This page contains a Flash digital edition of a book.
Market Insight


Looking forward, there are a number of factors which will influence the market in 2015 including the General Election in May, the prospect of interest rate rises and the general economic backdrop.


Looking back, in September 2014, just 5% of mortgaged households would be unable to pass tighter lending criteria, down from 9% a year ago. In the last year, just over 400,000 out of the total 10.8 million mortgaged UK households have found themselves no longer to be mortgage prisoners and as a result have been able to cut their mortgage payments. In London and the South East, less than 0.1% of households now find themselves in a position where they do not have sufficient equity to remortgage.


Those households which have been able to remortgage have been able to take advantage of substantially lower interest rates. A remortgaging household in 2014 saw their monthly payments fall by an average of £115 per month, equivalent to 12% of the total monthly mortgage payment. The average remortgaging household secured an interest rate 1.1% below their existing deal, while households coming off longer fixed rate mortgages saw their mortgage payment fall considerably more.


Mortgage prisoners – households unable to remortgage


Two thirds of households remortgaging in 2014 have been able to find a lower rate, despite the Bank of England Base Rate remaining unchanged. The average household saved 12% or £115 per month coming off a two year fixed rate deal in 2014.


Since interest rates on fixed rate mortgages have been edging upwards, a sign lenders are already pencilling in a rise in rates. The average interest rate offered on a two-year fixed rate mortgage typically reflects the short to medium interest rate expectation of lenders. Between January 2014 and June 2014 the average interest rate increased by 0.22%, equivalent to nearly the entire 0.25% rate increase proposed by two members of the Bank of England’s Monetary Policy Committee (MPC).


While some of the pressure for a rise in interest rates has come from the rate of house price growth, it is worth noting that the MPC has now “softened” their assumptions for future house price inflation. The MPC believe house price growth will slow to around 0.5% per month (6% per annum) by 2015. This increasingly reflects what a growing number of house price indices are showing, potentially relieving some of the upward pressure on interest rates.


Change in mortgage rate for a household coming off a two-year fixed rate deal in 2014


A BESPOKE SERVICE FOR PRESTIGE PROPERTIES 5


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36