Renting Archives - Page 61 of 572

Apache is functioning normally

March 7, 2024 by Brett Tams

Lately, mortgage rates have surged higher, climbing from as low as 2% to over 8% in some cases.

Despite this, home builders have been enjoying healthy sales of newly-built homes.

And somewhat incredibly, they haven’t had to lower their prices in many markets either.

The question is how can they continue to charge full price if financing a home has gotten so much more expensive?

Well, there are probably several reasons why, which I will outline below.

Home Builders Don’t Have Competition Right Now

The first thing working in the home builders’ favor is a lack of competition. Typically, they have to contend with existing home sellers.

A healthy housing market is dominated by existing home sales, not new home sales.

If things weren’t so out of whack, we’d be seeing a lot of existing homeowners listing their properties.

Instead, sales of newly-built homes have taken off thanks to a dearth of existing supply.

In short, many of those who already own homes aren’t selling, either because they can’t afford to move. Or because they don’t want to lose their low mortgage rate in the process.

This is known as the mortgage rate lock-in effect, which some dispute, but logically makes a lot of sense.

At the same time, home building slowed after the early 2000s housing crisis, leading to a supply shortfall many years later.

Simply put, there aren’t enough homes on the market, so prices haven’t fallen, despite much higher mortgage rates.

They Don’t Need to Lower Prices If Demand Is Strong

There’s also this notion that home prices and mortgage rates have an inverse relationship.

In that if one goes up, the other must surely come down. Problem is this isn’t necessarily true.

When mortgage rates rose from record lows to over 8% in less than two years, many expected home prices to plummet.

But instead, both increased. This is due to that lack of supply, and also a sign of strength in the economy.

Sure, home buying became more expensive for those who need a mortgage. But prices didn’t just drop because rates increased.

History shows that mortgage rates and home prices don’t have a strong relationship one way or the other.

Things like supply, the wider economy, and inflation are a lot more telling.

For the record, home prices and mortgage rates can fall together too!

Lowering Prices Could Make It Harder for Appraisals to Come in at Value

So we know demand is keeping prices mostly afloat. But even still, affordability has really taken a hit thanks to those high rates.

You’d think the home builders would offer price cuts to offset the increased cost of financing a home purchase.

Well, they could. But one issue with that is it could make it harder for homes to appraise at value.

One big piece of the mortgage approval process is the collateral (the property) coming in at value, often designated as the sales price.

If the appraisal comes in low, it could require the borrower to come in with a larger down payment to make the mortgage math work.

Lower prices would also ostensibly lead to price cuts on subsequent homes in the community.

After all, if you lower the price of one home, it would then be used as a comparable sale for the next sale.

This could have the unintended consequence of pushing down home prices throughout the builder’s development.

For example, if a home is listed for $350,000, but a price cut puts it at $300,000, the other homes in the neighborhood might be dragged down with it.

That brings us to an alternative.

Home Builders Would Rather Offer Incentives Like Temporary Buydowns

Instead of lowering prices, home builders seem more interested in offering incentives like temporary rate buydowns.

Not only does this allow them to avoid a price cut, it also creates a more affordable payment for the home buyer.

Let’s look at an example to illustrate.

Home price: $350,000 (no price cut)
Down payment: 20%
Loan amount: $280,000
Buydown offer: 3/2/1 starting at 3.99%
Year one payment: $1,335.15
Year two payment: $1,501.39
Year three payment: $1,676.94
Year 4-30 payment: $1,860.97

Now it’s possible that home builders could lower the price of a property to entice the buyer, but it might not provide much payment relief.

Conversely, they could hold firm on price and offer a rate buydown instead and actually reduce payments significantly.

With a 3/2/1 buydown in place, a builder could offer a buyer an interest rate of 3.99% in year one, 4.99% in year two, 5.99% in year three, and 6.99% for the remainder of the loan term.

This would result in a monthly principal and interest payment of $1,335.15 in year one, $1,501.39 in year two, $1,676.94 in year three, and finally $1,860.97 for the remaining years.

This assumes a 20% down payment, which allows the home buyer to avoid private mortgage insurance and snag a lower mortgage rate.

If they just gave the borrower a price cut of say $25,000 and no mortgage rate relief, the payment would be a lot higher.

At 20% down, the loan amount would be $260,000 and the monthly payment $1,728.04 at 6.99%.

After three years, the buyer with the higher sales price would have a slightly steeper monthly payment. But only by about $130.

And at some point during those preceding 36 months, the buyer with the buydown might have the opportunity to refinance the mortgage to a lower rate.

It’s not a guarantee, but it’s a possibility. In the meantime, they’d have lower monthly payments, which could make the home purchase more palatable.

Home Price Cuts Don’t Result in Big Monthly Payment Savings

	Price Cut Payment	Post-Buydown Payment
Purchase Price	$325,000	$350,000
Loan Amount	$260,000	$280,000
Interest Rate	6.99%	6.99%
Monthly Payment	$1,728.04	$1,860.97
Difference		$132.93

At the end of the day, the easiest way to lower monthly payments is via a reduced interest rate.

A slightly lower sales price simply doesn’t result in the savings most home buyers are looking for.

Using our example from above, the $25,000 price cut only lowers the buyer’s payment by about $130.

Sure, it’s something, but it might not be enough to move the needle on a big purchase.

You could take the lower price and bank on mortgage rates moving lower. But you’d still be stuck with a high payment in the meantime.

And apparently home buyers focus more on monthly payment than they do the sales price.

This explains why home builders aren’t lowering prices, but instead are offering mortgage rate incentives instead.

Aside from temporary buydowns, they’re also offering permanent mortgage rate buydowns and alternative products like adjustable-rate mortgages.

But again, these are all squarely aimed at the monthly payment, not the sales price.

So if you’re shopping for a new home today, don’t be surprised if the builder is hesitant to offer a price cut.

If they do offer an open-ended incentive that can be used toward the sales price or interest rate (or closing costs), take the time to consider the best use of the funds.

Those who think rates will be lower in the near future could go with the lower sales price and hope to refinance. Just be sure you can absorb the higher payment in the meantime.

