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Is it getting easier and easier to get a mortgage?

By on March 23, 2021 0

The number of mortgage transactions in the market has reached its highest level since the start of the COVID-19 epidemic.

This news will be music to the ears of homebuyers, many of whom have struggled to cope with high rates and disappearing offers in recent months.

Here, which one? explains what is happening in the market and analyzes whether it really becomes easier to get a mortgage.

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The number of mortgage transactions on the rise

New data from Moneyfacts shows mortgage availability improved for the fourth consecutive month, giving a boost to home buyers and mortgage.

The 3,215 transactions currently on the market are the highest recorded since last March, when a whopping 5,222 mortgages were available.

Since October, the number of mortgages on offer has increased by 42%, with 90% low deposit offers leading the recent charge.

What does this mean for rates?

Greater availability has yet to lead to cheaper fares.

Average rates continue to rise slightly, according to Moneyfacts, with two-year transactions now seeing seven consecutive months of increases.

The good news is that the speed of the increases is slowing, which means lower rates could be imminent.

Moneyfacts’ Eleanor Williams says: ‘At 2.53%, the two-year global average fixed rate is now 0.11% higher year-on-year, while the five-year equivalent at 2.73 % is equal to its February 2020 level.

“Although these rates have risen again, the increases are only 0.01% and 0.02% this month, which could be a sign of the beginning of some stability in the market.”

Best rates on mortgage offers

The good news for buyers and mortgagers is that the best mortgage rates are very low for people with larger deposits or significant equity in their home.

60% mortgage

With a loan-to-value (LTV) ratio of 60%, you can get a two-year solution with a rate below 1.2% or a five-year solution with a rate below 1.3%.

These deals are only slightly more expensive than the best rates recorded before the pandemic, but there is a downside.

As you can see from the table below, the cheapest offers now come with hefty upfront fees of up to £1,499.

Best rates on a 60% plan over two years

Best rates on a 60% plan over five years

75% mortgage

The rates on the 75% offers are also very attractive, but again, the cheapest offers come with high fees.

It should also be noted that the cost difference between the cheapest two-year patch and the cheapest five-year patch is 0.37% – considerably more than the 0.15% recorded at 60% LTV .

Best rates on a 75% plan over two years

Best rates on a five-year plan at 75%

Low Deposit Mortgages

First time buyers have been the hardest hit by the COVID-19 mortgage wipeout, but 90% of mortgages have seen some sort of resurgence lately.

The bad news is that rates remain high, with the cheapest two-year solution around 1.5% higher than before the pandemic.

You can find out the best rates currently available for first-time buyers in our story from earlier this week. 90% mortgage.

Mortgage transactions take longer

Before the onset of COVID-19, the average life of a mortgage loan was 56 days.

This time frame decreased significantly during 2020, falling to 30 days in July and 28 days at the end of the year, as banks struggled with resource problems and high demand.

There are, however, signs that mortgages are now staying on the market longer, with an average of 40 days recorded this month.

Eleanor Williams of Moneyfacts says: “After three months at a record high of 28 days, the longer shelf life of mortgages gives borrowers a much better chance of getting the deal they chose before it be removed.

row of terraced houses

Do banks make it easy to get a mortgage?

Greater availability and longer-lasting deals are good news for borrowers, but it’s still a tough time to get a mortgage.

On the positive side, lenders are starting to relax the strict rules they introduced in 2020.

For instance, Barclays reinstated its maximum ‘loan on income’ multiple of 5.5 times for borrowers with incomes over £75,000 (£100,000 for couples) earlier this week.

This came after At national scale reduced its 40-year maximum term for first-time buyers in January.

On the other hand, there are still some stumbling blocks.

Many banks are still reluctant to offer long-term deals and, as mentioned earlier, you may have to pay higher upfront fees than before if you want to get the best rate.

With this in mind, it may be wise to take advice from a mortgage broker about your options before apply for a mortgage.

Learn more:best and worst mortgage lenders