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Could Getting a Mortgage Become Easier in 2021?

MORTGAGES | 21.12.2020

The mortgage market has been in what seems like a constant state of flux since the start of the pandemic. Now it appears as though The Bank of England (BoE) is looking into ways to make getting a mortgage easier and more accessible as first-time buyers have been locked out of the market.

A mortgage market review

The BoE has stated that it’s a review of mortgage market recommendations, which are essentially the affordability criteria that determine the size of the loan a borrower is able to get. This review is set to take into account record-low interest rates, meaning that this should make things easier for homeowners to repay.  Low-deposit mortgages in the market have come under a lot of political scrutiny recently, with the Prime Minister already having pledged to aid first-time buyers looking to get on the property ladder, in a speech to the Conservative party conference in autumn.  The PM promised to turn “generation rent into generation buy”, and he asked ministers to look into ways of allowing more 5% deposit mortgages to be offered. Unfortunately, since the pandemic, many homeowners have been stuck having to consider paying larger deposits.

Examining structural changes

The BoE’s review is set to examine structural changes to the whole mortgage market that took place since the rules were first put in place in 2014. Back then, former chancellor George Osborne first granted The Bank of England the ability to intervene in the market if necessary.  These rules imposed limits on the amount of riskier mortgages banks could sell. They also forced banks to ask borrowers whether they could still pay their mortgage if interest rates were to rise by 3%.  However, the BoE has stated that a rise of that much in interest rates is becoming more and more unlikely. Especially now that the base rate had dropped to just 0.1% and is expected to stay lower for longer. Changes in household incomes and unemployment will also be examined in this review. Andrew Bailey, the BoE’s governor, said it was still important to ask whether the rules were “in the right place”. He said: “An overheating mortgage market is a very clear risk flag for financial stability. We have to strike the balance between avoiding that but also enabling people to buy houses and to buy properties.” If you’re looking for a mortgage, speak to an experienced mortgage broker today, who can search the market and ensure you get the right deal. Our team can guide you through all the options available to you, to find you the best deal for your specific circumstances.  For more information get in touch with us today on 0345 305 2540, or at info@taylormade-finance.co.uk.
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