Coronavirus: mortgage interest rates fall to historic lows
The average cost of a two-year and five-year fixed rate deal is now the lowest on record, making it a great time to remortgage. Here’s why.
The average interest rate for two-year and five-year fixed rate mortgages has dropped to the lowest level since records began in 2007, according to financial information group Moneyfacts.
The average rate charged on a two-year deal is now just 2.09%, while interest rates on a five-year fixed average 2.35%.
This is significantly below the record low of 2.66% that was set only last month.
Why are mortgage interest rates dropping?
The Bank of England has made two emergency cuts to the base rate (the bank’s set interest rate for lending to other banks) in response to the coronavirus pandemic.
These have reduced the base rate to a record low of 0.1%.
This fall in the official cost of borrowing has impacted swap rates (when two different parties swap interest rates), upon which fixed-rate mortgage deals are based.
Lenders have passed on the reduction in their own costs to borrowers.
Despite being able to make mortgage deals cheaper, banks and building societies have had to review the level of risk they take in lending.
This is due to the impact the virus is having on the UK’s economy.
As a result, many lenders have reduced the number of products they offer those borrowing a high proportion of their property’s value. In other words, those who need a mortgage with a high loan-to-value (LTV).
Is it a good time to remortgage?
The record-breaking fall in average fixed-rate deals makes it a great time to remortgage Especially if your current mortgage deal is coming to an end.
This is the same for those sitting on their lender’s standard variable rate (SVR).
The typical interest rate charged on an SVR is around 4.5%.
This means that homeowners could save more than £3,135 a year if they switch to an average two-year fixed rate deal of 2.09%, based on a £200,000 mortgage.
The gap between the cost of a two-year and a five-year fixed-rate deal has also narrowed.
So homeowners now pay a lower premium for the security of knowing what their mortgage repayments will be for five years.
Mortgage choice for homeowners has taken a dip
The number of different mortgages homebuyers can choose from has more than halved. It’s dropped from 5,222 products on 20 March to just 2,566.
The situation is particularly tight for people looking to borrow a high proportion of their property’s value.
The number of two-year and five-year fixed rate mortgages for homeowners with only a 5% deposit has dropped from 279 to just 22. Choice for those with a 10% deposit has declined from 563 to 50.
What are the options for people with small deposits?
A total of 72 mortgage products are still available for people with only 5% or 10% to put down.
Although lenders have increased rates on loans for people borrowing 95% of their home’s value,(raising the cost of five-year fixed rate deals by 0.04% and two-year ones by 0.1%) the rise is very small.
This suggests they are still open for business for this sector of the market.
Lenders have cut rates for people borrowing 90% of their property’s value. This indicates competition is still strong in this area, albeit on a reduced product range.
If you only have a small deposit and are struggling to find a mortgage, consider using a mortgage broker.
They’ll be able to scour the whole market on your behalf and help you find the best deal.
This is not just in relation to rates and fees, but also taking into account the likelihood of your application being accepted.
A mortgage broker will also be able assist you with the application process.
Top 3 takeaways
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The average rates for two-year and five-year fixed-rate mortgages have dropped to the lowest level since records began in 2007
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The typical rate charged on a two-year deal is now just 2.09%, while interest rates on a five-year deal average 2.35%
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But the number of different mortgages available has dropped from 5,222 products on 20 March to just 2,566
It’s time to restart the housing market - by the Rt Hon Robert Jenrick MP
The Secretary of State for Housing, Communities and Local Government on why a home is more than just four walls
In a column exclusive to Zoopla, Robert Jenrick shares his vision for restarting the housing market and recovering from the coronavirus crisis.
As the Prime Minister announced this week, we have now moved into the next phase of our fight against coronavirus. As with so many aspects of our lives, many people across the country have had their plans and dreams of moving home put on hold throughout this crisis. We’ve also seen important work to build the homes we need paused.
We made this difficult decision in order to keep the country safe, but thanks to the hard work and sacrifices of British people during the lockdown, we are now able to begin easing some measures in a way that is safe.
Since March, more than 450,000 buyers and renters have been unable to progress their plans to move. As of yesterday (13 May), those waiting patiently to move can now do so, though those self-isolating or with coronavirus should continue to keep their move on hold.
Back in business
Each of the building blocks of the buying and selling process are now back in business. The foundation for this is our new guidance on moving home while staying safe, including keeping a two-metre distance.
