Mortgage market

Despite the announcement at the end of May that UK inflation had fallen, this was nowhere near enough to prevent extreme concern for the UK economy, with most commentators predicting that the Bank of England will have to further increase Base Rate in an endeavour to reduce inflation.

Mortgage Rates Will Rise

The impact of this news is that mortgage rates will have to continue rising, although it is useful to look at the underlying interest swap rates, which provide an insight into the long-term cost of borrowing, and these are currently hovering around 4.5% for the next five years.

In the short term however, providers, whilst offering borrowing amounts based upon joint income multiples of up to six times, are still likely to review the rules that they apply to the approval of a mortgage application in respect of affordability.

The Stress Test

What this means is that whilst a borrower can choose from a range of different interest rate options, they must still pass a Stress Test as well. Lenders will look at whether or not a borrower will still be able to meet their monthly repayments, plus all other budgeted expenditure, if mortgage rates were to increase to a specific amount. Currently, Jersey lenders are using Stress Rates in the range of 8% - 10.64%.

Shop Around

Existing borrowers who have fixed rates coming up for review do not usually have to pass the Stress Test if staying with their current provider, although with mortgages being one of the largest financial commitments that many people face in their lifetime, it is important to watch out for potential pitfalls when your current rate comes up for review. One potential pitfall that many get caught in, is failure to do anything and by default remaining with their current lender, without ascertaining if they offered the best option.

A quick review with The Mortgage Shop could either provide the peace of mind, you are making the right decision, or suggest an alternative re-mortgage option, that could potentially save many thousands of pounds over the remaining mortgage term.

Property For Sale

Looking at the postings on the property website places. je, there are currently 1,393 listings on the site, of which 380 are in the First Time Buyer range up to £500,000. In addition, 136 listings are properties in the price bracket of £600,000 to £700,000, with many of these being three bed houses – a clear indication that asking prices are reducing.

House Price Index

The latest figures released from Statistics Jersey were expected to show a noticeable drop in the average price of property sold in the first quarter of the year. In fact, and despite a significant fall in the number of transactions, there was only a modest reduction in house prices and this is attributable to the fact that many of the transactions during this period were the eventual sale of new builds carried over from 2022, which had the effect of keeping the index at a higher level than what is being experienced in the market. The unfortunate outcome of this is that vendors will continue to hold out for 2022 prices for property that has in reality fallen by up to 20%. Whilst this situation continues, so the market will remain stagnant.

The Mortgage Shop

The Mortgage Shop was established over 33 years ago and has helped 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 Henley Financial, our sister company, specialises in financial services and can arrange the allimportant life assurance to run alongside your mortgage.

Best Rates

We can consider all local lenders and options, so your perfect mortgage search starts and ends right here.

With 100s of different mortgages at our fingertips, why not let us do the hard work and shop around to find the best mortgage option that works for you? We won’t stop there, we will be right with you every step of the way, to make sure buying your dream home goes smoothly.