Read more: Should I use the home builder’s lender?

Source: thetruthaboutmortgage.com

Apache is functioning normally

March 7, 2024 by Brett Tams

Gains Before and After Data

By:
Matthew Graham

Tue, Mar 5 2024, 4:32 PM

Gains Before and After Data

Today’s big to-do was the ISM Non-Manufacturing data at 10am ET. Of the two ISM reports, this is typically the bigger market mover, but that wasn’t the case this time around. One potential reason for that is the fact that markets had already gone on a fairly good run even before the data was released. Rationale is multifaceted and debatable for that initial rally. It includes things like European econ data, risk-off trading surrounding NYCB issues, and corrective momentum in equities. To be sure, ISM packed the biggest punch among TODAY’s events, both in terms of volume and bond market momentum, even though it only accounted for about a quarter of the overall movement. Still… it’s a strong showing considering bonds are making gains when yields are already at 3 week lows.

- ISM Non Manufacturing
  - 52.6 vs 53.0 f’cast, 53.4 prev
- ISM Prices Paid
  - 58.6 vs 64.0 prev
- ISM employment
  - 48.0 vs 50.5 prev

09:36 AM

Slightly stronger overnight with additional buying at the open. 10yr down 6.3bps at 4.154 and MBS up 7 ticks (.23)

10:39 AM

Stronger after ISM data, but at a tempered pace. MBS up 9 ticks (.28) and 10yr down 7.4bps at 4.143

02:30 PM

Sideways to slightly weaker into mid-day, but back near the highs now. MBS up 11 ticks (.34) and 10yr down 8.2bps at 4.135

Download our mobile app to get alerts for MBS Commentary and streaming MBS and Treasury prices.

Source: mortgagenewsdaily.com

Apache is functioning normally

March 7, 2024 by Brett Tams

Recent swings in mortgage rates are helping to drag down contract signings, which fell 5% in January, the National Association of REALTORS® reported this week. Pending home sales, a forward-looking indicator of housing activity based on contract signings, were down 8.8% compared to a year earlier.

“The job market is solid, and the country’s total wealth reached a record high due to stock market and home price gains,” says NAR Chief Economist Lawrence Yun. “This combination of economic conditions is favorable for home buying. However, consumers are showing extra sensitivity to changes in mortgage rates in the current cycle, and that’s impacting home sales.”

In recent weeks, mortgage rates have started creeping back toward 7%. Freddie Mac reports the 30-year fixed-rate mortgage averaged 6.94% this week, marking a two-month high. “While this is still below the rates seen in the fall of 2023, it impacts home buyers’ excitement about entering a spring market,” says NAR Deputy Chief Economist Jessica Lautz. The monthly mortgage payment for a $400,000 home, assuming a 20% down payment, now translates to about $2,116, Lautz adds. “For first-time buyers who are the most price-sensitive, the rise in mortgage rates poses a cause for concern, as they may be priced out of the market.”

Indeed, “the recent boomerang in rates has dampened already tentative homebuyer momentum as we approach the spring, a historically busy season for home buying,” adds Sam Khater, Freddie Mac’s chief economist. “While sales of newly built homes are trending in a positive direction, higher rates and elevated prices continue to pose affordability challenges that may leave potential home buyers on the sidelines.”

Freddie Mac reports the following national averages with mortgage rates for the week ending Feb. 29:

30-year fixed-rate mortgages: averaged 6.94%, rising from last week’s 6.9% average. A year ago, 30-year rates averaged 6.65%.
15-year fixed-rate mortgages: averaged 6.26%, dropping slightly from last week’s 6.29% average. Last year at this time, 15-year rates averaged 5.89%.

Source: nar.realtor

Apache is functioning normally

March 6, 2024 by Brett Tams

Mortgage rates are driven by movement in the bond market. Bonds can move for several reasons at any given moment, but a key consideration these days is the tone of the regularly scheduled economic data.

When it comes to data, some reports are more important than others. We witnessed this last week when Thursday and Friday’s reports provided the only exciting moments of the week. Fortunately, both were in favor of lower rates.

This week’s economic data is incrementally more meaningful than last week’s, and that’s especially true of Friday’s big jobs report. But today’s report on the strength of the services sector is a reliable supporting actor when it comes to data having an impact on rates. Here too, data was friendly

Not only did the report show slightly more weakness than expected in the services sector, but it highlighted an even faster downshift in the pace of price increases. It also suggested contraction in the services sector labor market–a point worth considering as Friday’s jobs report approaches.

Bonds had already found other reasons to improve ahead of the data, but the gains continued afterward. Bond market improvement equates to downward pressure on rates, all other things being equal.

With that, the average lender was able to drop 30yr fixed rates to their lowest level since February 12th. If there’s a catch, it’s that the range has been fairly narrow between now and then, and day-to-day movement has been modest.

Source: mortgagenewsdaily.com

Apache is functioning normally

March 6, 2024 by Brett Tams

Many or all of the products and brands we promote and feature including our ‘Partner Spotlights’ are from our partners who compensate us. However, this does not influence our editorial opinion found in articles, reviews and our ‘Best’ tables. Our opinion is our own. Read more on our methodology here.

Comparing mortgage rates is key to keeping your mortgage costs lower. It’s also why you should shop around if you’re looking for a new mortgage deal. Whether you’re ready to compare mortgages right now or want to keep tabs on the latest mortgage rates in the UK, everything you need is here.

Partner Spotlight

Compare Mortgage Rates

Tell us what you’re looking for and see current UK mortgages available, including rates, repayments and product information. Continue online to our partner L&C for fee-free mortgage help and advice.

How to get the best mortgage rates and deals

Mortgage rates vary depending on the type of mortgage you’re looking for, your financial situation and your credit score. But when we talk about getting the best mortgage rate, it’s important to find the best rate among the mortgage deals that suit you and your circumstances.

Mortgage fees and the features you want in a mortgage should always be considered alongside the mortgage rate when making mortgage comparisons and shopping around for any mortgage deal.