Estate agents, conveyancers and removal firms can also reopen if they follow social distancing guidelines. This is aided by our guidance for people working in homes, including fitters, so they can support home moving while reducing the risk of infection.
Underpinning all this is our work to restart and renew home building, with safety at its core.
I am grateful to everyone who has been carefully preparing to return to work over recent weeks. Thanks to these efforts, this week we were able to launch a Safe Working Charter with the Home Builders Federation, committing developers to returning to work while following stringent health advice.
We’re also allowing builders to agree more flexible working hours on site with their local council. This will make it easier to follow public health guidance on sites and stagger builders’ arrival times, making public transport less busy and so reducing the risk of infection.
A clear plan forward
Taken together, this forms a clear plan to ensure that everyone involved in moving home and building homes can begin their return to normal life, safely.
As week-by-week we continue to defeat this disease, we will stick to our long-term vision for the housing market we all want to see: safe, beautiful, high-quality, affordable homes, and more of them.
Because a home is more than just four walls. As we have found more than ever during this crisis, it is a sanctuary, a form of protection, and a link to your community.
Everyone has a role to play in helping to control the virus by staying alert and following the rules.
We all need to work together safely as we rebuild our economy and restore livelihoods, starting with the housing market. If we do this together, we will recover from this crisis.
Coronavirus Q&A: how to move home safely now the property market has reopened
The property market in England has reopened and people can move home again. We look at key government information homemovers need to know right now.
The property market in England has reopened and people can move home once again.
But any moves must adhere to government guidance aimed at keeping everyone safe during the pandemic.
We take a look at questions and answers homemovers need to know to comply with new government rules.
Q. Does the reopening of the housing market mean it is business as usual?
A. No, the lifting of the restrictions on not moving does not represent a return to normality.
Instead, the process of finding, buying and moving home must be adapted to reduce the risk of spreading the virus.
Changes include carrying out as much of the process online as possible.
Homemovers will be expected to mostly continue with virtual viewings rather than physical ones. Sellers may need to vacate their homes while potential buyers are shown around. And properties will need to be thoroughly cleaned before the new owners or tenants move in.
The government has also warned that it may be necessary to pause all home moves again in the future to manage the spread of the virus.
Q. How do I move safely during the pandemic?
A. While moves are now allowed to go ahead, social distancing continues. Everyone must continue to follow the guidance issued by Public Health England.
In practice, this means you must stay at least two metres away from anyone who’s not a member of your current. household. And you should continue to wash your hands frequently.
You must also isolate yourself immediately if you develop any coronavirus symptoms.
Those considered to be clinically vulnerable should continue to self-isolate, and not move home unless it’s absolutely necessary.
If you’re in a property chain with someone who’s deemed to be vulnerable, you may have to put your moving plans on hold.
Q. How does social distancing work with people from removals firms?
A. You must stay at least two metres away from people helping you move.
You should also clean your furniture and other items before removals professionals arrive and after they’ve left. This will minimise the risk of transmitting the virus.
Try to do as much of the packing yourself as you can.
Before removal crews come to your home, you should open all internal doors.
All parties should wash their hands frequently and dry them on separate towels, or disposable paper towels.
You should not provide any refreshments for removal crews.
Q. What are the social distancing rules?
A. Social distancing rules must be followed during in-person viewings and meetings with agents in person. These include:
- Washing your hands when you enter a home
- Bringing and using hand sanitiser
- Not touching any surfaces
- Keeping windows open in homes to air out the rooms
- Ensuring everyone maintains a two-metre distance from one another
Q. Is there a limit on how far I can move geographically?
A. There’s no limit on the distance you can move within England. As long as you follow public health guidance while you do so.
But the reopening of the housing market only applies in England. So a move to or within Scotland, Wales or Northern Ireland is currently not possible.
Q. Can I still move home if my housemate has coronavirus symptoms?
A. If anyone within your household develops coronavirus symptoms, it’s important to put your move on hold and isolate yourself immediately.
If you’re contractually committed to moving home, you should still delay your move until all members of your household have come to the end of their self-isolation period.
This will minimise the risk of transmitting the virus.
Make sure you inform your landlord or letting agent if this is the case.
Q. I’ve tested positive for coronavirus but I feel fine. Can I still move if I follow all the guidelines?
A. No.
Even if you’re not experiencing any symptoms of coronavirus, known as being asymptomatic, you can still infect others.
