Wanted: Opinion/case studies about mortgages and property

Hello Carmen - We are portfolio landlords that have been buying and remortgaging several properties in the current market. We are at the coal face of property management and are directly impacted by Section 21, Section 24 and myriad other changes.

Get in touch with me on kundan@kushman.co.uk and I can write a 600 word article on the current state of the market and what it is like to be a landlord in 2023.

I had a very difficult case recently, it should have been a very simple re-mortgage, pound for pound, no money raised. The client's partner had just gone onto maternity leave and as per lender criteria, the back to work income was used. A budget planner was done to show the mortgage and other expenditure was still affordable.

What happened next was a 6 week long battle with the underwriter from a major high street lender who despite being shown evidence of the net income for the client being the same on maternity as off, would not accept it and ended up declining it.

I had to escalate this to the head of underwriting and get it overturned on appeal however it was extremely distressing for the client as in the period this was going on, rates increased and it was very close to the variable rate for their current mortgage,

It felt like the lender just did not want to lend to the client

I recently had a particularly difficult case to place with a client. They were mother and daughter ages 30 and 63, who were looking to purchase their council property through the right-to-buy scheme. The mortgage needed to be in joint names due to the right-to-buy requirements, which was causing them difficulties due to the mother's age and lack of income as she was retired. They also had an adverse credit history in the form of multiple defaults which meant they were not passing credit score with high street lenders. I managed to place this mortgage with a specialist lender who accepted the clients credit history, and also ignored the mother from their affordability calculations as the daughter was much younger and it was ultimately her that would be paying the mortgage. The clients were very happy as they had spoken to multiple lenders directly and had always been declined, so they did not think it would be possible to purchase their council home.

Longer term fixes are common in some countries but not so much a feature of the UK. This probably stems from the more competitive nature of the UK mortgage market where there are a high number of lenders looking to win business. Although longer term fixes may seem more attractive in a time of rapidly rising mortgage rates the opposite can be the case in a time of falling rates. Unhappy would be the client who locked into a 5 year fixed rate, sub the 2008 credit crunch, when base rates fell rapidly to 0.5% and stayed there for nearly 15 years. Alternatives to help the property market, would be enhanced affordability calculations, longer mortgage terms aiding affordability and potentially longer term interest only mortgages. In Sweden, which has similar issues to the UK, in terms of interest rates and long term rising house prices, it is common to arrange mortgages with no fixed term on an interest only basis. The debt being repaid either on sale or death of the mortgage holder.

I think it would be foolish to get a 25-year fixed mortgage right now, even if they were available. Interest rates are at their highest level in over a decade, and banks are uncertain about the future of the lending market and medium-term interest rates. As a result, they are likely to price fixed-rate mortgages very high, making them a poor value for consumers.

I wouldn't even consider a 5-year fixed rate mortgage at this time, for the same reason. I believe that banks will price these mortgages very defensively, and consumers will once again be getting a bad deal. Your best bet as a property investor in this market is to opt for a variable rate until mortgage rates drop to approximately as they are forecast to in the next two years.