Balance matters – 5 things to think about if you are considering a mortgage.

Rocks balancing against each other

There isn’t a day goes by without some sort of promise of financial doom in the news when it comes to the property and mortgage market. Things are certainly different than they were last year, but does that mean you should be avoiding looking at mortgages?

Is there really no point in looking for a mortgage right now?

If you were to believe everything you read about the financial situation around the property market at the moment, not only would you not be looking for a mortgage, but you would also probably be hiding under the stairs in fear.

I read something earlier about a recent survey by Reuters in which they found there had been a significant reduction in people engaging with the news. The main reason was around consumers not wanting to see the constant downbeat content. Many people do accuse the press of scaremongering about things such as mortgage rates and house prices, but I am not sure that is the case. I think it isn’t that what they report is wrong as such, more that they don’t fully give the context. Things seem worse that they are because that’s all we see. So, in an attempt to adjust the balance a little bit, here are a few things you can do to get a better view of the situation if you are currently thinking about a mortgage.

Don’t take it all out of context.

The truth is that while every headline seems to be screaming about high mortgage rates, they are only relatively high. We have seen a long period of very low interest rates. In fact, ‘very low’ is an understatement. For the over a decade now the mortgage rates have been incredibly reasonable. Frankly, that probably wasn’t going to continue much longer anyway. So, yes, rates have gone up, but they are still not anywhere near as high as they have been in fairly recent times. At the time of writing this article the 5 years fixed rate is averaging around the 5.5% area. In the 1980s that could well have been a rate of 8%. In fact, until just over 10 years ago, the current rates were quite common.

TAKE AWAY THOUGHT – The current rates could be seen as a return to the normal rates rather than an unusual rise.

The rate isn’t just about the average.

As the applicant, you have a big influence on what rate you get. When you sit down with us to talk through your options, we will also look at your wider circumstances. The rate you pay is not the same as the headline average. Things like your credit rating, your job status and even your rental history could, depending on the deal, bring the rate down.

TAKE AWAY THOUGHT – Don’t assume the worst in advance. Take advice and we will find the best options and look at how you can influence your mortgage rate.

Whatever the papers may say, lenders do still want to lend to you.

There is this strange idea that there is no point in applying because mortgage companies are not looking to lend. This seems to have been partly a result of the recent sudden withdrawals of some deals. However, it only takes a moment of thought to realise that saying ‘the mortgage companies don’t want to give mortgages’ is a like saying that your local fish and chip shop doesn’t want to serve chips. They are commercial organisations, of course the want to lend money. It’s just about circumstances and the current situation.

TAKEAWAY THOUGHT – The mortgage companies make money out of giving people mortgages. We are still seeing them go through and helping people move into their new homes every day. Of course, the lenders want you to have a mortgage, if possible, it is their job after all. Ours is to find you the right mortgage from what they are currently offering.

Is it going to be better to wait before you buy?

We have been being asked about whether it is best to wait to go for a mortgage for some months now. OK, so this is a very complex situation and to bring it all down to a ‘yes or no’ answer is probably not a sensible response. There is a lot more to this question than whether the rates will rise or fall. The current mortgage deals, the price of property, your available deposit, personal circumstances, and many other factors all need to be considered. Again, speak to us before you jump to a conclusion on this one. I can promise you that we will always give you what we see as the best advice based on what is right for you.

TAKEAWAY THOUGHT – The property and mortgage landscape is a complex one and there are a lot of things that affect it. If you are waiting for an interest rate drop, well, it may be slow in coming. As we mentioned in the first point, they are still not anywhere near the mid 80’s highs and have room to rise further if inflation continues to jump. That said, there is always variables to deal with. In the end it is about the here and now and the certainties rather than what will happen tomorrow and the unknowns when it comes to mortgages.

The stamp duty madness is still influencing things.

Remember the stamp duty house sale stampede during the Covid situation? Well, that inflated house prices at the time, and they are now steadying out. So, while the cost of mortgages may be a little higher, house prices are slowing and even reducing.

TAKEAWAY THOUGHT – The mortgage is only part of the picture. They are still being granted and if you are in a position to buy then you could be looking at a much better house for your money.

At the end of the day, it is far more sensible to chat through the situation with an expert. That’s what we are here for, so come and talk to us and let’s get a real picture of your options.

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