Catch up on Mortgage Strategy’s most popular stories this week. Falling swap rates point to lower mortgage rates in 2024 and Metro Bank criteria changes streamline worker documents. Read more below:
Falling swap rates point to lower mortgage rates in 2024
Mortgage rates are expected to decrease in the coming year as lenders capitalize on more affordable funding. This projection follows a consistent five-month decline in average swap rates, as reported by specialist lender Octane Capital. The analysis of average monthly swap rates over the past year informs their anticipation of market trends, particularly in light of this week’s base rate decision from the Bank of England.
Nationwide cuts minimum visa validity to one year for resi loans
Nationwide Building Society has reduced the minimum visa validity period necessary for residential mortgage applications. In cases where an applicant lacks indefinite leave to remain in the UK, the revised requirement is a minimum of 12 months remaining on their visa at the time of application. This marks a significant decrease from the prior minimum stipulation of two years and six months.
Metro Bank criteria changes streamline worker documents
Metro Bank has streamlined its criteria, simplifying the documentation needed for both buy-to-let and residential mortgage applications. This initiative is aimed at potentially expanding the pool of eligible borrowers, encompassing both employed and self-employed individuals seeking home loans.
HSBC cuts resi, BTL rates by up to 30bps
HSBC has implemented rate reductions of up to 30 basis points on selected residential and landlord deals. The high street lender notes that, on average, residential mortgage reductions stand at 20 basis points, spanning a range between 5 and 30 basis points.
Mortgage lending to fall 5% in 2024: UK Finance
Anticipating a challenging landscape in the mortgage market, UK Finance predicts a 5% decrease in gross mortgage loans to £215 billion in 2024. This downturn is attributed to the impact of higher interest rates and increased household costs, which are expected to constrain access to mortgage credit. The forecast suggests that next year will see a decline in home loan lending coupled with a rise in arrears as these factors persist.
Bank of England holds rates at 5.25%
The Bank of England maintained the base rate at 5.25% for the fourth consecutive month, yielding few surprises. The decision by the Monetary Policy Committee to keep rates steady follows a series of 14 increases from its historic low of 0.1% in December 2021. Reflecting on the MPC’s choice, Paresh Raja, Chief Executive of Market Financial Solution, observes that, after nearly two years of rate hikes, the decision to sustain rates for a third consecutive time suggests a potential peak. Despite this, predicting the base rate’s position in the next six or twelve months remains a challenge.
Fixed rates hit lowest levels in six months: Moneyfacts
Average rates for both two- and five-year fixed mortgages have fallen for a fourth consecutive month, reaching a six-month low, according to the latest Moneyfacts UK Mortgage Trends Treasury Report. In November, the overall average rates dropped to 6.04% and 5.65%, respectively, the lowest since June 2023. Notably, the average two-year fixed rate is now 0.39% higher than the five-year equivalent, a slight decrease from the 0.43% difference observed last month.
Economy cooling fast but rates likely to rise again: Hargreaves
With the Bank of England yet to decide on another interest rate hike in four weeks, the economy is showing signs of a rapid cool-down. While the interest rate adjustments have had the intended impact, Hargreaves Lansdown’s Head of Money and Markets, Susannah Streeter, notes unfortunate side effects, including a significant decline in economic activity. Expectations are growing for a mild recession as the impact of rapid rate hikes begins to manifest in the business landscape, causing the outlook to deteriorate swiftly.
Skipton BS will write 95% LTV loans for new build flats, cuts rates
Skipton Building Society has adjusted its criteria policy to support first-time buyers by now accepting applications for new build flats at up to 95% loan to value. Additionally, the mutual plans to reduce fixed rates for both residential and landlord categories within its existing customer range. Jonathan Evans, the National Account Manager at Skipton Building Society, who recently assumed the role of new build lead, expressed enthusiasm about the focus on new build initiatives.
Lender mortgage commitments slump 16.5% in Q3: BoE
In the third quarter, the value of newly agreed mortgage commitments plummeted by 16.5% to £51.5 billion, according to data from the Bank of England. This figure represents a 41.4% decrease compared to the same period last year, as elevated interest rates limit household lending. On a positive note, the central bank reports an 18.6% increase in the value of gross mortgage advances from the preceding quarter, reaching £62.2 billion. However, this remains 27.6% lower than the corresponding quarter in the previous year.