If you’re in any way unsure or want help finding the best mortgage deal for you we recommend you seek mortgage advice.

Are mortgage rates going down?

Mortgage rates have mainly been rising in the past week, continuing the upward trend seen during much of February. The average rate on two-year fixed-rate mortgages increased to 5.15% in the week to 28 February, rising from 5.08% a week earlier, according to Rightmove. At the same time, the average rate on five-year fixed-rate mortgages increased to 4.80%, up from 4.72%.

Many of the big UK lenders have increased the cost of their fixed-rate mortgages in recent weeks. However, average rates remain lower than at the beginning of the year, due to the significant rate cuts seen during the mortgage rate price war in January.

Some experts are predicting that more mortgage rate rises may be on the way. This is mainly because of expectations that the Bank of England base rate may need to stay higher for longer, to get inflation down.

What are current UK mortgage rates?

The average two-year fixed-rate mortgage rate, if you have a 25% deposit or equity, increased to 4.99% over the past week, up from 4.90%, while the average rate on a similar five-year fixed-rate mortgage rose to 4.70%, from 4.61%. If you have a smaller deposit or equity of 5%, the average two-year fixed rate remained unchanged at 5.79%, while the average five-year rate increased to 5.38%, from 5.35%. All rates are according to Rightmove as at 28 February 2024.

Latest average two-year fixed-rate mortgage rates

Loan to value (LTV)	21 February 2024	28 February 2024	Week-on-week change	⇩ ⇧
60% LTV	4.50%	4.62%	+0.12%	⇧
75% LTV	4.90%	4.99%	+0.09%	⇧
85% LTV	5.08%	5.14%	+0.06%	⇧
90% LTV	5.31%	5.38%	+0.07%	⇧
95% LTV	5.79%	5.79%	No change	⇔

Latest average five-year fixed-rate mortgage rates

Loan to value (LTV)	21 February 2024	28 February 2024	Week-on-week change	⇩ ⇧
60% LTV	4.19%	4.30%	+0.11%	⇧
75% LTV	4.61%	4.70%	+0.09%	⇧
85% LTV	4.67%	4.73%	+0.06%	⇧
90% LTV	4.86%	4.93%	+0.07%	⇧
95% LTV	5.35%	5.38%	+0.03%	⇧

Data sourced from Rightmove/Podium. Correct as at 28 February 2024.

Average rates are based on 95% of the mortgage market and products with a fee of around £999.

What mortgage do I need?

If you’re looking for a mortgage, you’ll usually fall into one of the following categories of mortgage borrower.

If you’ve never owned a home before, you’ll usually need a first-time buyer mortgage. Knowing that you’re just starting out, the deposit requirements on most first-time buyer mortgages are generally small. You should also be able to find mortgage deals where upfront fees are kept to a minimum. However, mortgage rates for first-time buyers tend to be higher than if you’re already on the property ladder. This is because you’re likely to require a larger loan relative to the value of your property – so borrow at a higher loan-to-value (LTV) – making you a riskier proposition in the eyes of lenders. As it’s your first mortgage, lenders also have less to go on when trying to assess your reliability as a mortgage borrower.

If you already have a mortgage but want to switch to a new one, you are looking to remortgage. You may want to remortgage because your current fixed-rate or discounted term is at an end and you don’t want to move on to your lender’s standard variable rate (SVR), which may be higher. Other reasons you may remortgage include to raise funds to pay for home improvements, or because falling interest rates or a rise in the value of your home means remortgaging could save you money. If you’ve built equity in your property since taking out your current mortgage, it may be possible to borrow at a lower LTV for your new mortgage – and the lower your LTV, the lower mortgage rates tend to be.

If you already have a mortgage but are moving home, you may be able to take your current mortgage with you – this is called porting. Alternatively, you may want to arrange a new mortgage altogether, either with your current lender or a different one. Whichever option you’re considering, it’s important to weigh up the costs of either porting or exiting your existing deal, along with any potential fees you may need to pay on a new mortgage deal.

If you’re buying a property to rent out to tenants, you’ll be looking for a buy-to-let mortgage. You’ll normally need a larger deposit for a buy-to-let mortgage than you would for a residential mortgage, and buy-to-let mortgage rates tend to be higher too. Lenders will also want to see that the rental income you expect to receive will more than cover your monthly repayments.

How mortgage rates work

Mortgage rates are the interest rate you pay to a lender on the mortgage balance you have outstanding. The lower your mortgage rate, the lower your monthly mortgage repayments tend to be, and vice versa.

Different types of mortgage

The type of mortgage you take out can affect the mortgage rate you pay, and whether it may change going forward.

Fixed-rate mortgage

A fixed-rate mortgage guarantees that your mortgage rate, and therefore your monthly repayments, won’t change during the set fixed-rate period that you choose.

This can help with budgeting and means you are protected against a rise in mortgage costs if interest rates begin to increase. However, you’ll miss out if interest rates start to fall while you are locked into a fixed-rate mortgage.

Variable rate mortgages

With a variable rate mortgage, your mortgage rate has the potential to rise and fall and take your monthly repayments with it. This may work to your advantage if interest rates decrease, but means you’ll pay more if rates increase. Variable rate mortgages can take the form of:

a tracker mortgage, where the mortgage rate you pay is typically set at a specific margin above the Bank of England base rate, and will automatically change in line with movements in the base rate.
a standard variable rate, or SVR, which is a rate set by your lender that you’ll automatically move on to once an initial rate period, such as that on a fixed-rate mortgage, comes to an end. SVRs tend to be higher than the mortgage rates on other mortgages, which is why many people look to remortgage to a new deal when a fixed-rate mortgage ends.
a discount mortgage, where the rate you pay tracks a lender’s SVR at a discounted rate for a fixed period.

Offset mortgages

With an offset mortgage, your savings are ‘offset’ against your mortgage amount to reduce the interest you pay. You can still access your savings, but won’t receive interest on them. Offset mortgages are available on either a fixed or variable rate basis.

