WEBVTT - The Smartest Move You’re Not Making on Your Mortgage 0:00:02.720 --> 0:00:09.959 Bloomberg Audio Studios, Podcasts, radio news. Hello listeners, Meren zumazepwbare. 0:00:10.039 --> 0:00:12.080 I just wanted to remind you that if you are 0:00:12.160 --> 0:00:14.440 enjoying our weekly podcast, and I hope you are, you 0:00:14.480 --> 0:00:18.560 will also probably really enjoy my weekly newsletter for Bloomberg subscribers. 0:00:18.680 --> 0:00:21.799 It hits in boxes every Saturday. This past week I 0:00:21.840 --> 0:00:24.400 wrote about why the similarities with the nineteen seventies and 0:00:24.440 --> 0:00:25.360 the two thousand. 0:00:25.040 --> 0:00:27.200 And shit have you just a little bit worried? 0:00:27.480 --> 0:00:28.960 So check out the link in the show notes on 0:00:29.000 --> 0:00:32.040 how to subscribe to the newsletter. It does mean signing 0:00:32.120 --> 0:00:34.199 up for a dot com subscription, but I promise you 0:00:34.280 --> 0:00:37.440 it is worth it because you will also get access 0:00:37.440 --> 0:00:41.200 to John's Money Distilled newsletter and informative and actionable stories 0:00:41.200 --> 0:00:44.720 from more than two thousand and seven hundred journalists worldwide. 0:00:45.200 --> 0:00:53.880 Right onto this week's show, Welcome to Maren Talks Your Money, 0:00:53.880 --> 0:00:56.640 the personal finance edition of Meren Talks Money. In these 0:00:56.680 --> 0:00:59.280 blonus podcasts, we talk about the best strategies for making 0:00:59.320 --> 0:01:01.960 the most of you all money. I am Maren sumset 0:01:01.960 --> 0:01:04.640 Web and with me as ever senior reporter and Money 0:01:04.680 --> 0:01:11.280 to Suld author John Steback Hi John, hi elm Right, 0:01:11.640 --> 0:01:14.960 we are onto one of our favorite topics. Well it 0:01:15.160 --> 0:01:17.560 really house prices is our favorite topic, but we're actually 0:01:17.600 --> 0:01:20.800 going to revisit mortgages, which is connected to our favorite topic, 0:01:20.959 --> 0:01:22.760 and of course, dear to all of our hearts for 0:01:22.840 --> 0:01:24.559 those of you who are new to the show, last 0:01:24.560 --> 0:01:26.720 bring we published an eight part series on how to 0:01:26.760 --> 0:01:29.840 buy a house in the UK, which I strongly recommend, 0:01:29.840 --> 0:01:32.200 by the way, But since then, the landscape for interest 0:01:32.280 --> 0:01:35.560 rates in particular has changed drastically, so we thought it 0:01:35.680 --> 0:01:38.840 was worth revisiting this topic and looking questions like what 0:01:38.920 --> 0:01:40.560 is the best type to get now, who has the 0:01:40.560 --> 0:01:42.840 best rate, what's most important when trying to choose the 0:01:42.840 --> 0:01:45.640 best mortgage for you? And of course also is now 0:01:45.720 --> 0:01:47.720 really the best time to buy a house at all? 0:01:47.920 --> 0:01:49.560 To help us for that, we welcome back to the 0:01:49.600 --> 0:01:52.720 show Anthony Emerson, Director at Trinity Financial. 0:01:52.760 --> 0:01:55.360 Hello Anthony, Hi Maren, how are you good? 0:01:55.480 --> 0:01:57.280 Thank you and thank you for joining us again. We 0:01:57.440 --> 0:01:59.720 really appreciate it. Now you've already heard me say the 0:01:59.760 --> 0:02:01.680 question is then going to ask you, so why don't 0:02:01.680 --> 0:02:03.559 we just start? The landscape is saying a lot since 0:02:03.600 --> 0:02:06.440 we last saw you, last spoke to you do, run 0:02:06.480 --> 0:02:07.600 us through what's been happening. 