The Bank of England Base Rate undoubtedly plays a big part in what is happening in the mortgage world but there are other areas that are worth looking at from time to time too.
Lenders have been very busy changing all their products over the last couple of weeks. For the shorter term fixed rates, surprisingly this has been marginally downwards but the trend for the longer term fixed deals (5 years) has undoubtedly been up.
For deposits of 25% or more in January 2014, a five year fixed would have cost 2.99%. Now it is around 3.5%. A sure sign that lenders are pricing for rate rises!
These remain tight and don't forget that under the new rules that came into force in April 2014, income has to be proven on every single application.
Help to Buy (5% deposit) applications are now restricted to a maximum of 4.5 times income.
Some lenders are restricting lending in London to a maximum of 4 times income.
There are not many examples of any lenders going above 5 times income. So whilst this tends to be the maximum, it is not available to everyone all the time. If you are seeking to know a figure that is realistically achievable to obtain then I would say no more than 4 times income in the current market.
Now very very hard to obtain except on Buy to let mortgages. If you are borrowing above 75% of the property price then it is nearly impossible to get an interest only mortgage.
With a deposit of over 25%, it is possible in theory but be prepared to jump through several hoops which will constantly change. You will need to have at least £150,000 equity in your property, an acceptable investment vehicle that has been in place for 12 months already and most likely a minimum income in excess of £50,000.
There are transitional arrangements for existing interest only mortgage holders but for new customers, best consider a repayment mortgage.
Buy to let
This remains a strong area of the mortgage market to which several high profile lenders have returned in recent months having spent most of the credit crunch avoiding this type of business.
Most lenders are still operating at 75% maximum lending but several have started offering 80%. Before getting too excited, the criteria at 80% tends to be so restrictive (especially on the South Coast area of Bournemouth/ Poole) that few properties actually meet the lenders requirements.
However, the competition in this sector has increased and so interest rates are looking very healthy and the best I have seen in a long time.
Generally, this remains quite onerous. Expect to have to provide the following to support an application:
Last 3 months bank statements
Last 3 months payslips
Identification such as driving licence or passport
Proof of deposit/ savings
Last 3 years SA302's for the self-employed
Since April 2014 and the introduction of the new rules, these have undoubtedly slowed down. This was partly due to lenders having to get used to the new processes and partly as more documentation needed to be assessed.
As a general rule, I would allow 3 weeks from application until you receive your mortgage offer. This can often be quicker but 3 weeks is certainly a fair average.
In my experience over the last few months:
Best lender = Nationwide Building Society
Worst lender = Accord
Overall, I am happy with how the mortgage market is performing. There is still no flexibility from lenders - you either meet their criteria or you don't - and it can be difficult to place some applications. But it is still a lot better than it was and is showing signs of moving in the right direction.
Here's hoping it carries on that way!