Mortgage Outlook & Indicative Rates - Oct & Q4

Here is the latest outlook from Adverse.Online to shed some light on the current housing, mortgage and bad credit mortgage markets and what we might expect for Q4 to round out a challenging 2023.

Interest Rates - Maintained

The Bank of England’s Monetary Policy Committee (MPC) has been increasing rates in response to high inflation, which stood at 6.7% in September, down from its peak of 11.1% in October 2022.
Whilst Inflation remains well above the MPC’s 2% target, it is expected to continue to fall.
So far in 2023, the Bank of England has raised the base rate from 3.50% in January to 4% in February, 4,25% in March then on to 4.5% in May and then 5% on June 22nd with the last rise to 5.25% on August 3rd.
At the September 21st meeting the MPC maintained interest rates at 5.25%.

House Prices - Holding

Although UK house prices have fallen to date by some 2.8% since their last peak in March 2022 the rate of price reductions has been slowing according to analysis of the Nationwide house price index.

Additionally, whilst overall prices have largely held, regional differences are noticeable. Whilst London and the South East saw price reductions of 1.4% and 1.6% respectively, the North East saw a 3.6% rise with the West Midlands and North West also seeing gains of 1.1% and 0.4% according to the UK House Prices Index.

Mortgage Approvals - Falling

Net approvals (that is, approvals net of cancellations) for house purchases, which is an indicator of future borrowing, continued to fall from 45,400 in August to 43,300 in September, the lowest level since January 2023 (39,900).
Net approvals for remortgaging (which only capture remortgaging with a different lender) continued to decline from 25,100 in August to 20,600 in September, which is the lowest level since as far back as January 1999 (18,300).

Mortgage Completions - Falling

It is no surprise to learn that Mortgage completions for 2023 are at about 75% of the pre-covid averages heading into Q4 2023 which reflects the drop in mortgage approvals over the winter, spring and summer, which are now feeding their way into completions figures.
The provisional non-seasonally adjusted estimate of the number of UK residential transactions in September 2023 is 92,600, 19% lower than September 2022 and 2% lower than August 2023.
Seasonally adjusted residential transactions have fallen by 1% in September, which constitutes the first month-on-month decrease since May 2023 and further signals the challenging conditions facing the current housing and mortgage markets.

Availability of Mortgage Products - Falling

The availability of secured credit mortgages to households decreased in Q3 and is expected to decrease slightly further again over the next three months of Q4.
However, if the Bank of England Base Rate remains unchanged again at the next MPC meeting on November 2nd, the fact of having two consecutive MPC interest holds may well incentivise lenders to re-evaluate the mortgage product availability upwards.

Indicative Rates for a Bad Credit Mortgage

From our panel of bad credit mortgage lenders, we have largely seen interest rates holding but with some simplification of products and lending criteria. 
However, one of our lender panel has reduced its rates by up to 2.25% across their Residential products and up to 1.57% across their Affordable Home Ownership products, in a bid to keep their lending active.
We are still currently able to provide products within touching distance of the high street and also at maximum LTVs up to 85%.  
From our panel of bad credit mortgage lenders, we have seen the following products: 
Rates from 6.34% with up to with 75% Loan To Valuation*
Rates from 6.95%  with up to with 85% Loan To Valuation *
*Interest rates available as at October 1st 2023 are subject to change, or withdrawal at the lenders discretion. The actual rate available will depend upon your circumstances. Ask for a personalised illustration.

Adverse Online is a fully online bad credit mortgage broker offering the convenience and speed of online mortgage application completion and processing but with the quality assurances you would expect from a mortgage broker authorised and regulated by the Financial Conduct Authority.  

Whether you want to apply for a Bad Credit First Time Buyer Mortgage , Bad Credit Home Mover Mortgage or a Bad Credit Remortgage , we have a range of adverse credit mortgage products for you and an initial decision in principle can be achieved in less than 15minutes.

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