The mortgage market has witnessed a number of major changes over the last few decades. There are now many more types of mortgage on offer, homebuyers have learned to shop around for the best available deals, 70% use the services of a mortgage adviser, loans can be much longer than 25 years, and re-mortgaging for a better deal is commonplace.
Homeowners are getting older
The average age of a UK homeowner is rising. In 1996 it was 52, by 2016 it was 57, highlighting an increased concentration of homeownership amongst older people, and underlining the problems faced by younger buyers who often find themselves approaching their 30s before they can afford to buy a property.
Fixed-rate deals widely available
The first fixed-rate mortgage deal was launched in 1989. According to Moneyfacts, the best rate on offer was a three-year deal from NatWest at 12.4%, and the average house price according to the Office for National Statistics was £55,000.
By 2009, the lowest mortgage rate on offer was 3.89% from the Principality Building Society. Since then, rates have remained low, fixed-rate mortgages have increased in popularity amongst borrowers, and the average house price is just over £200,000.
Longer-term loans are becoming more common
As prices continued to rise, lenders saw that borrowers needed longer term loans in order to make their monthly repayments affordable. By 2017, figures from the Bank of England showed that almost 16% of new mortgages were for terms of 35 years or more.
Low deposit lending
With first-time buyers often struggling to save for a deposit, lenders have launched mortgages to cater for those with lower deposits. In March, the number of 95% loan to value deals on the market exceeded 300, the first time this has happened since April 2008. The market remains very competitive, and many of these 5% deposit deals come with additional incentives such as free valuations or cashback options.
Borrowers are more rate-savvy
The mortgage payment is often a family’s major monthly outgoing, so it’s not surprising that borrowers are becoming more rate-aware and are re-mortgaging to save money. Figures for January show that 49,800 re-mortgages were completed, that’s 19.1% more than in the same month in 2017. With the Bank of England sending strong signals that rates are likely to rise later this year, borrowers are choosing to lock into two and five year fixed-rate deals which enable them to budget effectively for the period of the loan.
Getting the right advice
If you’re looking for a mortgage, your current mortgage deal is coming to an end, or if you’ve been with your existing lender for a while, this could be a very good time to get some good mortgage advice.
Your home may be repossessed if you do not keep up repayments on your mortgage.