GLOBE LAUNCHES NEW ADVICE COLUMN IN WAKE OF MINI-BUDGET TURMOIL
THIS week The Globe introduces a timely addition to the editorial team, Charles Calvert, who will be contributing regular columns on different aspects of the mortgage market and answering questions from readers, both individually and in print.
The founder and managing director of Easy Mortgages, a new mortgage and insurance brokerage, based in Gosport, Charles first started as a mortgage advisor in 2007 and has worked for some of the UK’s largest brokerages. Here he gives a little background information about himself and reflects on the dramatic impact the mini-budget has had for anyone wanting a home loan…
I created Easy Mortgages with a vision that we could do better.
Large firms have huge costs and so need to write lots of business each month, with high targets. I wanted to offer our clients a far superior service; spend more time learning about their aspirations and dreams, talking through the market and their options.
We specialise in First Time Buyers, Home Movers, Remortgages and Buy To Lets. We aim to make things as easy as possible for our clients and ensure they are never confused or blinded with jargon. We can help anyone in the UK but especially love helping locals here In Gosport.
When I’m not working, I adore spending time with my family and friends. My wife is currently expecting a baby boy, which we’re very excited about. And I have a passion for golf!
WHAT a week we have had in the mortgage market! Changes we haven’t seen in over a decade. If you’ve been around the block, you’ll have seen this before in 2008 but for some this is new territory.
We’ve seen interest rates being removed from the market with little or no notice, returning shortly after at much higher rates. The mini-budget having drastic consequences on the pound and market confidence. The reversal of the planned 45% tax reduction by the Chancellor whilst also calling in execs from top banks for urgent discussions as rates hit a 14-year high.
New data revealed that the average two-year fixed rate has now hit 6.07%, this the highest since November 2008.
This is causing life changing consequences to clients approaching the end of their current fixed rates. Some are coming off rates as low as 1.5%.
£250,000 mortgage – 25-year term – 1.5% = £1,000 per calendar month
£250,000 mortgage – 25-year term – 6% = £1,611 per calendar month
For some, although an annoyance, this will be affordable, for others this could lead to increased home sales or repossessions. I’d love to tell you when rates will be coming down but with inflation at still over 10%, we’re not expecting this any time soon.
Hopes are that Chancellor Kwasi Kwarteng will ease tensions further and rates may return closer to the Bank of England Base Rate in coming weeks, which currently stands at 2.25%. Still much lower than it was in 2007, when at 5.75%.
We are expecting the base rate to rise further in November and into 2023.
On a brighter note, this could be a positive thing for first time buyers. If more properties become available, prices may dip which could mean, a first-time buyer, scooping up a bargain!
The Chancellor set out a raft of tax cuts just over two weeks ago now. The knock-on effect is still being measured.
The value of the pound, the cost of mortgages and pension funds have all been affected by the move. Pressure is now mounting for millions around the country approaching their mortgage fixed term end dates. The Bank of England also announced their bond-buying support will end on Friday. Meanwhile the UK economy unexpectedly shrank 0.3% in August.
Who would have wanted to be Liz Truss in yesterday’s PMQ’s? Questions needed to be answered and Labour leader Sir Keir Starmer was taking no prisoners.
The Prime Mister announced she won’t be cutting government spending to pay for the tax cuts. So, the question remains, where is this money coming from?
And, how are they going to help people paying hundreds extra a month on their mortgage payments not lose their homes?
If you have questions about your mortgage, or would like to arrange an appointment with me, I can be contacted on:
Easy Mortgages Limited