0:02:08.200 --> 0:02:11.800 The landscape has changed dramatically. I mean, last time we spoke, 0:02:12.520 --> 0:02:15.639 we were on a journey where we were expecting one, 0:02:15.760 --> 0:02:19.359 maybe two Bank of England based rate cuts. The inflation 0:02:19.440 --> 0:02:21.400 looked like it was a little bit more in control, 0:02:22.120 --> 0:02:26.280 and then it's flipped entirely on its head and we 0:02:26.360 --> 0:02:29.320 are now in a position where the Iran war has 0:02:29.400 --> 0:02:33.600 created an immediate surge in the interest rates that are 0:02:33.600 --> 0:02:37.840 available to clients. We saw within a two week period 0:02:37.880 --> 0:02:41.120 and increase of around about one point two percent in 0:02:41.160 --> 0:02:44.520 the cost of borrowing, which is exactly the opposite of 0:02:44.560 --> 0:02:45.640 what we were hoping for. 0:02:45.880 --> 0:02:49.720 Yeah, one points so up from what was it before. 0:02:49.840 --> 0:02:52.520 What was the sort of classic two effects before the 0:02:52.560 --> 0:02:53.080 war began. 0:02:53.720 --> 0:02:56.080 The lowest rates are available at the point where the 0:02:56.080 --> 0:02:59.040 war started was around about three point six, and then 0:02:59.280 --> 0:03:03.359 that jumped up to four point seven as the sort 0:03:03.360 --> 0:03:06.360 of best rate option that was about available, and that 0:03:06.520 --> 0:03:09.360 was we're a stonkingly high forty percent deposit. 0:03:10.360 --> 0:03:13.280 Wow, if we went out today with say a classic 0:03:13.360 --> 0:03:17.480 ten percent deposit looking for two year effects, what would 0:03:17.520 --> 0:03:18.000 we end up. 0:03:17.960 --> 0:03:21.400 Paying at the moment just short of five percent? And 0:03:21.440 --> 0:03:23.760 that I mean the interest rates went up by sort 0:03:23.760 --> 0:03:27.239 of one point two where everything was in excessive five percent. 0:03:27.320 --> 0:03:29.760 But since then we've seen a little bit of a 0:03:29.800 --> 0:03:33.240 softening as the swap rates have edged downwards a little bit, 0:03:33.960 --> 0:03:39.680 and I think the uncertainty caused lenders to over compensate 0:03:39.760 --> 0:03:42.800 for the uncertainty. And then as things have sort of 0:03:42.840 --> 0:03:44.720 panned out and they've got more of an idea of 0:03:44.760 --> 0:03:47.360 how it's going to affect, we've had the rates come 0:03:47.440 --> 0:03:49.360 down a little bit, run about sort of point two 0:03:49.440 --> 0:03:52.960 of a percent, So we still that one percent higher. 0:03:53.720 --> 0:03:57.520 The lenders, bless them, are doing absolutely everything they can 0:03:57.640 --> 0:04:00.200 to try and get us into the properties that we on. 0:04:00.360 --> 0:04:03.600 I mean, we've seen more and more lenders these days 0:04:03.760 --> 0:04:08.440 change their affordability calculations. So we've now got more lenders 0:04:08.520 --> 0:04:11.160 lending five and a half times your income, even up 0:04:11.200 --> 0:04:14.760 to six times your income for certain people. And you know, 0:04:15.240 --> 0:04:19.640 we have really reached that inflection point still where that 0:04:19.720 --> 0:04:23.560 whole debate about rental versus owning on a month to 0:04:23.600 --> 0:04:26.560 month cost basis, as if you're young, then you've got 0:04:26.560 --> 0:04:29.800 a deposit, it probably makes sense for you still to 0:04:29.839 --> 0:04:31.680 buy a house than it is for you to rent 0:04:31.920 --> 0:04:33.120 really it is. 0:04:33.200 --> 0:04:37.120 Yeah, and it's not getting a little closer with these prices. 