Freelance Advisor and Associate Director of Contractor Mortgages Made Easy, Taj Kang, surveys how the mortgage market is looking for contractors and freelancers.
No surprises from the Bank of England this week, as once again the base rate was kept at 0.50%.
This follows closely on the heels of the pre-budget report where it was announced that the temporary stamp duty holiday, which increased the threshold from £125,000 to £175,000, would finish as planned at the end of the year.
Activity in the housing market has increased markedly since reaching a trough in January when just 23,000 home loans were advanced during the month.
A total of 55,300 mortgages were granted by lenders in October, the highest number since December 2007, the Council of Mortgage Lenders (CML) said today.
The CML’s director general, Michael Coogan, said we were witnessing “a two-speed mortgage market”. “It appears that low interest rates for those with substantial deposits, coupled with this year’s sustained increases in house prices, are encouraging more people to buy or move home.
“But the same low interest rates that are driving house purchase activity provide little incentive for borrowers to refinance their loans. This, coupled with ongoing tightness in lending criteria, continues to hold back the remortgage market.”
The value of first-time buyer loans dropped by 4% on September’s figure to £2.2bn, but was up 29% on last October’s figure, reflecting rising house prices and an increased willingness by lenders to offer higher loan-to-value mortgages.
Linked to this increase in higher loan to value mortgages is a greater readiness by lenders to accept contracting income as lower risk than before. Tighter lending policy for employees has been offset by more lenders willing to look at contract income as a viable option for mortgage applications — providing certain conditions are met.
Utilising a specialist whole of market Contractor specific mortgage broker can help to take advantage of the competitive funding options on offer, and navigate the conditions that lenders ask contractors to meet for a successful mortgage offer.
by Taj Kang, Associate Director, Contractor Mortgages Made Easy