If you’ve tested positive, it’s important that you and other members of your household stay at home and self-isolate.
Any move must be put on hold until the isolation period is over.
If you’re already contractually committed to moving, the move must still be put on hold and you should work with other people in your chain to agree a new date.
If you absolutely have to move - for example, there’s an urgent health and safety risk at your current property - you should contact Public Health England or your local public health team for advice.
Q. Can I view properties in person again now?
A. Yes, physical property viewings are allowed to take place again.
But it’s important that all parties involved follow public health guidance and take steps to minimise the risk of infection.
Viewing numbers should also be kept to a minimum. They should only involve members of the same household. It’s best not to bring small children if possible.
Even so, initial viewings should still be done virtually if possible.
Estate agents are open again and they can accompany potential buyers on viewings. But they must follow the public health guidelines too.
Show homes are also open and will operate an appointment system for viewing to avoid overcrowding.
Open house viewings are currently not allowed.
Q. I’m a renter, should I let my landlord organise viewings?
A. The government expects landlords and tenants to work together to help people to move home in a safe way.
Your landlord must give you fair warning about any viewings.
Those involved in the viewing must follow the public health guidelines.
If you or anyone in your household develops coronavirus symptoms, viewings must be cancelled until everyone has come to the end of their self-isolation period.
Q. Can I still have a survey done on a property I want to buy?
A. Yes, you can still have a survey carried out.
But surveyors will be expected to follow the same rules as those viewing properties.
This means they should maintain a distance of two metres from others, frequently wash their hands and not attend the property if they have symptoms of coronavirus.
You can visit a property you’re buying if you wish to take measurements.
But such a visit must be agreed with the seller and be conducted according to the public health guidelines.
For more information, read the official government guidance on moving home during the coronavirus outbreak.
Coronavirus: property market reopens for business
Estate agents are open and people can once again move home and view properties
The housing market in England has reopened for business after being shut down in a bid to slow the coronavirus pandemic.
From today, government advice states that estate agents can reopen their offices, potential buyers can view properties and people can move home.
Removal companies and other essential elements of the sales and letting process, such as surveyors and conveyancers, can also re-start work right away.
Reopened property market will boost economy
Charlie Bryant, chief executive of Zoopla, said: “Opening up the housing market is not just great news for home-hunters and estate agents.
“As well as unlocking £82 billion of housing sales stalled in the pipeline, it will provide an all-important boost to the real economy, as housing sales trigger increased spending through builders, tradespeople, removal firms, solicitors and many more.”
He added that before the coronavirus lockdown, the housing market was enjoying its strongest start to the year since 2016.
“By taking these steps, the government will give confidence to buyers, sellers and renters that Britain is reopening for business and they can do their bit to get the economy moving again.”
What does the market reopening mean for buyers?
Zoopla estimates that 373,000 property transactions were stalled due to the government’s lockdown measures.
These can now resume in England, with solicitors and conveyancers allowed to carry out their work as long as they follow social distancing guidelines.
Once a transaction has been completed, buyers will be allowed to move into their new home.
Those who have not yet found a property they want to purchase will be allowed to view homes in person, but they must comply with social distancing guidelines. This means staying two metres apart from whoever’s hosting the viewing.
What if I want to sell my home right now?
Following today’s announcement, estate agents will once again be able to visit your property to conduct an appraisal and take photographs for a listing.
Interested buyers will also be allowed to view your home in person, as long as social distancing guidelines are observed.
Even so, many estate agents are expected to continue to also offer virtual viewings. These have proven popular with buyers during the lockdown period.
What if I want to purchase a new-build home?
Building rates have slowed down as a result of social distancing measures. This has limited the number of people allowed to work on construction sites.
The good news is that in a bid to help construction firms catch up, the government is allowing builders to agree more flexible construction site working hours with their local councils. Showhomes can also reopen.
The government and the Home Builders Federation have launched a new charter to help construction sites operate in line with the latest health and safety guidance.
For new sites, developers and local councils will be allowed to publicise planning applications through social media. This is instead of using posters and leaflets and should speed up the process.
There will also be support for smaller developers, such as allowing them to defer payments to local councils to help ease cash flow pressures.
All of these measures should help the construction of new homes get back on track. This is particularly important for people planning to purchase a home through the government’s Help to Buy scheme.