0:04:37.120 --> 0:04:38.760 I mean, I always think when you see when you 0:04:38.800 --> 0:04:42.600 see a lender prepared to offer six times income in 0:04:42.720 --> 0:04:46.080 a in a dodgy economy with very low growth in 0:04:46.720 --> 0:04:49.080 rail wages, particularly in the private sector, it makes me 0:04:49.080 --> 0:04:52.080 feel nervous that maybe they've relaxed those affordability measures a 0:04:52.080 --> 0:04:52.839 little too much. 0:04:54.080 --> 0:04:56.320 I can totally see where you're coming from on that. 0:04:56.360 --> 0:04:59.599 But the problem is the Renters Reform Act has also 0:04:59.680 --> 0:05:02.400 kicked now, which is meaning that we've got more and 0:05:02.480 --> 0:05:08.000 more landlords leaving the sector, and that means that we're 0:05:08.040 --> 0:05:11.960 going to have less rental properties available, which is going 0:05:12.000 --> 0:05:15.000 to drive the prices up. It's going to have completely 0:05:15.040 --> 0:05:20.159 the opposite sort of effect that maybe the government wanted, 0:05:20.480 --> 0:05:24.000 but it is definitely going to mean that renting is 0:05:24.040 --> 0:05:26.599 going to get more and more expensive as we move forward. 0:05:27.320 --> 0:05:30.479 Interesting, so you'd expect buying to become more affordable, prices 0:05:30.520 --> 0:05:33.000 to come down, and we're seen suddenly at a collapse 0:05:33.080 --> 0:05:35.679 in house price growth and we're seeing falls in absolute 0:05:35.760 --> 0:05:37.839 nominal terms in quite a lot of areas now, particularly 0:05:38.320 --> 0:05:41.360 in London, and you'd expect that to continue partly as 0:05:41.400 --> 0:05:44.680 a result of this rental reform, I think so. 0:05:44.800 --> 0:05:48.480 I mean we're seeing that flats in particular, which were 0:05:48.520 --> 0:05:52.279 the vast majority of the rental stock, a lot more 0:05:52.680 --> 0:05:55.720 stock is on the market and therefore those prices are 0:05:55.760 --> 0:05:59.240 being pushed downwards because of the supply and demand imbalance. 0:06:00.480 --> 0:06:03.560 You can probably pick up a fairly decent deal in 0:06:03.600 --> 0:06:06.240 the rental in a flat market at the moment, then 0:06:06.320 --> 0:06:09.760 you could maybe compared to a year or two ago. 0:06:11.640 --> 0:06:15.200 That means that obviously, if you are a starter, first 0:06:15.240 --> 0:06:17.640 time buyer, there is probably a couple of good deals 0:06:17.640 --> 0:06:20.719 out there which will make sense. And obviously the bigger 0:06:20.760 --> 0:06:25.320 the deposit you've got. You know, we're looking at rental properties. 0:06:25.360 --> 0:06:28.000 If you bought something at circus six hundred odd thousand 0:06:28.080 --> 0:06:31.320 pounds and you were, you know, in your early thirties, 0:06:31.839 --> 0:06:34.080 you could probably get a mortgage costing year round about 0:06:34.120 --> 0:06:36.960 two and a half thousand pounds on a capital repayment basis, 0:06:37.080 --> 0:06:41.159 even at ninety percent lines of value. Now those sorts 0:06:41.160 --> 0:06:44.279 of properties from what we've seen, are renting for around 0:06:44.279 --> 0:06:47.520 about two and a half thousand pounds, so it's quite equitable, 0:06:47.680 --> 0:06:51.320 but obviously in your in your capital repayment mortgage, there 0:06:51.360 --> 0:06:53.719 is an element of capital repayment which you are getting 0:06:53.720 --> 0:06:55.080 back over the course of time. 0:06:55.480 --> 0:06:58.320 Yeah, so that that whole thing can still work. So 0:06:58.400 --> 0:06:59.960 do you think that rates have settled for now? 0:07:01.040 --> 0:07:05.120 Who knows at the moment. You know, we've had We've 0:07:05.120 --> 0:07:08.919 had a couple of lenders just this morning saying that 0:07:08.960 --> 0:07:12.160 they're reducing their rates. But when I say reducing their 0:07:12.320 --> 0:07:15.880 only coming down by zero point zero five of a percent, 0:07:16.400 --> 0:07:22.200 So it's very very nominal. We are very nervous