An Everchanging Mortgage Market

Posted in July 2023

Despite the current uncertainty around lending and increasing mortgage rates, house prices are still managing to remain relatively stable

An Everchanging Mortgage Market

The uncertainty around lending has proven to shake-up the property industry as many buyers and sellers find it hard to plan and navigate escalating mortgage rates.

At the start of 2023, a 5-year fixed mortgage with a 30% deposit was available at just under 4.5%; today, something similar is 0.8% more (or on a £250,000 Mortgage over 25 years, around £125 a month). However, despite this latest increase, many people forget that mortgage rates now are lower than those that were available at the end of 2022!

As the property market picked up slightly during May, new sales instructions have been relatively steady since June and the current level of stock is slightly higher than what was reported at the end of last year. 

In a positive light also, despite increasing mortgage rates, it appears that by and large, house prices are remaining relatively stable which is encouraging news; Nationwide and Halifax have both stated that the monthly change in the average UK property price in June was just 0.1%. The rate of inflation has also fallen from 8.7% to 7.9%.

Property transactions remain subdued with 80,020 in May, 27% lower than May 2022 and 3% lower than April 2023. Mortgage approvals for home purchase, a leading indicator of future supply, increased from 49,000 in April to 50,500 in May. However, they do remain 24% lower than the 66,175 in the same month a year ago.

The effect on the market as a whole, has not been as dramatic as had been expected.  In fact, the number of new prospective buyers in London over a recent 4-week period was 24% above the 5-year average expectation. As well, the press speculation and coverage on general mortgage rates, incorporate considerably higher interest rates, but this generalisation does not apply necessarily to everyone. In other words, the analysis tends to cover loan-to-value products for those with no deposit.  Mortgages that have a 40% - 50% deposit are usually much cheaper, as well as specialist products that often have a higher pay rate. As a result, the average price of a 5-year fixed-rate mortgage can be quoted at above 6%.

Therefore, a mortgage loan can fluctuate as it depends on an individual’s circumstances and the financial condition of the property market at that time. Which is why it is always prudent to seeks the advice of an independent mortgage advisor, rather than just rely on general information gleaned from the press or social media.

Bearing this in mind, we have consulted with Annie Young - an independent mortgage broker and asked what advice she would offer for those who are currently trying to navigate the various mortgage products available and what preparations she would suggest:-

“Mortgages have hit the headlines once again following the latest Bank of England base rate rise in an effort to curb inflation. Buying a property is a big decision especially for first-time buyers. While it can be an exciting and rewarding experience, it can also be stressful and overwhelming. There are several tips and options available that can help you, as a first-time buyer, get onto the property ladder.”

What can I do to prepare?

Save for a deposit: The larger the deposit you can put down, the better the mortgage deal you will be able to secure.

Check your credit score: This will play a big role in whether or not you can get approved for a mortgage. Take steps to improve it if necessary, such as paying off any outstanding debts and registering to vote at your current address.

Get a mortgage in principle: Before you start looking for properties, get a mortgage in principle from a lender. This will give you an idea of how much you can borrow and what your monthly repayments are likely to be.

Consider government schemes: Look into the various government schemes available to first-time buyers, such as Lifetime ISA or Shared Ownership.

I’m struggling to raise a deposit. What options are there?

100% Mortgage

What is it? Also known as a zero-deposit mortgage, it is a loan that allows first-time buyers to borrow the full purchase price of a property without having a deposit. This can be an appealing option as it allows you to step onto the property ladder sooner, without having to build up a large deposit. It can help individuals or couples who may be struggling to save a sizeable amount for a down payment, while also covering other expenses linked with buying a home, such as legal fees and moving costs.

What about my finance? With a 100% mortgage, first-time buyers could face higher interest rates compared to mortgages with a deposit. Lenders view these loans as higher risk as there is no initial equity, and as a result, they may charge a higher interest rate to balance this risk. Furthermore, as a first-time buyer, it is important to consider the long-term affordability of a 100% mortgage. Without a deposit, the loan amount will be larger, resulting in higher monthly repayments. It is essential to carefully assess your personal finances, taking into account ongoing mortgage payments, other living expenses, and potential interest rate changes.

Joint Borrower Sole Proprietor

What is it? Also known as a JBSP mortgage, it is an arrangement that typically allows first-time buyers to get financial support from family members, without them co-owning the property. Assistance is usually offered by parents, but can be up to four family members, in order to help share the responsibility of the mortgage repayments.

How does it work?  As with any mortgage, the lender will carry out both affordability and credit checks, however with a JBSP mortgage income from multiple applicants can boost affordability, due to additional support being offered from the family members. A deposit will be required, as with the majority of all mortgages. Other criteria applies such as outgoings, and there can be age restrictions, such as the maximum term often being determined by the age of the oldest applicant. Additional independent legal advice is also required. It is important for all parties to thoroughly review their current financial commitments and expenditure, as well as future possible changes, when considering a JBSP mortgage.

Shared Ownership Property

What is it? Shared ownership is a government scheme that allows first-time buyers to purchase a portion of a property and pay rent on the remaining share. It can make property ownership more affordable, easier to qualify for, providing flexibility for those who may need it.

How does it work? Under the terms of the scheme, a buyer purchases between 25%-75% of the home’s full market value from a housing association. The payment of rent and the mortgage is proportional to the percentage of the property owned. Further shares can be purchased at a later date, through a purchase called staircasing.

Following these tips could increase your chances of getting on the property ladder as a first-time buyer. For more information, contact a mortgage broker who can support you and provide the best outcome for your situation.

For further details on what is the best mortgage deal available for you, contact:-

Annie Young BSc (Hons), CeMAP

Mortgage Consultant

About Mortgages Ltd

01403 283 928  

07969 468 828

If you are thinking of selling your property, please call our Sales Team today for a FREE market appraisal on 020-7619-3750 (Archway), 020-7354-9111 (Highbury) or 020-7281-2000 (Stroud Green), or email   If you are looking to buy a property, please register your details on our website today.

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