The papers are full of stories about how hard it is to get a reasonably priced mortgage. Rates are going up by the day. This week, Nationwide followed the general trend by putting up its fixed rates by another 0.3% to 6.45%.
Then the chaos at Bradford & Bingley really got going, making it clear to the market that their rates are soon likely go up across the board. Given that Bradford & Bingley is not only the tenth-largest mortgage lender in Britain, but also one of the very few still offering mortgages to first-time buyers with small deposits, that’s not helpful.
Nor is the fact that if you want a good deal you can no longer rely on getting it through a broker. Instead, lenders, looking to monitor their borrowers more intensely, are offering all their best deals direct in their branches, or over the internet. This means that you have to do all your own legwork. If you want a new loan, says The Independent, brace yourself “for a lengthy trudge down the high street”. No wonder the numbers for this April showed that lending is down 40% on the same month last year.
But the real question here has to be why anyone wants to take out a new mortgage at all. Remortgaging is one thing, but taking out a mortgage to buy a new house – why would you want to do that? House prices are now falling fast and there’s no reason to think they won’t continue to. Estate agents are reporting the widest house-price falls since 1978, says the BBC.
More importantly, despite the fact that rents have been rising, a new report from Hometrack shows that across the country private rents for two and three bedroom properties are only 68% of mortgage costs for a similar sized property. So why not skip the uncertainty over interest rates, the huge upfront fees you have to pay to get anything approaching a decent rate these days, and the stress of negative equity and just rent your dream home?
Consider Loddenden Manor in Staplehurst in Kent, says Helen Davies in The Sunday Times. You could buy it through Savills for £2.25m, but you could also rent it instead for £8,000 a month. That might sound a lot, but it is a lot less than it would cost you to buy the thing. The £8,000 a month represents 4.5% of that value of the house a year – try getting a mortgage at that price. And don’t forget that you won’t just be shelling out for the mortgage – there’ll be the £90,000 in stamp duty too.
Still, if you are after something a little cheaper, what about Wickslem House in Gloucestershire. It is Grade II-listed, comes with 15 acres, five bedrooms and stabling for nine horses. Yours for £3,900 a month. Sounds good to us – but of course, as Davies says, if you get bored with it you can “just move out and rent somewhere else” instead.