Mortgage Criteria & Indicative Rates – September 2023

Residential mortgages – 5% to 10% deposit

• Minimum 5% deposit – we have access to schemes such as shared ownership / deposit unlock and guarantor mortgages.
• Ideally a good credit rating and on electoral role on these deposit sizes.
• Approximately 4 to 4.5 times total income is an approximate rule of thumb.
• Mortgage rates based on a 10% deposit now starting from 5.43% for a fixed rate.
  
  
  

Residential mortgages – larger deposits of 15% or more

• Contrary to media speculation, it’s possible to borrow in the region of 4.5 to 5.5 times your income. Generally, the higher the income the greater the chance of getting approval for 5 times income or higher.
• Some adverse credit is more likely to be tolerated on a 15% deposit or more.
• Mortgage rates typically starting from 5.04% for a fixed rate and a 15% deposit.
• Interest only or part interest only an option if 25% deposit or greater.
  
  
  

Investors – Buy to Let

• Most lenders generally require a 25% deposit as a minimum.
• Excellent to good credit rating otherwise likely to be declined.
• Options available for clients with minimal provable income.
• We can assist with standard personal BTL mortgages as well as areas such as limited company buy to lets / HMOs / Holiday lets / Expats too.
• Rates on BTL mortgages based on 25% deposit priced from 4.79%.
  
  
  

Commercial Finance – Purchase of premises / offices / hotels / property portfolios / development finance / bridging loans

• More discretion shown by lenders on requirements as cases judged on individual merits but typically looking for 25-30% deposit absolute minimum. Rates start from around 7% but priced by lenders on an individual basis. We can assist with these types of finance enquiries too.
  
  
  

Overseas Investors & Expats

• For clients that don’t reside or domicile in the UK there are many lenders we have access to that can assist or if you paid in a currency other than GBP.
  
  
  

Standard Variable Rates, Key Interest Rates and House Price Indices

• Standard Variable Rates: Santander 8.5%, Halifax 8.74%, Natwest 7.49%, Nationwide 7.99%, Barclays 8.74% and HSBC 6.99%.
• Key Central Bank Interest Rates: Bank of England 5.25%; US Federal Reserve 5.25%; European Central Bank 3.75%, Chinese base rate 3.85%.
• UK inflation rate – Latest Consumer Price Index reading was 6.8% for the 12 months to July 2023 and is finally trending downwards.
• Nationwide House Price Index - Typical UK property according to Nationwide now costs £259,153 which is down 5.3% higher compared to 12 months ago.
  
  
  

Things to consider before applying for a mortgage

• Check your credit file to ensure there are no nasty surprises on your report. Here is a link to download your file which grants you access to the main 3 credit agencies used by lenders: https://www.checkmyfile.com/credit-report.htm?ref=alexgroom&cbap=1
• Check to see you’re on the voters role – www.gov.uk/electoral-register/viewelectoral-register
• Ensure your bank account balance is not exceeding any overdraft limit so that you live within your means.
• Determine your maximum purchase price and ensure a mortgage will be affordable prior to making an offer – this is something we can assist with.
  
  
  

Economic, mortgage and housing commentary

The next Bank of England meeting to set interest rates is looming and policymakers will decide on whether to increase the cost of borrowing again. The continual rise in interest rates comes with unfortunate side effects and there is evidence of a sharp drop in economic activity. Expectations are also rising that a mild recession is on the way. The market consensus is still for another rate hike in September to 5.5%. There is a chance it could be the last in the cycle, but right now the market consensus is for two more rate hikes to 5.75% before the end of the year, until there’s a pause. Mortgage rates have stabilised and given the Summer lull in activity, we are seeing evidence of lenders now pricing their mortgage rates marginally more competitively to attract new business. Hopefully this trend will continue as we move into Autumn.

Contact Ben Edwards at ben.edwards@agamortgages.co.uk or on 07464 971654 should you need any mortgage advice prior to buying.

Any rates mentioned here are indicative only and not to be relied upon. Please contact us for a personalised illustration.

Website: www.agamortgages.co.uk