about 0:07:22.240 --> 0:07:26.760 the fact that inflation is a sort of rear wood 0:07:26.800 --> 0:07:31.200 looking metric, and we are yet to see the full 0:07:31.280 --> 0:07:34.360 effect of inflation and the pressures that that puts on 0:07:34.520 --> 0:07:40.000 everything else come through in the figures. So we think that, 0:07:42.120 --> 0:07:45.760 you know, the cost of fuel, fertilasa and all the 0:07:45.800 --> 0:07:48.960 other bits and pieces is really going to come to 0:07:49.040 --> 0:07:52.200 the foe in the next couple of months, and you 0:07:52.280 --> 0:07:55.440 might see rates remain at this sort of level for 0:07:55.480 --> 0:07:58.320 a while while they wait for more data to come through. 0:07:59.200 --> 0:08:01.320 Okay, I'm nice. Pose it the question that I know 0:08:01.360 --> 0:08:03.840 that everyone wants to ask, And if I hadn't interrupted John, 0:08:03.840 --> 0:08:05.520 I think he might have been about to ask it. Sorry, 0:08:05.560 --> 0:08:09.360 John is if you need to remortgage in the near future, 0:08:09.720 --> 0:08:12.320 do you do it now or do you wait? And 0:08:12.320 --> 0:08:13.960 from what you've just said, it rather sound to me 0:08:14.000 --> 0:08:17.120 like you would say do it now because these inflationary 0:08:17.120 --> 0:08:18.120 infacts are still to come. 0:08:19.240 --> 0:08:21.840 We have this conversation with people all the time where 0:08:21.880 --> 0:08:24.400 they think that you need to wait to be able 0:08:24.440 --> 0:08:27.880 to secure something. You can remortgage your property if you're 0:08:27.960 --> 0:08:31.960 up for remortgage up to six months early earlier than 0:08:32.000 --> 0:08:35.800 your expiry dates of your current product. If the rates 0:08:35.920 --> 0:08:39.600 improve from that point going forward, you can always ditch 0:08:39.640 --> 0:08:43.160 the application that you've made, either with your existing lender 0:08:43.280 --> 0:08:46.360 or with a new provider, and then reapply for a 0:08:46.400 --> 0:08:49.439 new rate or new products, or whatever it might be 0:08:49.520 --> 0:08:54.240 going forward. I'd much rather clients are prepared and get 0:08:54.240 --> 0:08:57.280 their mortgage set and settled six months ahead of time, 0:08:57.679 --> 0:08:59.959 and then every month catch up with their mortgage broke 0:09:00.320 --> 0:09:01.760 just kind of say, let's have a look at the 0:09:01.800 --> 0:09:04.880 market again. Has it improved? Should we make another application 0:09:05.400 --> 0:09:09.080 for something cheaper? Too many people are leaving it right 0:09:09.120 --> 0:09:12.040 to the last minute, and if something goes against them, 0:09:12.240 --> 0:09:14.199 they may very well end up paying quite a bit 0:09:14.240 --> 0:09:15.040 more than they had to. 0:09:15.720 --> 0:09:18.240 I haven't realized you could do that kind of rolling rearranging. 0:09:18.280 --> 0:09:21.400 How do you, John, I was aware of that. I'd 0:09:21.440 --> 0:09:24.720 just would like to just double check. Are they don't 0:09:24.760 --> 0:09:27.280 say to that Antony late. For example, you don't have 0:09:27.320 --> 0:09:30.160 to pee the arrangement fee up front. There's no sort 0:09:30.160 --> 0:09:32.040 of non refundable costs involved. 