Every Wednesday, we take an overview of the mortgage market with industry experts and round up the best rates with Moneyfactscompare.co.uk.
In the past week we’ve had rumblings of changes to mortgage rules.
The Financial Conduct Authority, the UK’s financial regulator, is planning to simplify the stricter lending rules brought in after the 2008 financial crisis.
This could potentially make it easier for people to secure a loan.
The FCA indicated it would act just weeks after the prime minister asked every UK regulator to examine ways to boost growth.
The regulator says it is right to question whether the rules are too strict given the low numbers of borrowers missing repayments or having homes repossessed.
But analysts are concerned that any changes don’t go too far.
Rachel Springall, finance expert at Moneyfacts, said: “As murmurs for relaxing lending rules circulate, such a shake-up could be a lifeline for those who don’t presently tick all the boxes to get a mortgage. However, any changes to lending criteria, such as income multiples, must be done carefully to ensure consumers can comfortably afford their mortgage.
“If consumers borrow too much, then it can see them fall into negative equity if house prices plummet, which in turn could result in a spike of mortgage defaults.”
Elsewhere, banks and building societies say they are expecting the demand for mortgages to fall during the first half of this year.
Simon Gammon, managing partner, Knight Frank Finance, said: “Clearly, the lenders think that the beginning of 2025 will be another period of sluggish activity in the housing market. As things stand, this is likely to prove true.”
He highlighted recent bond market volatility, which could have an impact on the cost of some mortgages.
Here’s a look at the lowest rates available for first time buyers…
Moneyfacts also rounds up what it calls “best buys”, which look beyond the lowest rates and take in incentives and fees…
In the wider housing market, despite the warnings outlined above, property prices have seen their biggest new year bounce since 2020, according to Rightmove.
The estate agent said the average asking price has risen by just under £6,000 in January.
This took the average asking price to £366,189, although this is still £8,942 below a record set in May 2024, reflecting affordability constraints, it added.
