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Making Sense of the Mortgage Market

John Cox, of Mortgage Desk, reports

I think the following quote can best summarise the mortgage market… “There are decades where nothing happens; and there are weeks where decades happen.” – Vladimir Ilyich Lenin.

The property market regarding access to finance and rates had been, until recently, a borrower’s heaven with lenders competing on both criteria and price – it wasn’t until May 2022 that Bank of England (BOE) rates hit 1%, and since the Great Financial Crisis 07-08 the rate had never peeped above 1%.

The market for landlords and investors even a few months ago was one where 5-year limited company fixed rates at 3.5% were freely available – typical stress testing depending on lender at 125%/145% was at a  pay rate of 5.5%.

One could argue we have all benefited from over a decade of cheap and relatively easy money – this has now been broken and one could argue that the era of cheap money is confined to the history books and whilst rates will and have ticked up - rates are still low compared to levels seen before the Great Financial Crisis

Current climate
With recent events, the after-effects of Covid and then the war in Ukraine, one could argue that the BOE being fast asleep at the wheel has meant inflation has jumped into double digits – this meant even before the ‘mini’ budget crisis of Truss/Kwarteng it was forecast that the BOE base rate would peak around 4% sometime around mid-2023.

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