
60% LTV 2 year fixed 1.19% with ?999 arrangement fee. Only available with a Pink broker.
- Platform 1.23%
60% LTV 2 year fixed rate 1.23% with ?1499 arrangement fee. Only available with a Pink broker.
- Nationwide 1.24%
60% LTV 2 year tracker 1.24% with ?999 arrangement fee.
- Skipton Building Society 1.25%
?60% LTV 2 year fixed rate 1.25% with ?995 arrangement fee.
All of the above are remortgage products, illustrating that now is still a great time to remortgage if you wish to secure a better deal. Two of the products are only available when you go through a Pink mortgage broker ? just another great reason to use a mortgage broker when looking for the right deal.
Uncertain Times Ahead
With an uncertain political future ahead of us, it?s very difficult to make any assumptions about the next 12 months. We?ve had a year full of surprises, and although it?s difficult to predict what?s waiting around the corner, there are a few areas in which we can be pretty confident about the future.
The Brexit is still causing uncertainty across the market, which is only likely to continue until and beyond Article 50 being triggered. Lending may fall slightly, but the record-low interest rate environment we are in will continue to encourage homeowners to remortgage.
Interest rates are unlikely to move much ? there won?t be another cut, with the Bank of England aware that another reduction of rates would seem desperate.
House prices are likely to increase by around 5%, with the housing market remaining a priority to the government. The Chancellor will be looking to stimulate the market, which could well lead to a reduction in Stamp Duty.
Buy-to-let mortgage criteria is set to get even tougher this year, with buy-to-let borrowers now needing to prove that they can cover their loan interest with their rental payments, even if rates were to rise to 5.5%. New regulatory rules could mean that investors need to raise larger deposits or up their rent to meet the new criteria.
The Trump Factor
With Trump?s reign impending, many homeowners are anxious about the future and what may happen to mortgage rates. Our rates?are?likely to be affected by Trump?s takeover, but it?s uncertain exactly what will happen.
The Guardian?s advice following the election result was to fix your mortgage rate as soon as possible. Locking into a 10-year fixed-rate mortgage now would guarantee you a low interest rate, safe in the knowledge that your mortgage will not rise through the Trump and Brexit years.
All in all, 2017 could be a good time to buy, as prices are still modest and interest rates are low. However, fixed mortgage rates are likely to continue to creep up as the year goes on.
With this in mind, it?s important to remember that increased competition from lenders who desperately want their market share is likely to keep rates competitive.
It?s worth considering your own circumstances if you are remortgaging or taking out a new mortgage. If you can slash ?1000s off your costs and get peace of mind about a fixed rate, it could be something to consider. Rates are only going to rise, so many people will be looking to get a deal sooner rather than later.
So what do the Eddison Wells brokers think?
Matt says:??We have enjoyed a nice long stance of rates being really low, with many sub 1% offers. 2017 has already seen most of these removed, with HSBC being one to name, and it is already looking like we are going to have a unpredictable year.
What Eddison Wells would recommend to consider is that sometimes chasing what is fraction of a percentage could lead to you missing out on what are very good mortgage deals available now. It?s always best to consider your own circumstances, but we say keep in mind that at some point mortgage rates will have to go up.?
If you?d like to discuss your mortgage options, or are seeking advice on any of the above subjects, please contact Eddison Wells Financial on 0800 808 9981.
*Details correct as of 18/01/17