Mortgage Criteria & Indicative Rates – July 2024

Residential mortgages – 5% to 10% deposit

• Minimum 5% deposit – we have access to schemes such as shared ownership / deposit unlock and guarantor mortgages – please ask for details.
• Ideally a good credit rating and on electoral role on these deposit sizes.
• Borrowing around 4.5 times total income is an approximate rule of thumb.
• Mortgage rates based on a 10% deposit now starting from 4.85% for a fixed rate.
  
  
  

Residential mortgages – larger deposits of 15% or more

• Contrary to media reports, it’s still possible to borrow in the region of 4.5 to 5.5 times your income. Generally, the higher the income the greater the chance of getting approval for 5 times income or higher.
• Some adverse credit is more likely to be tolerated on a 15% deposit or more.
• Mortgage rates starting from 4.57% for a fixed rate and a 15% deposit.
• Interest only or part interest only an option if  25% deposit or greater.
  
  
  

Investors – Buy to Let

• Most lenders generally require a 25% deposit as a minimum. 
• Excellent to good credit rating otherwise likely to be declined.
• Options available for clients with minimal provable income.
• We can assist with standard personal BTL mortgages as well as areas such as limited company buy to lets / HMOs / Holiday lets / Expats too.
• Rates on BTL mortgages based on 25% deposit priced from 3.89%.
  
  
  

Commercial Finance – Purchase of premises / offices / hotels / property portfolios / development finance / bridging loans

• More discretion shown by lenders on requirements as cases judged on individual merits but typically looking for 25-30% deposit absolute minimum. Rates start from around 7% but priced by lenders on an individual basis. We can assist with these types of finance enquiries too.
  
  
  

Overseas Investors & Expats

• For clients that don’t reside or domicile in the UK there are many lenders we have access to that can assist or if you paid in a currency other than GBP.
  
  
  

Standard Variable Rates, Key Interest Rates and House Price Indices

• Standard Variable Rates: Santander 7.5%, Halifax 8.74%, Natwest 8.24%, Nationwide 7.99%, Barclays 8.74% and HSBC 6.99%.
• Key Central Bank Interest Rates: Bank of England 5.25%, US Federal Reserve 5.25%, European Central Bank 3.75%, Chinese Base Rate 3.85%.
• UK inflation rate – Latest Consumer Price Index reading was 2.0% for the 12 months to May 2024 - further indication of inflation easing and now reaching the Bank of England target rate.
• Nationwide House Price Index (May 2024) - Typical UK property according to Nationwide now costs £264,249 which is 1.3% higher compared to 12 months ago.
  
  
  

Things to consider before applying for a mortgage

• Check your credit file to ensure there are no nasty surprises on your report. Here is a link to download your file which grants you access to the main 3 credit agencies used by lenders: https://www.checkmyfile.com/credit-report.htm?ref=alexgroom&cbap=1
• Check to see you’re on the voters role – www.gov.uk/electoral-register/viewelectoral-register
• Ensure your bank account balance is not exceeding any overdraft limit so that you live within your means.
• Determine your maximum purchase price and ensure a mortgage will be affordable prior to making an offer – this is something we can assist with.
  
  
  

Economic, mortgage and housing commentary

The Bank of England is likely to cut interest rates soon, "probably in August", as long as inflation and wage data align with the Monetary Policy Committee's (MPC) May forecasts, a former MPC member said on Thursday. "They have clearly signalled they are willing to cut soon if data are okay," said Michael Saunders, an MPC member at the Bank of England (BoE) between 2016 and 2022.

"If so, I would expect the rest of the internal (members of the BoE MPC) to move as a bloc to vote for a cut," Saunders said, adding that the central bank had done enough to prepare markets. The MPC is made up of nine members, five from within the BoE and four from outside the central bank. The BoE kept its bank rate unchanged at a 16-year high of 5.25% last week, ahead of a July 4 national election, with some policymakers saying their decision not to cut rates was "finely balanced". He sees the BoE cutting rates seven times in increments of 25 basis points (bps) by the end of 2025, putting the main interest rate "close" to his neutral rate of 3.5%.

Contact Ben Edwards at ben.edwards@agamortgages.co.uk or on 07464 971654 should you need any mortgage advice prior to buying.

Any rates mentioned here are indicative only and not to be relied upon. Please contact us for a personalised illustration.

Website: www.agamortgages.co.uk