INCREASE IN BANK RATE

 

The Bank of England has raised rates to their highest level in almost 15 years. The Base Rate has now risen from 4.25% to 4.50% - the 12th successive rate increase in a row, with some economists predicting that there could be two further increases this summer.

 

These increases are attributable to extremely high inflation rates and will impact on new mortgages, remortgages, loans and credit cards. On the plus side, savers will now start to enjoy a much better return on their savings. Once inflation starts to fall, mortgage rates will follow, but probably not for the rest of this year.

 

THE PROPERTY MARKET

 

After a very slow start in the first quarter, there is slightly more activity in the market and vendors seem to be acknowledging the fact that their properties no longer have the value they had enjoyed up until Autumn last year.

 

It would seem from the consensus of opinion from agents that we have spoken to, that prices have fallen between 15% and 20%, although this will be confirmed in due course by the quarterly figures produced by the States’ Statistical Office. The Quarter 1 figures will be released later this month, although the full impact of price reductions is unlikely to be seen until the end of Quarter 2.

 

A STALLING PROPERTY MARKET

 

It is apparent that the Buy to Let market has virtually ground to a halt as increased purchase costs, combined with higher BTL mortgage rates no longer make an investment viable unless the buyer does not need a mortgage.

 

Nick Dodsley, the chair of the Jersey Estate Agents Association has commented: ‘’Vendors are dropping their asking prices, but there remains a distinct difference in the market from previous years. The unfortunate intervention of the Government in the property market by introducing a buy to let / second home stamp duty of 3% has not helped either the sales, or the letting market, or young Vendors seeking to sell their apartments, as its imposition has taken a ready pool of buyers out of the market.’’

 

A GOOD CHOICE OF AVAILABLE PROPERTY

 

Following a look at the property currently listed for sale in Jersey, it is interesting to see that there are 1,300 listings of apartments and houses being advertised, of which 352 are for apartments below the £500,000 ceiling, which is generally regarded as being the maximum purchase for most First Time Buyers.

 

What is of greater interest is the fact that there are also 132 properties being advertised in the price range £600,000 to £700,000 – a clear indication that vendors are now acknowledging that prices have reduced. This is very encouraging for many, who may have previously thought that they would never be able to buy a house.

 

FINDING THE RIGHT MORTGAGE

 

The last piece in the jigsaw is the availability of mortgages in a market that has tightened up significantly since last Autumn, and whether to opt for a variable tracker rate or lock into a 2 or 5 year fixed rate. 

 

This is where The Mortgage Shop can help. The team can advise on the maximum a purchaser can expect to borrow and which bank will offer the best overall mortgage option, having factored in each lender’s unique underwriting criteria, to ensure the best chance of the application progressing. They can help organise the raft of documents that will be required, obtain approval, help you to also to put in place the essential life assurance to link to the mortgage, and be available to offer you advice and support right through to your day of completion.

 

HERE TO HELP

 

The Mortgage Shop was established 33 years ago and has helped many thousands of islanders to acquire their first home, to trade up to their forever home, to acquire an investment property or to provide the short-term funding needed by so many people, when rebuilding or extending their homes. Should you require our assistance, please get in touch.

 

Henley Financial, our sister company, specialises in financial services and can arrange the all-important life assurance to run alongside your mortgage.

 

BEST RATES

 

Best rates this month (bearing in mind the recent Base Rate increase is likely to have an impact);

 

• 2 year tracker 60% LTV 5.19% (May) prev. 4.49% (January)  
• 2 year tracker 90% LTV 5.79% (May) prev. 5.04% (January)  
• 5 year Fixed 60% LTV 4.74% (May) prev. 5.29% (January)  
• 5 year Fixed  90% LTV 5.04% (May) prev. 5.49% (January)   

 

Rates correct at 12/05/23