#70 - Mortgage rates going up then down?
What I’m Watching
This week I went to see the Book of Mormon at the Prince of Wales Theatre with my brother and sister. I’ve wanted to see this ever since it came out in 2011 and so I'm glad I finally got to tick this off. For those that don’t know, it’s written by the creators of South Park so the humour can be a little crude, but there was a great atmosphere, and the music, and storytelling was perfectly balanced. I highly recommend it if you’ve not seen it!
Resource of the week
Inflation is remaining very high, so it’s important to think about having your money invested instead of being eroded away in a bank account with negligible interest. Make sure you use your ISA allowance. Either a fixed rate or flexible cash ISA or a stocks and shares ISA in an index fund which is what I’m using. I personally use Hargreaves Lansdown but your bank will most likely have these options.
Quote
Tennis can be a very frustrating sport. There is no way around the hard work. Embrace it. You have to put in the hours because there is always something you can improve. [Y]ou have to put in a lot of sacrifice and effort for sometimes little reward but you have to know that, if you put in the right effort, the reward will come.
Roger Federer
News and trends
- The hot topic in the property industry, is what is going on with mortgage rates right now? Compared to the previous fortnight, mortgage rate rises have gathered pace this week and are up by an average of 0.18%, compared to last week’s 0.13%. However swap rates – the underlying costs of mortgages for lenders – have fallen to a two-year low, and this has taken some pressure off lenders to increase rates further.
- The average cost of a BTL mortgage to increase by £275 by 2025 according to the Bank of England, which anecdotally is very close to what I’m seeing on my remortgages.
- I’m always fascinated by ways creators monetise their audience and what kind of businesses they build by leveraging their audience. For example, Mr Beast launched Feastables in the UK.
Thoughts
I’m currently in the process of remortgaging 3 BTL properties and have to say I agree with the sentiment that a lot of landlords will be forced out at a time when there is an undersupply of rental properties. With the hikes in mortgage rates, there’s no doubt a lot of landlords will be pushed into a loss-making position, particularly in the South and South East.
Also, I wanted to share a mistake I make with those of you who are remortgaging or plan to. It’s sometimes easy, in these times of high mortgage rates to simply go ahead with your broker recommendation with the product that offers the lowest rate but there are a lot of extra costs you need to be aware of that won’t necessarily be factored in by your broker. For example, I decided to remortgage onto a 2-year fixed mortgage, the solicitors' fee alone is £1,600, the broker fee is £550, and there will be an ILA solicitor fee which can cost between £500 and £1,300. This is all per property and only lasts for 2 years. Notwithstanding, there’s a lot of paperwork associated with this. So before you go ahead and switch lenders consider doing a product switch which will save you potentially a lot of hassle and money.
It will be very interesting to see what the government does with regard to landlords leaving the sector. On one hand, it will reach a critical point when the rental shortage will reach crisis levels and you have people like Ben Beadle the chief exec of the NRLA banging on at the gov, but on the other hand, any move seen to favour landlords will be very unpopular politically.
Hans