This morning we all awoke to the sound of advent calendars being opened (or emptied if some kids were unsupervised!). It’s the First of December and the countdown to Christmas is well and truly on. May your advent calendars survive till the 24th!
This time of year is always a time for reflection. So on that note, we asked our Managing Director, Cameron, for his thoughts on 2022 (even writing the year feels surreal). Cameron feels that 2022 will see the following:
- Increase in “green” mortgages.
- Tighter lending criteria.
- Increase in house valuations
- Change to Bank of England base rate
- Increased uptake of life insurances, critical illness, income protection, and more.
- People reviewing their insurances to make sure they’re fit for purpose.
Green mortgages are where lenders offer a better interest rate in return for a property that has an energy rating of A or B. After COP26, I fully expect to see more lenders embracing this. We currently have Natwest and Barclays offering such deals.
What does this mean? It means that the more energy-efficient your home, the lower the mortgage payment could be.
With inflation rising, lenders will take this into consideration and tighten their affordability calculators. There’s also the corresponding rise in the cost of materials for house building which in turn is causing house prices to rise in most areas of the UK.
What does this mean? It means that lenders will assess income more stringently and possibly lower the maximum loan, making it a less risky mortgage. It doesn’t mean that mortgages are harder to get, it will mean your advisor being on the ball!
Just because affordability calculations are tightening doesn’t mean fewer mortgages. Currently, we’re seeing 95% LTV (Loan-To-Value) on newly built houses. Flats however are still proving tricky, with most lenders offering only 90%. Lenders have cautiously inched their way back up to 95% LTV for new-build houses. If the buyer is of a particular profession then 95% LTV for a new build flat is achievable.
Here’s how it’s achievable:
The applicant must be fully qualified, practicing and registered with a recognised UK professional body in one of the eight specified professions as under noted:
- Solicitor (Law Society of Scotland, Law Society of England & Wales)
- Chartered Accountant (Institute of Chartered Accountants Scotland, Institute of Chartered Accountants England & Wales, Chartered Institute of Management Accountants, Association of Chartered Certified Accountants, and Chartered Institute of Public Finance and Accountancy).
- Medical Doctor (General Medical Council)
- Dentist (General Dental Council)
- Vet – Partner/Owner of a practice (Royal College of Veterinary Surgeons)
- Pharmacist – Partner/Owner of a practice (General Pharmaceutical Council)
- Optometrist – (General Optical Council)
- Actuaries – (Institute and Faculty of Actuaries)
Above is the list of professions and the relevant professional bodies acceptable to the Scottish Building Society. The deal is 3.19% fixed for 3 years with a £995 arrangement fee or 2.89% fixed for 5 years with a £995 arrangement fee (correct as of the time of publishing this blog).
The demand for housing is high, and building them is becoming more costly by the day. According to Rightmove, Inverness has seen a 5% increase in house prices over the last two years. The average house price in Inverness in 2020 is £206,702. I recently completed a remortgage for a returning client. They had bought a new build in 2019 which in 2021 has increased by £15,000 in value.
The Bank of England base rate has remained unchanged at 0.1% since the start of the UK lockdown in 2020. The next review is in mid-December. I predict we will see a rise within the next few months. This is down to there being a more stable economy alongside restrictions easing within the UK and across the globe (though we don’t want to jinx that). I think we’ll see the next rise take the BOE base rate to 0.25% in early 2022.
What does this mean? If you’re on a tracker mortgage, this will mean a rise in your monthly mortgage payment. For those who are on a standard variable rate (SVR), it’s time to remortgage!
In one of our previous blogs, we talked about how the number of people looking into life insurance, critical illness, etc spiked over lockdown. In 2022, I expect to see a big uptake in life insurance as well. People will want to protect their loved ones and assets as much as they can now. Life is too short but we also have responsibilities to our next of kin.
What does this mean? Make sure you find a Protection Advisor who listens to your needs. Here, check out our previous blogs to find out about the myths about your life insurance policy & the 10 Questions to Ask Your Mortgage and Protection Advisor
Storm Arwen has caused so much havoc. People left without power for days on end. A common thing we keep hearing is about the amount of food spoiled as freezers have slowly defrosted. And, we all know that if meat is defrosted, it shouldn’t be refrozen. Most people assume that their home insurance will cover their freezer contents, especially at this time of year when most people have started stocking up for Christmas. Again the devil is in the details, check your policy to see if it would payout. It’s worthwhile to rethink your home insurance in light of such a devastating storm. Are you truly covered for everything? Will your insurance provider put you up in a hotel? What about pets? If these questions are making you think, then it’s time to review your home insurance.
It won’t be just home insurance that’s reviewed. Please take the time to reconsider what life insurance you have, especially if you’ve had it for a few years. But, do also review it when something significant happens in your life such as having a baby, moving house, or splitting up from a long-term relationship. Whatever the circumstance, your Protection Advisor will be able to help.
In a few months, we’ll see how accurate Cameron is.