Mortgage Criteria & Indicative Rates – February 2025

Residential mortgages – First Time Buyers - No or limited deposit

• Potentially no 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 4.69% 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 4.43% for a fixed rate and a 15% deposit. Rates starting from 4.16% for a 40% deposit.
• Interest only or part interest only an option if  25% deposit or greater.

Lifetime Mortgages

• Aimed at over 55s. We have access to later life lending mortgages aimed at helping older borrowers move home or retain their existing home and release equity. Rates typically start from around 5.79%.

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 typically from 4.15% (there are rates below 4% but arrangement fees are excessive)
  
  
  

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 7.25%, Halifax 8.24%, Natwest 7.74%, Nationwide 7.49%, Barclays 6.74% and HSBC 6.99%.
• Key Central Bank Interest Rates: Bank of  England 4.5%, US Federal Reserve 4.25%, European Central Bank 2.75%, Chinese Base Rate 3.10%.
• UK inflation rate – Latest Consumer Price Index reading was 2.5% for the 12 months to Dec 2024.
• Nationwide House Price Index (Dec 2024) - Typical UK property according to Nationwide now costs £268,213 which is 4.1% 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.partners/45F8S4T/2CTPL/
• 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

Morgan Stanley has forecast that the Bank of England will implement five interest rate cuts in 2025 to bolster a faltering economy. On Monday, the US investment bank revised its growth forecasts downward, attributing this to the prolonged effects of the Bank's monetary tightening and repercussions from the Budget.

It now anticipates the UK economy to expand by just 0.9 per cent in 2025, a decrease from the previous projection of 1.3 per cent and significantly below the consensus among City economists. "While the peak impact of the Bank of England’s policy tightening is likely behind us, its drag on the economy still persists," Morgan Stanley analysts wrote. They also observed that the measures announced in the Budget have negatively affected business sentiment. The analysts highlighted a "limited hiring appetite" even before the increase in employment costs, with demand becoming "lacklustre to non-existent" post-Budget. According to Morgan Stanley's predictions, the Bank Rate would end the year at 3.50 per cent, a reduction from the current 4.75 per cent. Goldman Sachs, another Wall Street heavyweight, also expects the Bank to aggressively cut rates, forecasting six reductions by mid-2026.

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