By Ed Emerson
This may be the best possible time ever for UK self-employed mortgage seekers to get locked into a long-term low interest rate, or take advantage of the ‘cheap borrowing’ opportunities now available. Check it out before the seemingly inevitable increase in the cost of borrowing (rising interest rates) comes to a bank near you.
And there are four good reasons why interest rates won’t stay this low forever:
1) The withdrawal of cheap funding for home loans through the UK government’s Funding for Lending Scheme, and the new onus on banks to have to source more expensive cash to lend out, means that increased cost will have to be passed on to those seeking a UK self-employed mortgage.
2) The costs for implementing the new MMR rules will also need to be passed on to customers by the lenders, raising mortgage rates and/or fees to help pay for higher staff costs, and the expense of changing IT systems, processes and associated compliance.
3) While caps on loan-to-value ratios in the mortgage market were designed to help prevent a return to the risky and unsustainable lending of yore, house prices are rising and that is making the loan-to-value ratio for customers more difficult to achieve. Higher acceptable lending risks means higher loan rates for those seeking a mortgage as a consultant or entrepreneur.
4) The on-going economic recovery since the 2008/09 recession has been deemed the slowest in history, however, despite the media’s constant mewling about impending disaster the markets have more than recovered in almost every measurable way since then. As certain economic factors – like employment, inflation, manufacturing and other indicators – return to levels deemed “acceptable”, the Bank of England’s Monetary Policy Committee can opt to raise rates from their current historic lows, for reasons I won’t go into here. And they certainly will for a UK self-employed mortgage seekers and consultants and entrepreneurs looking to buy a home. It’s just a question of when. not if, they can.
Understanding the pressure on interest rates to rise affords a better understanding of what the mortgage market looks like from the banks’ perspective, and the opportunity at hand for you.
Don’t miss out on it.
Want to know more?
Why not see what HNW Magazine’s Self-Employed Mortgages section here has to offer you in terms of advice, guidance and options.
And look out for HNW Magazine’s report The 5 Steps to a UK Self-Employed Mortgage for consultants, freelancers and entrepreneurs, out soon, and take advantage of the mistakes others have made so that you don’t have to.
Ed Emerson, Editor, HNW Magazine