Moneyfacts data as of this morning puts the average two-year fixed rate at 5.9%, up from 4.83% at the start of March. Five-year fixes are at 4.9%. Product availability has also thinned, with the total count falling from approximately 8,500 to 7,000 over the same period. This is a notable deterioration but still well short of the 2022 episode. Worth watching for anyone mid-application or about to lock in.
That is quite a jump in five weeks. A colleague’s daughter was looking to buy her first place in Lymington and had an agreement in principle at 4.9% from early March. She went back to the lender last week and they offered 5.7% on the same product. She has pulled out of the purchase entirely, at least for now.
I know it is not 2022 levels but for anyone on a tight budget that kind of swing in a single month is brutal. The product count falling from 8,500 to 7,000 is the bit that worries me more, though. Fewer products usually means lenders are quietly tightening criteria as well, not just price. The ones that stay on the shelf tend to require bigger deposits or stricter income multiples.
Mortgage-free here so I am watching from the sidelines 
but it does not fill you with confidence about the spring market.
This is exactly what I was worried about. We had an AIP done in early March at 5.05% on a five year fix. Our solicitor is still waiting on local authority searches for the semi we are buying and the chain above us has gone quiet.
If our AIP expires before we exchange, are we basically looking at re-applying at whatever the going rate is at that point? Our broker said the AIP is valid for six months but I have seen people say lenders can withdraw products at any time.
Is it worth asking the broker to lock in a rate now even though we are weeks away from exchange? Or is that just burning money if the deal falls through again. I could just roll some dice at this point.
Ring your broker and ask them to lock a rate. Thats literally what theyre for.
@rb471956 rang the broker this morning as you suggested. The 5.05% five year fix we had in our AIP is gone. They can offer us 5.48% now, or 5.72% on a two year fix, both with a £999 arrangement fee. The broker said he expects things to settle in a few weeks but honestly he said something similar in March.
The issue is our local authority searches still haven’t come back. Solicitor says it could be another two weeks. If rates keep climbing we could be looking at something worse by the time we actually need the mortgage offer.
Is there any point locking in now if we don’t even have searches back yet? Or do most lenders let you lock a rate and then extend the offer window if the transaction takes longer than expected?
I could just roll some dice at this point.
@kev8421 that is a painful jump, especially when you were already committed to the chain. Sympathies.
I cycled past the Barton on Sea estate agents on Wednesday and counted the number of Sold STC boards still up from February. Five of them, none of which have progressed to Sold. I strongly suspect at least a couple of those are stalling because the buyers’ mortgage offers have either expired or the rate they were quoted has vanished. The agents won’t admit it of course but you can see it in the body language when you ask.
The broader worry is what happens if rates stay here or drift higher through the summer. Buyer demand is already down, Zoopla had it at 13% below last year. At some point sellers have to adjust expectations or everything just grinds to a halt. Not a cheerful thought for a Friday morning, sorry
@greenwhistle_hants thanks, needed the sympathy.
So here’s the latest fun development. Our buyer’s solicitor rang ours yesterday afternoon to say the buyer needs to reapply for their mortgage because the product they had has been pulled. They were on a two year fix apparently, and whatever they had agreed has vanished. Nobody knows yet whether the new rate will affect their affordability or whether they’ll still be approved for the same amount.
So now we’re stuck in a chain where:
- Our rate has jumped from 5.05% to 5.48% on the five year fix
- Our buyer might not even get approved at the new rate
- The seller above us is apparently “motivated” but won’t budge on price
I’ve asked our solicitor whether there’s any point pushing for an exchange deadline to force everyone’s hand, or whether that just risks blowing the whole thing up. Am I being unreasonable wanting some kind of timeline here?
Exchange deadlines in a chain are mostly theatre. You can ask for one but nobody is contractually bound until exchange actually happens, so anyone can still pull out the day before. All it does is make everyone stressed and give the agents something to chase about. Your actual problem is the buyer below you. If their mortgage falls through the rest is academic.
@rb471956 you were not wrong about exchange deadlines being theatre. Our buyer’s solicitor has gone quiet since Friday and our solicitor cannot get a response. The buyer apparently submitted the new mortgage application on Wednesday but we have no idea what rate they are going for or whether it will even be approved at the higher figures.
Meanwhile the vendor of the semi we are buying is starting to make noises through their agent about “other interest”, which may or may not be real.
At what point do we just cut our losses and tell our agent to start showing the flat again? I do not want to blow up the chain unnecessarily but I also do not want to be sitting here in three weeks with no buyer and no semi either. Is there a conventional grace period people give in this situation, or am I overthinking it?
I could just roll some dice at this point.
Well, Monday morning update that nobody wanted.
Our buyer’s mortgage reapplication has been declined. Their broker apparently told them the new rates push them over the affordability threshold. So they’re now scrambling to find another lender or come up with a bigger deposit.
Our solicitor rang theirs first thing this morning and got told “the buyer is exploring options” which sounds like code for “we have no idea what’s happening either.”