Interest-only mortgages

An interest-only mortgage allows you to make repayments that cover the interest you’re charged each month but won’t pay off any of your original mortgage loan amount. This helps to keep monthly repayments low but also requires that you have a repayment strategy in place to pay off the full loan amount when your mortgage term ends. Interest-only mortgages can be arranged on either a fixed or variable rate.

» MORE: Should I get an interest-only or repayment mortgage?

How rate changes could affect your mortgage payments

Depending on the type of mortgage you have, changes in mortgage rates have the potential to affect monthly mortgage repayments in different ways.

Fixed-rate mortgage

If you’re within your fixed-rate period, your monthly repayments will remain the same until that ends, regardless of what is happening to interest rates generally. It is only once the fixed term expires that your repayments could change, either because you’ve moved on to your lender’s SVR, which is usually higher, or because you’ve remortgaged to a new deal, potentially at a different rate.

Tracker mortgage

With a tracker mortgage, your monthly repayments usually fall if the base rate falls, but get more expensive if it rises. The change will usually reflect the full change in the base rate and happen automatically, but may not if you have a collar or a cap on your rate. A collar rate is one below which the rate you pay cannot fall, while a capped rate is one that your mortgage rate cannot go above.

Standard variable rate mortgage

With a standard variable rate mortgage, your mortgage payments could change each month, rising or falling depending on the rate. SVRs aren’t tied to the base rate in the same way as a tracker mortgage, as lenders decide whether to change their SVR and by how much. However, it is usually a strong influence that SVRs tend to follow, either partially or in full.

» MORE: How are fixed and variable rate mortgages different?

Mortgage Calculators

Playing around with mortgage calculators is always time well-spent. Get an estimate of how much your monthly mortgage repayments may be at different loan amounts, mortgage rates and terms using our mortgage repayment calculator. Or use our mortgage interest calculator to get an idea of how your monthly repayments might change if mortgage rates rise or fall.

Can I get a mortgage?

Mortgage lenders have rules about who they’ll lend to and must be certain you can afford the mortgage you want. Your finances and circumstances are taken into account when working this out.

The minimum age to apply for a mortgage is usually 18 years old (or 21 for a buy-to-let mortgage), while there may also be a maximum age you can be when your mortgage term is due to end – this varies from lender to lender. You’ll usually need to have been a UK resident for at least three years and have the right to live and work in the UK to get a mortgage.

Checks will be made on your finances to give lenders reassurance you can afford the mortgage repayments. You’ll need to provide proof of your earnings and bank statements so lenders can see how much you spend. Any debts you have will be considered too. If your outgoings each month are considered too high relative to your monthly pay, you may find it more difficult to get approved for a mortgage.

Lenders will also run a credit check to try and work out if you’re someone they can trust to repay what you owe. If you have a good track record when it comes to managing your finances, and a good credit score as a result, it may improve your chances of being offered a mortgage.

If you work for yourself, it’s possible to get a mortgage if you are self-employed. If you receive benefits, it can be possible to get a mortgage on benefits.

Mortgages for bad credit

It may be possible to get a mortgage if you have bad credit, but you’ll likely need to pay a higher mortgage interest rate to do so. Having a bad credit score suggests to lenders that you’ve experienced problems meeting your debt obligations in the past. To counter the risk of problems occurring again, lenders will charge you higher interest rates accordingly. You’re likely to need to source a specialist lender if you have a poor credit score or a broker that can source you an appropriate lender.

What mortgage can I afford?

Getting an agreement or decision in principle from a mortgage lender will give you an idea of how much you may be allowed to borrow before you properly apply. This can usually be done without affecting your credit score, although it’s not a definite promise from the lender that you will be offered a mortgage.

You’ll also get a good idea of how much mortgage you can afford to pay each month, and how much you would be comfortable spending on the property, by looking at your bank statements. What is your income – and your partner’s if it’s a joint mortgage – and what are your regular outgoings? What can you cut back on and what are non-negotiable expenses? And consider how much you would be able to put down as a house deposit. It may be possible to get a mortgage on a low income but much will depend on your wider circumstances.

» MORE: How much can I borrow for a mortgage?

Joint mortgages

Joint mortgages come with the same rates as those you’ll find on a single person mortgage. However, if you get a mortgage jointly with someone else, you may be able to access lower mortgage rates than if you applied on your own. This is because a combined deposit may mean you can borrow at a lower LTV where rates tend to be lower. Some lenders may also consider having two borrowers liable for repaying a mortgage as less risky than only one.

The importance of loan to value

Your loan-to-value (LTV) ratio is how much you want to borrow through a mortgage shown as a percentage of the value of your property. So if you’re buying a home worth £100,000 and have a £10,000 deposit, the mortgage amount you need is £90,000. This means you need a 90% LTV mortgage.

The LTV you’re borrowing at can affect the interest rate you’re charged. Mortgage rates are usually lower at the lowest LTVs when you have a larger deposit.

What other mortgage costs, fees and charges should you be aware of?

It’s important to take into account the other costs you’re likely to face when buying a home, and not just focus on the mortgage rate alone. These may include:

Stamp duty

Stamp duty is a tax you may have to pay to the government when buying property or land. At the time of publication, if you’re buying a residential home in England or Northern Ireland, stamp duty only becomes payable on properties worth over £250,000. Different thresholds and rates apply in Scotland and Wales, and if you’re buying a second home. You may qualify for first-time buyer stamp duty relief if you’re buying your first home.

» MORE: Stamp duty calculator

Mortgage deposit

Your mortgage deposit is the amount of money you have available to put down upfront when buying a property – the rest of the purchase price is then covered using a mortgage. Even a small deposit may need to be several thousands of pounds, though if you have a larger deposit this can potentially help you to access lower mortgage rate deals.

Mortgage fees

Among the charges and fees which are directly related to mortgages, and the process of taking one out, you may need to pay:

Sometimes also referred to as the completion or product fee, this is a charge paid to the lender for setting up the mortgage. It may be possible to add this on to your mortgage loan although increasing your debt will mean you will be charged interest on this extra amount, which will increase your mortgage costs overall.

