Since the financial crash, the mortgage market has changed a lot. While it is true that lending is more tightly regulated, the rates are lower than ever before. Triggered by risky lending, which left the country in the woes of the worst economic downturn since the Great Depression, mortgages plunged into negative equity. Property prices went down. This left hundreds of thousands of mortgage prisoners unable to sell their homes. New rules have been introduced and there has been an uptick in the number of deals available. Mortgage rates have fallen. Now that Brexit will become official, there are a lot of people making predictions about how mortgages will change.
Since 2009, mortgage rates have plummeted. Over the average two-year fixed rate, which was at 4.93 percent a decade ago. It has gone down to 2.44 percent since then. The average mortgage deal would have someone with a £100,000 mortgage at £656 per month for 20 years. Now the mortgage is about £527 a month. Fixed rates for the mortgage market have dropped significantly, from 5.6 percent to 2.61. Five-year fixed rates have gone down as well, by nearly half. Fixed rates for ten years have dropped from 5.74 to 3.02 percent.
It can be difficult to tell if mortgage rates will continue to go down after Brexit, but everything is pointing in that direction. With new rules and competition that doesn’t show any sign of slowing down, mortgage rates will likely decrease, which may lead to some more bad behavior.
Over the past year, competition between mortgages have suppressed rates according to the site MoneyPug, which is known as a mortgage broker. A slew of lenders have left the market this year citing pressures of the competition. After Brexit becomes a reality, the competition surrounding mortgages may increase, but new rules and regulations may slow the market.
Banks Changing the Way they Lend
One of the biggest changes of the past decade was the lending rules that changed five years ago. The Financial Services Authority cracked down on the lax regulations after the financial crisis in 2007. The government, mortgage lenders, as well as consumer and trade bodies tried to improve the market. This set of rules have changed the way that mortgages were sold after the year 2014.
Regulations have made it tougher to get a mortgage than it once was and are designed to curtail risky lending practices lenders engaged with the financial crash. A borrower could simply self-certify their income on a mortgage application. After a decade of these regulations, lenders are looking for affordable ways to keep up with mortgage repayments. This goes to show that bankers are trying to find new ways to get around regulations and return to riskier tactics.
The Future after Brexit
In the summer of 2019, 35,010 new first-time buyer mortgages were completed. First-time buyers who entered the market will continue to grow despite Brexit. Yet they still aspire to buy property. It is very important to understand how much repayments will cost each month will give you peace of mind. Those who want to protect themselves against Brexit uncertainty will wait to take out a mortgage. However, another thing to consider is a fixed-rate deal. Personal and future circumstances into account when securing a mortgage and seek advice from a broker to ensure you’re aware of the options.
The people taking out low-deposit mortgages hit the highest level since the financial crash recently. A growing number of homeowners mainly first-time buyers. High loan-to-value mortgages are seen as one of the hallmarks of the banks, they are engaged in the lead up to the crash.
It is difficult to know how things will change after Brexit. Mortgage regulations have been strict for the last decade. With lenders looking for loopholes and ways to get riskier loans approved, there will likely be more competition. Mortgage rates have gone down and it looks like they will continue to go down. Still we don’t really know much about what will occur after Brexit but many people are making predictions and preparing for a United Kingdom without the European Union.