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UK mortgages offer exciting new opportunities for the property market

The Bank of England has announced that it will hold interest rates at 5.25%, marking the fifth time in a row the Rate has been frozen since it rose to its current level in August last year. Forecasts predict three cuts of 0.25 percentage points later this year, the first expected to take place in June, and according to the Bank rates will fall to 4.5% before the end of 2024.

Below we break down what this means for the UK property market and mortgage rates.

How do interest rates impact UK mortgages?

Interest rates set by the Bank of England affect mortgage, credit card and savings rates for millions of people across the UK. These interest rates move up and down in order to control UK inflation, which has come down sharply in recent months, easing cost-of-living pressures.

According to the government's English Housing Survey just under a third of households have a mortgage, and when interest rates rise or fall more than 1.4 million people without fixed rate deals see an immediate change in their monthly payments.

The Bank of England says that interest rate cuts are expected soon despite last week’s announcement that they would remain at the current rate, their highest for 16 years.

According to some forecasters, this means that sub-4% mortgages are back ‘on the cards’ in the coming few months.

Buy-to-let UK mortgages

Buy-to-let mortgages allow property owners to invest in the property market by purchasing homes in the UK to rent to tenants. The need for landlords in the UK private rented sector is currently at record highs, with the number of enquiries per home to rent still double pre-pandemic levels. This year marks a prime opportunity for more investors to explore the buy-to-let market and bridge the supply-and-demand rental gap, and there are a number of enticing mortgage options available.

For example, Nationwide-owned lender the Mortgage Works has become the first buy-to-let lender in the current cycle to offer a sub-4% mortgage. The landlord-centred lender is introducing lower rates from 26 March, including a 3.99% five-year fix with a 55% loan-to-value and 3% fee.

Mortgage rates for those returning to the UK

The term ‘expat mortgages’ refers to mortgages for former residents who want to return and buy a property in the UK, but either don’t live there anymore, or have recently moved back. For many expats returning to the UK the option to invest in property is an enticing one, either as a safety net, an option for UK-based family, or as a potential buy-to-let property in the future.

Returning expats do have a number of exciting mortgage options within the UK, and HSBC offers an opportunity to lend to UK residents based overseas at a competitive rate just over 4% if they are using the property either to return to the UK or for domestic family use.

That said, expats looking for a mortgage in the UK could potentially face a few additional hurdles compared to other investors as mortgage lenders like to see a solid UK credit history and financial ties to the UK. In these instances it’s always imperative to adhere to professional guidance and advice to ensure you adjust back into the UK property market with confidence and clarity.

Individual banks will set their own mortgage rates and terms so it’s always highly recommended to shop around for the deal best suited to your financial needs and investment goals. Contact Tailor My Property today and connect with our expert network of financial and property professionals who can assist and advise as you explore and navigate the mortgage and property opportunities of the UK market.


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