This is essentially a charge made to reserve a mortgage while your application is being considered, though it may also be included in the arrangement fee. It’s usually non-refundable, meaning you won’t get it back if your application is turned down.

This pays for the checks that lenders need to make on the property you want to buy so that they can assess whether its value is in line with the mortgage amount you want to borrow. Some lenders offer free house valuations as part of their mortgage deals.

You may want to arrange a house survey so that you can check on the condition of the property and the extent of any repairs that may be needed. A survey should be conducted for your own reassurance, whereas a valuation is for the benefit of the lender and may not go into much detail, depending on the type requested by the lender.

Conveyancing fees cover the legal fees that are incurred when buying or selling a home, including the cost of search fees for your solicitor to check whether there are any potential problems you should be aware of, and land registry fees to register the property in your name.

Some lenders apply this charge if you have a small deposit and are borrowing at a higher LTV. Lenders use the funds to buy insurance that protects them against the risk your property is worth less than your mortgage balance should you fail to meet your repayments and they need to take possession of your home.

If you get advice or go through a broker when arranging your mortgage, you may need to pay a fee for their help and time. If there isn’t a fee, it’s likely they’ll receive commission from the lender you take the mortgage out with instead, which is not added to your costs.

These are fees you may have to pay if you want to pay some or all of your mortgage off within a deal period. Early repayment charges are usually a percentage of the amount you’re paying off early and tend to be higher the earlier you are into a mortgage deal.

Government schemes to help you buy a home

There are several government initiatives and schemes designed to help you buy a home or get a mortgage.

95% Mortgage Guarantee Scheme

The mortgage guarantee scheme aims to persuade mortgage lenders to make 95% LTV mortgages available to first-time buyers with a 5% deposit. It is currently due to finish at the end of June 2025.

Shared Ownership

The Shared Ownership scheme in England allows you to buy a share in a property rather than all of it and pay rent on the rest. Similar schemes are available in Scotland, Wales and Northern Ireland.

Help to Buy

The Help to Buy equity loan scheme, designed to help buyers with a smaller deposit, is still available in Wales, but not in England, Scotland and Northern Ireland.

Forces Help to Buy

The Forces Help to Buy Scheme offers eligible members of the Armed Forces an interest-free loan to help buy a home. The loan is repayable over 10 years.

First Homes Scheme

Eligible first-time buyers in England may be able to get a 30% to 50% discount on the market value of certain properties through the First Homes scheme.

Right to Buy

Under this scheme, eligible council tenants in England have the right to buy the property they live in at a discount of up to 70% of its market value. The exact discount depends on the length of time you’ve been a tenant and is subject to certain limits. Similar schemes are available in Wales, Scotland and Northern Ireland, while there is also a Right to Acquire scheme for housing association tenants.

Lifetime ISAs

To help you save for a deposit, a Lifetime ISA will see the government add a 25% bonus of up to £1,000 per year to the amount you put aside in the ISA.

How to apply for a mortgage

You may be able to apply for a mortgage directly with a bank, building society or lender, or you may need or prefer to apply through a mortgage broker. You’ll need to provide identification documents and proof of address, such as your passport, driving license or utility bills.

Lenders will also want to see proof of income and evidence of where your deposit is coming from, including recent bank statements and payslips. It will save time if you have these documents ready before you apply.

» MORE: Best mortgage lenders

Would you like mortgage advice?

Taking out a mortgage is one of the biggest financial decisions you’ll ever make so it’s important to get it right. Getting mortgage advice can help you find a mortgage that is suitable to you and your circumstances. It also has the potential to save you money.

If you think you need mortgage advice, we’ve partnered with online mortgage broker London & Country Mortgages Ltd (L&C) who can offer you fee-free advice.

Key mortgage terms explained

Loan to value (LTV)	Your loan-to-value ratio is the amount you wish to borrow through a mortgage expressed as a percentage of the value of the property you’re buying.
Initial interest rate	This is the interest rate you’ll pay when you’re still within the initial fixed-rate period of a mortgage deal.
Initial interest rate period	This is the period of time your initial interest rate will last, before your lender switches you over to its SVR.
Annual Percentage Rate of Charge (APRC)	The APRC is a single percentage figure designed to help you compare the annual cost of different mortgage deals.
Annual overpayment allowance (AOA)	This is the amount a lender will let you overpay on your mortgage each year without being charged a fee.
Early Repayment Charge (ERC)	This is a charge you may need to pay if you want to pay off some or all of your mortgage earlier than you agreed with your lender.
Mortgage term	A mortgage term is the full period of time over which the mortgage contract is taken out for – it should not be confused with the deal term. At the end of the term you will have paid off the full debt or all of the interest depending on what type of mortgage you took.

The current average rate on a five-year fixed-rate mortgage for a 10% deposit or equity is 4.93%, up from 4.86% a week earlier. For an equivalent two-year fixed-rate mortgage, the average rate of 5.38% has increased from 5.31%. If you have a 40% deposit/equity, the average five-year fixed rate is 4.30%, up from 4.19% a week earlier, while the average two-year fixed rate is 4.62%, rising from 4.50%. All rates are according to Rightmove as at 28 February 2024.

A mortgage rate is the interest rate a lender charges on the mortgage amount that you borrow. Mortgage interest rates may be fixed, guaranteeing that they will remain the same for a certain length of time, or variable, meaning it may fluctuate.

Mortgage providers regularly review the mortgage rates that they offer to take into account the costs involved with funding its lending activities, their latest priorities in terms of target borrowers, and wider conditions in the market. As a result, when searching for a new mortgage, it’s always a good idea to consider various lenders and take the time to compare different mortgages. Crucially, you need to bear in mind that a deal offering the best mortgage rate may not necessarily be the one that is most suitable for you. The mortgage rate is important, but at the same time, you need to consider other factors, such as the charges and fees attached to a mortgage, the type of mortgage that you need, and the mortgage term that you want.

While mortgage rates have been rising in recent weeks, many commentators still expect to see mortgage rates fall across 2024 as a whole.

