Top Mortgage News

Derin Clark

Derin Clark

Online Reporter
Published: 13/12/2019

After a highly competitive year in the mortgage charts, with just a few weeks left of 2019 competition seems to have eased at the top of the charts with no new top rates available this week. Saying this, there are still low mortgage rates available across the charts.

While the rate is important when choosing a mortgage deal, borrows should also take into account other factors when choosing the best deal for their personal circumstances, such as product fees and incentives. It should be noted that the charts below only highlight the lowest rate available and, as such, these might not be the best deal.

During 2019, houses have become more affordable in nearly two-thirds of local authority areas in the UK, research carried out by Yorkshire Building Society reveals.

The research found that a combination of stagnating or falling house prices along with rising wages has led to houses becoming more affordable in 233 areas, which in some areas has seen a 20% increase in housing affordability compared to a year ago.

Saying this, it was not good news for all first-time buyers, as homes in 132 local authority areas became less affordable than a year ago. This, according to Yorkshire Building Society, is mainly due to house prices rising more quickly than wage increases in these areas.

Nitesh Patel, strategic economist at Yorkshire Building Society, said: “In the past year, we’ve seen house price growth continue to slow, stall completely, or even fall. At the same time, salaries have increased, which means wage growth has begun to catch up with house price growth. This is why we’ve seen more affordable house prices in the vast majority of places.

“This is most striking in London, where six of the capital’s boroughs occupy the 10 largest increases in house price affordability. But it’s important to remember, this is all relative. London still has some way to go before house prices are truly affordable for someone on median earnings.”

He continued: “House prices have grown by an average of 43% since 2009 – twice as fast as earnings (21%) in the same period. The difficulty in affording to buy a home is one reason why house sales have not picked up in the past year, even though some of the key drivers for the housing market remain positive.

The longer-term outlook for people wanting to buy a home remains to be seen. Demand for homeownership is still strong and supply is limited, so over the short-to-medium term, house prices could increase faster than earnings. This may continue to cause issues for home buyers, particularly those buying their first home.”

According to the latest House Price Index data from Halifax, house prices have shown a marked increase, rising by 2.1% compared to November 2018. This change is the largest monthly increase since February this year, with prices increasing by 1% compared to October 2019.

As a result, the average price of a house in the UK now stands at £234,625 – a rise of some £4,836 since November last year when it stood at £229,789.

Commenting on the latest House Price Index figures, Russell Galley, Managing Director of the Halifax, said: “Average house prices rebounded somewhat in November, with annual growth of 2.1% being driven by the biggest monthly rise since February, following two months of modest falls.

“Prices are now up by £3,904 since the start of the year. While a degree of uncertainty remains evident, it’s also clear that buyers and sellers are responding to factors such as improved mortgage affordability and the limited supply of available properties.
“It is these issues which we believe will continue to underpin the resilience evident in the market for most of 2019. Over the medium-term we expect the emerging trend of modest gains to continue into next year.”

First-time buyers got an early Christmas present at the start of December, as mortgage lenders cut fixed rates on 95% loan-to-value (LTV) mortgages.

Data from the latest Moneyfacts UK Mortgage Trends Treasury Report, soon to be published, has revealed that the average two year fixed rate at 95% LTV fell by 0.02% month-on-month, from 3.27% in November to 3.25% at the start of December. Meanwhile, the average five year fixed rate offered at this tier fell by 0.03% month-on-month, from 3.60% in November to 3.57% in December. First-time buyers able to save for a 10% deposit also benefited from rate cuts, as the average rate on two-year fixed rate 90% LTV mortgages fell by 0.04% month-on-month and the five year average decreased by 0.02% month-on-month.

Residential mortgage product analysis (by loan-to-value)

Average two year fixed rate 

Max loan-to-value 60% 75% 80% 85% 90% 95%
Nov 19 1.80% 2.31% 2.39% 2.47% 2.66% 3.27%
Dec 19 1.78% 2.30% 2.40% 2.48% 2.62% 3.25%
Difference -0.02% -0.01% 0.01% 0.01% -0.04% -0.02%

Average five year fixed rate

Max loan-to-value 60% 75% 80% 85% 90% 95%
Nov 19 2.11% 2.59% 2.73% 2.80% 2.96% 3.60%
Dec 19 2.08% 2.58% 2.73% 2.81% 2.94% 3.57%
Difference -0.03% -0.01% 0.00% 0.01% -0.02% -0.03%

Source: Moneyfacts UK Mortgage Trends Treasury Report 

Commenting on the fall in average mortgage rates, Darren Cook, finance expert at Moneyfacts, said: “First-time buyers or those borrowers seeking higher LTVs seem to have benefited the most during November, as providers appear to be once again competing for this business by driving interest rates down.

“During the latest round of competitive cuts, it appears that mortgage providers are lowering rates for those with a smaller deposit, with the average rates at 90% and 95% seeing greater reductions than their lower LTV counterparts. This follows a summer of fairly muted activity at the riskier, higher LTV tiers, following the warning issued by the CEO of the Prudential Regulation Authority in May that the Bank of England is watching mortgage rates ‘like a hawk’.

“With the average two-year fixed rate at 95% LTV falling by 0.02% over the past month and the average rate at the 90% LTV tier decreasing by 0.04%, the disparity between these rates has now widened to 0.63%. Meanwhile, the average five-year fixed rates at 95% and 90% LTV have fallen by 0.03% and 0.02% respectively during November, meaning the disparity between these average rates also stands at 0.63%.

“The difference in average rates between 90% and 95% LTV tiers has historically always been greater than differences in average rates between LTVs lower down the tier scale, so it is always worthwhile for a potential first-time buyer to try to raise an additional deposit and attempt to step down the ladder to find a deal offering a more favourable interest rate.”

After a year of intense mortgage rate competition, there has been little movement at the top of the charts over the last few weeks. In fact, this week saw an increase in the top rate available in the moving home chart. Saying this, competition within the charts continues and there are some highly competitive rates available across all the charts.

Borrowers should be aware that it is important to factor in many considerations when choosing the right mortgage deal and not just look at the rate on offer. For example, some borrowers might find a better deal at a higher rate when factoring incentives and flexible features into the deal as well.

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