The first plans for Brexit emerged this week. Prime Minister Theresa May indicated that by March 2017 she will trigger Article 50. That means by summer 2019 we’ll have officially left the European Union. While we’ll all be screaming out “I’m sorry, Wilson” as our greatest ally slips away from the shore, deep down we know our brilliant nation will be just fine.
The uncertainty over the next few years is the only thing we can be sure of. Every decision will have an impact on the economy, from house prices to interest rates to travel — but that doesn’t mean we have to wait to save, go abroad or invest. With or without Brexit, peaks and troughs in our economy would always happen. So instead of gazing ahead into the unknown, let’s take a look a little closer to home at what’s happened in the world of mortgages and tech this week.
Get in the landlord game now.
Last week Buy-to-Let (BTL) took another hit. The Bank of England confirmed that it will be forcing lenders to stress-test all new BTL mortgages at a rate of 5.5%. The good news is that rent increases will be included in those affordability checks, but for generation rent that could mean more frequent rent hikes. This all comes off the back of the Prudential Regulation Authority (PRA) review of Buy-to-Let underwriting standards, which aims to ensure all lenders are meeting the same regulations, and safeguarding everyone against the tax increases due in April next year. The Telegraph’s Olivia Rudgard has given a good breakdown here on what you need to know. If you’re considering entering the BTL market, we would recommend doing it this year if you can to get ahead of the changes.
It’s not just you, it does feel like groundhog day.
Mortgage approvals hit a two-year low last week, according to the Bank of England. I don’t know about you, but it felt like groundhog day, didn’t it? Only a few days earlier lending had fallen in August by over 20%, according to BBA, and just a few days before that the Council of Mortgage Lenders (CML) said we were up by 15% in August. So what do we believe? What gives the best read on the market? Unfortunately, the uncertainty of the years ahead means these stats will continue constantly to change. That said, it shouldn’t stop you from investing in your dream home, and our CEO breaks down what you should definitely keep in mind here. Don’t let mortgage data groundhog day hold you back.
AI, there’s nothing to fear.
More than half of UK adults (58 per cent) are worried about the impact of robots, and 4 in 10 think artificial intelligence will destroy humanity as we know it, according to a study by Sky Atlantic. Forgive us for being a little biased, but what is there to fear? It’s already happening around us: from virtual assistants, the DLR, smart home devices, banking, and now even mortgages. RBS and Natwest have just introduced virtual staff to help customers with simple questions (e.g. card replacement), but they still let people switch to speaking to a human if they need to. It’s about giving customers choice, and a way to enhance our lives, rather than take anything away or, worse yet, destroy us.
Ask habito: We speak to hundreds of people every day, each with different mortgage needs, career paths, goals, and most importantly questions. One of the more common inquiries we’ve had this week, perhaps due to the pending worker’s rights reforms:
- Can I still apply for a mortgage if I’m self-employed? Yes. You definitely can. You should be commended for starting your own business, not turned away. Lenders just need to know that you’ll be able to afford your mortgage now and in the future. So as long as you can prove this, you’ll be fine. For example, you’ll need to show them that you have been trading for a certain period — the industry standard is two years, though some lenders ask for three — and be able to supply figures to prove your income. The government is even looking into ways to improve worker’s rights, especially self-employed, as they’re usually disadvantaged versus employed people when it comes to holiday, parental leave, pensions and mortgages.
#MortgageFacts: The Agreement in Principle (AIP) is a statement from a lender to say that ‘in principle’ they would lend a specific amount to a borrower based on your eligibility (credit rating, employment, salary etc). It’s what you need to take to an estate agent or home seller, to confirm that subject to a few final credit checks you can afford this mortgage. The illustrations you get from online mortgage calculators, like ours and other online players, are not AIPs. It won’t be accepted by an estate agent or allow you to put an offer on a property — they simply give you an overview of what you can afford (subject to eligibility). So when you’re ready to get an AIP, just start with the one as trying to get several can have a negative impact on your credit rating.
And finally, if you’re on the tube, bus, or overground train in central London, look out for us!
Habito is the UK’s digital mortgage broker, using technology to bring the mortgage application process into the 21st century. Honest, transparent and easy, homebuyers can be sure they’re getting the best mortgage on the market for the first time. No jargon, no fees and no misinformation. Visit habito.com.