The next move in the Bank of England base rate, which currently sits at 5.25%, is widely forecast to be down. But with inflation remaining unchanged in January, and wage growth easing by less than expected, some experts predict the first rate cut may not be made until September. Towards the end of 2023, some believed the rate could begin falling in March.

The uncertainty makes it even more difficult than usual to predict what may happen to mortgage rates next.

The interest rate is the percentage of a loan amount that a lender charges for borrowing money, whereas the APRC, or annual percentage rate of charge, is a calculation expressed as a percentage that takes into account both the interest rate and associated costs of a mortgage across its lifetime. The aim of the APRC is to help borrowers make meaningful comparisons between mortgage deals.

Taking the time to compare mortgage rates and deals, making sure your credit score is in good shape, saving for a larger deposit and paying off existing debts can all help improve your chances of getting a good mortgage deal.

When looking for a mortgage it is vital that you compare mortgage lenders and the rates and deals on offer. Taking the time to carry out a mortgage comparison can improve your chances of finding the best mortgage for your circumstances.

A mortgage is a loan you take out to help you buy a property you don’t have the money to pay for up front. You may be a first-time buyer, remortgaging, securing a buy to let, or moving to your next home. The amount you need to borrow will depend on the purchase price of the property, and how much you can put down as a deposit or already hold in equity in your current property. The mortgage is secured against the property, which means your home is at risk if you don’t meet the repayments.

With a capital repayment mortgage, your monthly repayments pay off your interest and some of your original loan amount each month, so that everything should be paid off by the time you reach the end of your mortgage term. The alternative to a repayment mortgage is an interest-only mortgage, where you will repay only the interest each month before needing to pay off your original loan amount in its entirety at the end of the mortgage term.

A mortgage term is the period of time you agree with a lender over which you intend to entirely pay off your mortgage and interest. A typical mortgage term in the UK is usually considered to be 25 years, but you may opt for a shorter period or a longer one, if allowed. Some lenders offer mortgage terms of up to 40 years. If you have a longer term, your monthly repayments will be lower, but you’ll pay more interest overall.

The cost of your mortgage will depend on many factors, including how much you borrow, the size of your deposit, the length of your mortgage term, the mortgage rate you’re paying, and whether you can afford to make overpayments. Your mortgage lender must provide you with the full cost of the mortgage before you apply.

» MORE: How much could your mortgage cost you?

Besides making sure your monthly repayments are affordable, there are many other costs associated with arranging a mortgage. These may include arrangement, survey, valuation and mortgage broker fees.

If you’ve previously owned a home and the property you’re buying is worth more than £250,000, stamp duty will be payable as well; if you’re a first-time buyer, stamp duty only becomes payable on properties worth over £425,000.

To get a mortgage as a first-time buyer you’ll usually need at least a 5% deposit and a regular income. Most lenders offer first-time buyer mortgages aimed primarily at those with smaller deposits. First-time buyers may also be able to secure a mortgage with the help of close relatives through a guarantor mortgage.

Some lenders offer buy-to-let mortgages that can be arranged on a property you want to rent out to a tenant, rather than live in yourself. You’ll usually need a larger deposit for a buy-to-let mortgage than for a residential mortgage, and interest rates are often higher. You may also need to already own your own home or have a residential mortgage on another property.

It may be possible to get a mortgage with bad credit but you’ll probably have fewer mortgage deals to choose from and need to pay higher mortgage rates.

You may want to consider remortgaging if your initial fixed-rate period is close to ending and you want to avoid moving on to your lender’s SVR. Choosing to remortgage has the potential to save you money if you find the right mortgage deal.

» MORE: How remortgaging works

It’s always important to think about your plans, particularly when it comes to choosing the type of mortgage that will suit you best. For instance, if you plan to move in perhaps two years, choosing a five-year fixed-rate mortgage may mean you have to pay early repayment charges if you need to get a new mortgage.

Getting an agreement in principle, or AIP, from a lender will give you an idea of how much you may be able to borrow for your mortgage without needing to formally apply. Getting an AIP usually involves a soft credit check, which shouldn’t affect your credit score. However, having an AIP does not guarantee that a lender will offer you a mortgage. An agreement in principle is also sometimes referred to as a decision in principle or a mortgage promise.

Yes, some providers offer halal or Islamic mortgages in the UK. These are compliant with Sharia law and allow people to borrow but not pay interest.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a loan or any other debt secured on it.

Information on this page is a guide. It does not constitute advice, recommendation or suitability to your needs or financial circumstances. Seek qualified mortgage advice before proceeding with a mortgage product.

NerdWallet strives to keep its information accurate and up to date. This information may be different than what you see when you visit a financial institution, service provider or specific product’s site. All financial products and services are presented without warranty. When evaluating products, please review the financial institution’s Terms and Conditions.

Apache is functioning normally

March 6, 2024 by Brett Tams

National Mortgage News in partnership with the Best Companies Group is proud to announce the winners of the ranking of the Best Small Mortgage Companies to Work For. These are companies about the overall list of Best Mortgage Companies to Work For in 2024, who have 99 or fewer employees.

READ ALSO: Best Mortgage Companies to Work For 2024

This ranking is the result of extensive employee surveys and reviews employer reports on benefits and policies. The employee survey covers eight topics: leadership and planning; corporate culture and communications; role satisfaction; work environment; relationship with supervisor; training, development and resources; pay and benefits; and overall engagement.

Once the survey data is analyzed, the companies get a score that decides their ranking. The overall score is calculated using the employee survey (weighed at 75%) and the employer questionnaire (25%). To qualify for consideration, organizations with 25 or more employees need a minimum response rate of 40% while companies with 25 or fewer employees need 80%.

READ ALSO: Best Small Mortgage Companies to Work For 2023

See the best Small Mortgage Companies to Work For in 2024 below:

Source: nationalmortgagenews.com

Apache is functioning normally

March 5, 2024 by Brett Tams

Yields spiked in the first half of February as the jobs report and CPI both suggested a stubbornly resilient economy and inflation outlook. That was January data. Now that the market is getting to see and digest February’s data, things are starting to change. Traders are increasingly thinking about concepts like “residual seasonality” in price indices for January as well as the tendency for NFP to beat/miss in a big way only to reverse course in the next month of data. The extent to which the market would need to reprice borders on ‘extreme’ in the event of this sort of data volatility in the next week and a half. There’s no solid reason to assume that will happen, but today’s ISM services data fires another warning shot.