Meanwhile the people selling the semi to us are getting twitchy because they’ve already found somewhere and want to move by end of May. Our agent says to sit tight and give the buyer a week, but I’m not sure what a week achieves if the numbers don’t work.
So the options as I see them are:
- Wait and hope the buyer sorts something out
- Put the flat back on the market now and risk losing the semi
- Accept a lower offer from someone else (we had a second offer at £8k less back in March)
Am I missing something or is this just the bit where the whole thing falls apart again?
Dont wait a week. Your agent is being lazy. Tell the buyer they have until Wednesday to confirm a new mortgage offer or youre remarketing the flat. You can still take their offer if they sort it but you need to protect yourself. The second offer at 8k less might still be there, ring that buyer today. A week in this market is a lifetime given whats happening with rates.
@rb471956 took your advice. Told the agent Monday evening that we needed confirmation of a new mortgage offer by Wednesday or we were going back on the market.
Got a call this morning. The buyer has apparently secured a new offer, but at 6.1% on a two year fix. Their affordability still works apparently but only just. The agent sounded relieved but I am not exactly celebrating.
Meanwhile on our purchase side, our solicitor still has not received the local authority search results for the semi. She says it could be another week. So even if the buyer is now sorted, we cannot exchange until those come back.
Is it worth asking our solicitor to chase the local authority directly, or is that just not how it works? I feel like we are stuck in a holding pattern where every piece slots into place about two days after something else falls apart.
Your solicitor can chase but it wont make any difference. Local authority searches take however long they take and nobody gets bumped up the queue.
The bigger question is whether this buyers new offer at 6.1% is genuinely solid or whether theyre one payslip away from it collapsing again. Id be asking your agent to get written confirmation of the mortgage offer, not just a verbal from their broker.
Wednesday update as promised.
The buyer came back this morning with confirmation of a new mortgage offer. It is through a different lender, 5.62% on a five year fix, which they say they can afford. Their broker has apparently submitted the application on an expedited basis so they are hoping for a formal offer within two weeks.
Two questions:
-
Does a new mortgage application mean their solicitor basically has to start the lender’s legal requirements from scratch, or can some of the existing searches and checks carry over?
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Should I be worried that “two weeks” turns into four? Our own purchase is now effectively on hold until their mortgage completes and I am conscious our rate lock expires on 12 May.
I am relieved they have not pulled out entirely but I would be lying if I said I was not still half expecting this to collapse again.
Two weeks is what brokers say to keep everyone calm. Three to four is more realistic for a new application even on an expedited basis, and thats assuming no valuation delays. Searches usually transfer to the new lender but the lenders solicitor may want to redo parts of the title check. Your rate lock expiring 12 May is the real problem here. If their offer doesnt come through before you need to relock youre looking at whatever rates are doing in mid May, which based on the last six weeks could be anything. Id be having that conversation with your broker now rather than waiting.
Thursday morning update. The buyer’s broker has confirmed the new mortgage offer is formally issued, so that’s one less thing to lose sleep over. The rate is 5.62% on a five year fix as mentioned, and the valuation came back fine.
The problem now is searches. Our solicitor says the local authority search is still outstanding from the original application and they’ve had to resubmit because it expired. She reckons two to three weeks from resubmission, which would put us into early May at best.
@rb471956 given your point about three to four weeks being realistic, is there any value in us pushing for a formal exchange deadline at this stage? Or does that just antagonise everyone and achieve nothing? My worry is that if we set one and then the searches aren’t back in time, we look like the ones holding things up.
The vendor above us has apparently been “very patient” according to their agent, which I’m reading as code for “about to lose it.”
Dont bother with a deadline. Youve got no leverage to enforce it and if the searches arent back its not the buyers fault. All a deadline does right now is give the vendor above you a reason to get twitchy and start looking at other buyers. Keep the chain warm, get your solicitor chasing the search weekly, and sit tight.
Friday update.
Searches came back on our purchase yesterday, no issues flagged. Our solicitor says we are now technically ready to exchange on our side, which should feel like progress but somehow doesn’t.
The problem is the vendor of the semi we are buying. Their onward purchase solicitor has apparently gone silent since Tuesday. Our solicitor has chased twice and the estate agent has tried calling three times. Nobody can get a response.
Meanwhile our buyer is sitting there with a mortgage offer that has an expiry date on it, and every day this drags is another day closer to that expiry.
Is this normal? Is the vendor’s onward solicitor just slow, or is this the kind of silence that means something has gone wrong further up the chain? I have no idea how to read it.
At what point do you start making contingency plans? I could just roll some dice at this point.
Solicitors going quiet for two or three days is not unusual, especially around Easter. Could just be a backlog. Could be a problem. Theres no way to tell from your end. Your agent should be pressing the vendors agent not the solicitor directly. Thats where youll get actual information. In this market any chain with more than two links is fragile by definition so contingency plans are just common sense.