Why Now Might Be A Good Time To Switch Mortgage Deals

December 12, 2022

The BBC reports that the average five-year fixed mortgage rate has fallen below 6% for the first time in almost two months. While they are still higher than before the ill-fated mini-Budget announced in September, the pressure is eased slightly for those seeking to get a renewed mortgage deal, or for first time buyers looking to enter the market.

This means that anyone who has locked in a mortgage deal between the market turbulence in September and late November could benefit from shopping around for a new deal, as there are many more cheaper products available.

There is usually no fee to cancel a mortgage offer, but it is advisable to seek the advice of a good mortgage broker before you act. In some circumstances, you may lose a booking fee, legal fees, or an arrangement fee, but the savings you may make on a new deal could still make paying these fees worthwhile.

Your broker should be able to advise you on the best course of action. They will also have established relationships with a comprehensive range of lenders, and are likely to know which ones can offer you a competitive deal. This is especially important if you have non-standard circumstances, such as self-employment, or an adverse credit history.

Many people will have gone ahead and locked in a deal recently, despite the spike in rates, for fear that conditions will only get worse. However, after the appointment of the new Chancellor Jeremy Hunt, and the new premiership of Rishi Sunak, market confidence and stability has returned, and mortgage rates have in consequence fallen.

Hunt reversed most of the radical measures announced by his predecessor Kwasi Kwarteng, including billions of pounds of unfunded tax cuts. Since the Autumn Statement on 17 November, mortgage rates on the average five-year fixed term mortgage have fallen to 5.95%, below the peak in late October of 6.51%.

Furthermore, first time buyers may be able to take advantage of the fact that house prices are finally beginning to fall, after eighteen months of steep rises.  According to The Guardian, prices are expected to fall about 5% over the next year, and sellers are already beginning to settle for below the asking price, as the property market cools off.

Richard Donnell, executive director at Zoopla, said: “The housing market is adjusting to a reset in the level of mortgage rates but the likelihood of double-digit house price falls at a UK level remains low.”

He added: “While the outlook for house prices is weak, we see a shift to more needs-driven motivations to move in 2023 and beyond which will support sales volumes. Ongoing pandemic impacts, increased labour market flexibility plus more retirement will continue to encourage moves.”

The cost-of-living crisis may mean that there is less competition for properties, and so the next few months may be more favourable than it first appears for those who are considering buying a home for the first time.

If you would like to talk to IVA mortgage specialists, please get in touch today.

Your home may be repossessed if you do not keep up with your mortgage repayments.

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