Taken in conjunction with last Friday’s ISM data, the market is quickly shifting its perception of how this week’s jobs report may come in. There could even be some hope for next week’s CPI although the components keeping that data elevated are not well-reflected in the ISM reports. Even so, it’s been enough for a noticeable lead-off from the recent range.

Source: mortgagenewsdaily.com

Apache is functioning normally

March 5, 2024 by Brett Tams

Editor’s Note: Parts of this story were auto-populated using data from Curinos, a mortgage research firm that collects data from more than 250 lenders. For more details on how we compile daily mortgage data, check out our methodology here.

Mortgage rates remain above 7%, according to data from Curinos analyzed by MarketWatch Guides. The 30-year fixed-rate mortgage is 7.35% today, down -0.12 percentage points from last week.

With mortgage rates above 7% and home prices showing no signs of dropping, home affordability has continued to decline, according to the Mortgage Bankers Association (MBA). An MBA report published last week showed that the median monthly payment for new home purchases in the U.S. increased to $2,134 in January – up 4% from the month before.

Prospective home buyers may see rates drop more substantially this year, however. The Federal Reserve board previously indicated that it expects three rate cuts throughout 2024 and their next meeting is scheduled for March 19-20.

Here are today’s average mortgage rates:

30-year fixed mortgage rate: 7.35%
15-year fixed mortgage rate: 6.70%
5/6 ARM mortgage rate: 6.99%
Jumbo mortgage rate: 7.17%

Current Mortgage Rates

Product	Rate	Last Week	Change
30-Year Fixed Rate	7.35%	7.47%	-0.12
15-Year Fixed Rate	6.70%	6.72%	-0.02
5/6 ARM	6.99%	7.02%	-0.03
7/6 ARM	7.22%	7.24%	-0.02
10/6 ARM	7.32%	7.32%	0.00
30-Year Fixed Rate Jumbo	7.17%	7.23%	-0.06
30-Year Fixed Rate FHA	7.17%	7.21%	-0.04
30-Year Fixed Rate VA	7.15%	7.23%	-0.08

Disclaimer: The rates above are based on data from Curinos, LLC. All rate data is accurate as of Tuesday, March 05, 2024. Actual rates may vary.

>> View historical mortgage rate trends

Mortgage Rates for Home Purchase

30-year fixed-rate mortgages are down, -0.12

The average 30-year fixed-mortgage rate is 7.35%. Since the same time last week, the rate is down, changing -0.12 percentage points.

At the current average rate, you’ll pay $688.97 per month in principal and interest for every $100,000 you borrow. You’re paying less compared to last week when the average rate was 7.47%.

15-year fixed-rate mortgages are down, -0.02

The average rate you’ll pay for a 15-year fixed-mortgage is 6.70%, a decrease of -0.02 percentage points compared to last week.

Monthly payments on a 15-year fixed-mortgage at a rate of 6.70% will cost approximately $882.14 per $100,000 borrowed. With the rate of 6.72% last week, you would’ve paid $883.25 per month.

5/6 adjustable-rate mortgages are down, -0.03

The average rate on a 5/6 adjustable rate mortgage is 6.99%, a decrease of -0.03 percentage points over the last seven days.

Adjustable-rate mortgages, commonly referred to as ARMs, are mortgages with a fixed interest rate for a set period of time followed by a rate that adjusts on a regular basis. With a 5/6 ARM, the rate is fixed for the first 5 years and then adjusts every six months over the next 25 years.

Monthly payments on a 5/6 ARM at a rate of 6.99% will cost approximately $664.63 per $100,000 borrowed over the first 5 years of the loan.

Jumbo loan interest rates are down, -0.06

The average jumbo mortgage rate today is 7.17%, a decrease of -0.06 percentage points over the past week.

Jumbo loans are mortgages that exceed loan limits set by the Federal Housing Finance Agency (FHFA) and funding criteria of Freddie Mac and Fannie Mae. This generally means that the amount of money borrowed is higher than $726,200.

Product	Monthly P&I per $100,000	Last Week	Change
30-Year Fixed Rate	$688.97	$697.16	-$8.19
15-Year Fixed Rate	$882.14	$883.25	-$1.11
5/6 ARM	$664.63	$666.65	-$2.02
7/6 ARM	$680.14	$681.50	-$1.36
10/6 ARM	$686.93	$686.93	$0.00
30-Year Fixed Rate Jumbo	$676.76	$680.82	-$4.06
30-Year Fixed Rate FHA	$676.76	$679.47	-$2.71
30-Year Fixed Rate VA	$675.41	$680.82	-$5.41

Note: Monthly payments on adjustable-rate mortgages are shown for the first five, seven and 10 years of the loan, respectively.

Factors That Affect Your Mortgage Rate

Mortgage rates change frequently based on the economic environment. Inflation, the federal funds rate, housing market conditions and other factors all play into how rates move from week-to-week and month-to-month.

But outside of macroeconomic trends, several other factors specific to the borrower will affect the mortgage interest rate. They include:

Financial situation: Mortgage lenders use past financial decisions of borrowers as a way to evaluate the risk of loaning money.
Loan amount and structure: The amount of money that bank or mortgage lender loans and its structure (including both the term and whether its a fixed-rate or adjustable-rate).
Location: Mortgage rates vary by where you are buying a home. Areas with more lenders, and thus more competition, may have lower rates. Foreclosure laws can also impact a lender’s risk, affecting rates.
Whether borrowers are first-time homebuyers: Oftentimes first-time homebuyer programs will offer new homeowners lower rates.
Lenders: Banks, credit unions and online lenders all may offer slightly different rates depending on their internal determination.

