Home-buying hit the headlines more than usual this month, with another base rate increase and the launch of a new 100% mortgage product. We’re back to break down the latest updates and what they mean for you.


Skipton launch a ‘deposit-free’ 100% mortgage

This month’s big story was the launch of a new 100% mortgage product, which allows renters to buy a home without needing to put down a deposit. Skipton Building Society’s 100% mortgage is a five-year fixed deal with an interest rate of 5.49%. It’s really positive news for first-time buyers struggling to save up enough for a 5% deposit, and it’s also been great to see many lenders follow, by bringing back their 95% mortgage products.

100% mortgages are riskier for both lenders and home-buyers, as there’s a higher chance you’ll slip into negative equity – where house prices fall and the value of your mortgage ends up being higher than the value of your property. So, the lending criteria for 100% mortgages is stricter as a result.

To be eligible for Skipton’s deal, you need to be a first-time buyer over the age of 21, and be able to prove that you’ve kept up to date with all rental and utility bill payments for the last 12 months in a row. You can only borrow up to the amount you currently pay on rent each month. Learn more about the deal here.


The cost of borrowing climbs again to 4.5%

In May, the Bank of England decided to increase the base rate again, taking it to 4.5% – the 12th increase in a row. They’re set to meet again to make their next decision on 22nd June. Inflation has fallen considerably, but not as fast as hoped, so experts are unfortunately forecasting another base rate hike in June.¹

We know it’s a tough time to be a homeowner, especially if you’re on a variable rate mortgage like a tracker, where you instantly feel the impact of higher repayments. Moneybox mortgage brokers can help you work out your options and potentially find you a better deal.


The housing market continues to cool

The housing market has felt the impact of rate rises – UK house prices have fallen by 1.2% since February 2023, although the average price of a property is still 4.1% higher than last year.² Remember, we look at Land Registry data, which reports how much houses have actually sold for rather than asking prices. That said, it’s worth noting that Rightmove data shows asking prices are increasing, which is a great sign of confidence in the market and will hopefully encourage sellers.


Closing thoughts

While the latest base rate increase came as an unwelcome surprise for many, there are hopeful signs ahead, especially for first-time buyers. With the launch of Skipton’s new 100% mortgage product, and rumours of the government’s Help to Buy scheme returning, it feels like a step in the right direction for available support.


¹ Source: Office of National Statistics (ONS) CPI Annual Rate of Inflation

² Source: GOV.UK Land Registry (UK House Price Index for March 2023).

³ Source: Trading Economics, UK Mortgage Approvals for April 2023 

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