What does the market reopening mean for estate agents?
The halting of the property market was set to cost estate agents £1 billion in lost commission.
Now that the market is restarting and stalled transactions going through, they should be able to start recouping some of this revenue.
Andy Marshall, chief commercial officer at Zoopla, said: “We’re delighted that the government has recognised the need to restart the property market, permitting estate agents to operate - within the parameters of common sense social distancing.
Now is the time to get the market moving and to restore it to full health.”
He added that Zoopla had two payment plans to help estate agents. For at least the next five months, agents who subscribed to one of these offers would be able to rebuild their revenue pipeline without shelling out on a portal.
“We welcome the opportunity to discuss plan options with any agents who have not signed up,” he said.
Families can move into new homes if done safely
Housing Secretary Rt Hon Robert Jenrick MP said:
“I know this has been a difficult time, with some families unable to move and feeling stuck in homes no longer suitable for them.
“Now we are past the peak of the virus we are now able to safely adapt some of the restrictions so that from today anyone in England can now move home as long as this is done safely.
“I thank everyone visiting Zoopla for their patience over the last few weeks and ask them to follow the public health advice as they search for their new home."
Top three takeaways
- The housing market in England has reopened for business after being shut down in a bid to slow the coronavirus pandemic
- From today, estate agents can reopen their offices, potential buyers can view properties and people can move home
- Removal companies and other essential elements of the sales and letting process, such as surveyors and conveyancers, can also re-start work with immediate effect
Coronavirus: will new lockdown measures impact your property purchase?
While new coronavirus lockdown measures do not directly address the property market, they mean positive change for potential homebuyers
The housing market is set to stay on hold for at least three more weeks despite relaxed coronavirus lockdown measures.
But the new measures could mean positive change for potential homebuyers and property browsers.
Government announces relaxed lockdown measures
Prime Minister Boris Johnson announced a series of measures on Sunday night. The aim is to enable a gradual reopening of society following the coronavirus pandemic.
These measures include allowing employees who cannot work from home to return to workplaces. Though they should avoid public transport. People are now also allowed to spend more time outdoors and travel further from their homes in their cars.
No specific measures were announced to help get the property market moving again.
Instead, it’s assumed that estate agents are in the same category as shops and will have to wait until 1 June before they can re-open their branches.
It remains unclear when viewings and new instructions will be able to start again.
Buyers can browse potential areas more easily
Despite no specific measures in place for the property market, the latest coronavirus lockdown measures are positive for potential homebuyers.
With unlimited outdoor exercise now permitted, as well as long car journeys, homemovers can scope out areas of interest more easily.
They can also check out the outside of properties that they could previously only view online.
Keeping your property purchase moving right now
Under current government guidelines, people have been asked to delay property transactions until after social distancing measures have been lifted.
But if the property you’re moving into is currently empty, you can still go ahead with the move.
In other circumstances, movers have been asked to work together to agree on a new completion date.
Virtual viewings have taken off
Estate agents can work from home and continue to market properties they already have on their books.
What they cannot do is visit homes to take photographs, conduct appraisals for new listings or show prospective buyers around a property.
Instead, many have turned to virtual viewings to enable people to view homes while in lockdown.
The types of virtual viewing available for homebuyers vary between different estate agents.
Others involve agents taking their own videos as they walk around a property and highlight its key features.
What does the future of the property market look like?
Even when things ‘return to normal’, the property market could look quite different.
Now that virtual viewings have become more popular, it’s likely agents will carry on doing them. Video tours could save time for homemovers and estate agents.
The use of technology gives people an insight into whether or not a property will meet their needs without having to book a physical tour.
Calls for stamp duty holiday to kickstart the market
There’s evidence to suggest there’s pent-up demand from homebuyers and sellers.
But industry bodies (such as The Royal Institution of Chartered Surveyors and The National Association of Estate Agents) have called for a stamp duty holiday to help kickstart the market.
This stamp duty holiday could boost confidence among potential buyers and encourage housing growth in 2020 and beyond.
Top three takeaways
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The housing market looks set to stay on hold for at least three more weeks despite an easing in other lockdown measures
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Estate agents are thought to be in the same category as shops and will have to wait until 1 June before they can re-open their branches
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But relaxations in exercise rules give potential buyers more scope to explore areas they like in person