How To Shop for the Best Mortgage Rate

Comparison shopping for a mortgage can be overwhelming, but it’s shown to be worth the effort. Homeowners may be able to save between $600 and $1,200 annually by shopping around for the best rate, researchers found in a recent study by Freddie Mac. That’s why we put together steps on how to shop for the best mortgage rate.

1. Check credit scores and credit reports

A borrower’s credit situation will likely determine the type of mortgage they can pursue, as well as their rate. Conventional loans are typically only offered to borrowers with a credit score of 620 or higher, while FHA loans may be the best option for borrowers with a FICO score between 500 and 619. Additionally, individuals with higher credit scores are more likely to be offered a lower mortgage interest rate.

Mortgage lenders often review scores from the three major credit bureaus: Equifax, Experian and TransUnion. By viewing your scores ahead of lenders considering you for a loan, you can check for errors and even work to improve your score by paying down balances and limiting new credit cards and loans.

2. Know the options

There are four standard mortgage programs: conventional, FHA, VA and USDA. To get the best mortgage rate and increase your odds of approval, it’s important for potential borrowers to do their research and apply for the mortgage program that best fits their financial situation.

The table below describes each program, highlighting minimum credit score and down payment requirements.

Though conventional mortgages are most common, borrowers will also need to consider their repayment plan and term. Rates can be either fixed or adjustable and terms can range from 10 to 30 years, though most homeowners opt for a 15- or 30-year mortgage.

3. Compare quotes across multiple lenders

Shopping around for a mortgage goes beyond comparing rates online. We recommend reaching out to lenders directly to see the “real” rate as figures listed online may not be representative of a borrower’s particular situation. While most experts recommend getting quotes from three to five lenders, there is no limit on the number of mortgage companies you can apply with. In many cases, lenders will allow borrowers to prequalify for a mortgage and receive a tentative loan offer with no impact to their credit score.

After gathering your loan documents – including proof of income, assets and credit – borrowers may also apply for pre-approval. Pre-approval will let them know where they stand with lenders and may also improve negotiating power with home sellers.

4. Review loan estimates

To fully understand which lender is offering the cheapest loan overall, take a look at the loan estimate provided by each lender. A loan estimate will list not only the mortgage rate, but also a borrower’s annual percentage rate (APR), which includes the interest rate and other lender fees such as closing costs and discount points.

By comparing loan estimates across lenders, borrowers can see the full breakdown of their possible costs. One lender may offer lower interest rates, but higher fees and vice versa. Looking at the loan’s APR can give you a good apples-to-apples comparison between lenders that takes into account both rates and fees.

5. Consider negotiating with lenders on rates

Mortgage lenders want to do business. This means that borrowers may use competing offers as leverage to adjust fees and interest rates. Many lenders may not lower their offered rate by much, but even a few basis points may save borrowers more than they might think in the long run. For instance, the difference between 6.8% and 7.0% on a 30-year, fixed-rate $100,000 mortgage is roughly $5,000 over the life of the loan.

Expert Forecasts for Mortgage Rates

Mortgage rates have cooled significantly over the past several months. After the 30-year fixed-rate mortgage hit 8% last October, it ended 2023 closer to 7%. In fact, the average for Q4 2023 was 7.3%.

Analysts with Fannie Mae and the Mortgage Bankers Association (MBA) both project that rates will fall going into 2024 and throughout next year.

Fannie Mae economists expect rates to drop more quickly, falling below 6% by Q4 2024. Meanwhile, the MBA’s forecast for Q4 2024 is 6.1% and 5.9% for Q1 2025.

More Mortgage Resources

Methodology

Every weekday, MarketWatch Guides provides readers with the latest rates on 11 different types of mortgages. Data for these daily averages comes from Curinos, LLC, a leading provider of mortgage research that collects data from more than 250 lenders. For more details on how we compile daily mortgage data, check out our comprehensive methodology here. Editor’s Note: Before making significant financial decisions, consider reviewing your options with someone you trust, such as a financial adviser, credit counselor or financial professional, since every person’s situation and needs are different.

Source: marketwatch.com

Hedging, Renovation, QC, Validation, Verification Products; Investor and Correspondent News and Metrics

Option 1: Copy and send this link

Market waits for rates to drop

Buyers should shop for the best rate

Home Builders Don’t Have Competition Right Now

They Don’t Need to Lower Prices If Demand Is Strong

Lowering Prices Could Make It Harder for Appraisals to Come in at Value

Home Builders Would Rather Offer Incentives Like Temporary Buydowns

Home Price Cuts Don’t Result in Big Monthly Payment Savings

Gains Before and After Data

Compare Mortgage Rates

On this page

How to get the best mortgage rates and deals

Are mortgage rates going down?

What are current UK mortgage rates?

Latest average two-year fixed-rate mortgage rates

Latest average five-year fixed-rate mortgage rates

What mortgage do I need?

How mortgage rates work

Different types of mortgage

Fixed-rate mortgage

Variable rate mortgages

Offset mortgages

Interest-only mortgages

How rate changes could affect your mortgage payments

Fixed-rate mortgage

Tracker mortgage

Standard variable rate mortgage

Mortgage Calculators

Can I get a mortgage?

Mortgages for bad credit

What mortgage can I afford?

Joint mortgages

The importance of loan to value

What other mortgage costs, fees and charges should you be aware of?

Stamp duty

Mortgage deposit

Mortgage fees

Government schemes to help you buy a home

95% Mortgage Guarantee Scheme

Shared Ownership

Help to Buy

Forces Help to Buy

First Homes Scheme

Right to Buy

Lifetime ISAs

How to apply for a mortgage

Would you like mortgage advice?

Key mortgage terms explained

More from NerdWallet UK

Dive even deeper

Current Mortgage Rates

Mortgage Rates for Home Purchase

30-year fixed-rate mortgages are down, -0.12

15-year fixed-rate mortgages are down, -0.02

5/6 adjustable-rate mortgages are down, -0.03

Jumbo loan interest rates are down, -0.06

Factors That Affect Your Mortgage Rate

How To Shop for the Best Mortgage Rate

Expert Forecasts for Mortgage Rates

More Mortgage Resources

Methodology