0:09:33.280 --> 0:09:36.800 Generally speaking, John, you have lenders providing you with free 0:09:36.880 --> 0:09:40.760 valuation and free legal transfer nowadays, and because of that, 0:09:41.440 --> 0:09:44.920 we can secure something with no money down. The arrangement 0:09:45.000 --> 0:09:49.319 fee varies from product to product, from free to fifteen 0:09:49.400 --> 0:09:52.520 hundred two hundred to fifteen hundred to two thousand pounds 0:09:52.520 --> 0:09:56.400 for each product, but you can opt to add them 0:09:56.440 --> 0:09:59.840 to the loan at the end when the mortgage comp 0:10:01.080 --> 0:10:04.320 So therefore there's no money down from your side to 0:10:04.400 --> 0:10:08.320 be able to get in and do that application. And 0:10:08.440 --> 0:10:11.240 at least you have something in your back pocket which 0:10:11.440 --> 0:10:15.800 basically allows you to protect yourself from any upward increase 0:10:15.840 --> 0:10:16.920 in rates. 0:10:17.800 --> 0:10:20.280 Yes, so basically you should definitely do it, But there's 0:10:20.360 --> 0:10:21.520 no down't say to. 0:10:21.520 --> 0:10:24.559 This, absolutely no downside other than the poor mortgage broker 0:10:24.640 --> 0:10:26.920 might need to do his job two three, four times over. 0:10:28.040 --> 0:10:29.920 What about if you're what about if you're buying, you're 0:10:29.960 --> 0:10:32.439 taking on a new mortgage, and you say you say 0:10:32.480 --> 0:10:34.200 you're looking for a house right now, can you do 0:10:34.280 --> 0:10:35.920 the same kind of thing thing, Well, I haven't found 0:10:35.920 --> 0:10:37.800 a flat yet, but I'm definitely going to find one. 0:10:37.840 --> 0:10:42.760 Can I arrange a mortgage and then keep rolling that 0:10:43.000 --> 0:10:45.360 over or I can't arrange the mortgage until I've actually 0:10:45.360 --> 0:10:46.400 found the house. 0:10:47.120 --> 0:10:50.080 You have to have found a property first in order 0:10:50.120 --> 0:10:53.040 to make a full mortgage application, and at that point 0:10:53.080 --> 0:10:56.600 the mortgage offer comes out, and as long as you 0:10:56.720 --> 0:11:00.200 haven't yet exchanged, we can keep reviewing the rate and 0:11:00.320 --> 0:11:04.160 change in the application accordingly. So if you took out 0:11:04.160 --> 0:11:08.520 a mortgage application with San Sander, for example, and you 0:11:08.520 --> 0:11:10.640 know the rate went from four point seven to four 0:11:10.679 --> 0:11:14.400 point five, we could ring San Sander up, get a 0:11:14.440 --> 0:11:17.200 new mortgage offer issued, and they would issue a new 0:11:17.200 --> 0:11:20.040 mortgage offer at the lower interest rate. The reason that 0:11:20.080 --> 0:11:21.560 we say that you can do it up to the 0:11:21.600 --> 0:11:25.680 points of exchange is that once you've exchanged contracts, because 0:11:25.720 --> 0:11:27.640 you have to complete on a set day and a 0:11:27.679 --> 0:11:31.040 set timeline, it's very risky to go back to the 0:11:31.080 --> 0:11:33.679 bank and ask for a change to be made, because 0:11:33.720 --> 0:11:37.199 the bank has the right to reassess the entire loan 0:11:37.960 --> 0:11:41.959 under whatever their new basis is. So affordability might have 0:11:42.000 --> 0:11:45.240 slightly changed, the kind of property that you're after might 0:11:45.240 --> 0:11:47.480 have slightly changed, so there is a risk that the 0:11:47.559 --> 0:11:52.640 lender might pull the product at that point. However, generally speaking, 0:11:52.679 --> 0:11:56.760 it doesn't affect the client's application. Okay. 0:11:56.760 --> 0:11:58.800 So, given the length of time there often is between 0:11:58.840 --> 0:12:02.240 an offer being accepted and exchange, it's worth getting your 0:12:02.240 --> 0:12:04.839 mortgage offer in as quickly as possible because it gives 0:12:04.880 --> 0:12:07.240 you there's great optionality and that if rates go up, 0:12:07.440 --> 0:12:11.680 not your problem. If rates go down, you can reallygotiate. 0:12:12.520 --> 0:12:17.040 Absolutely. That's one hundred percent correct, Okay. Interesting, and I 0:12:17.080 --> 0:12:19.840 think too many people, especially when it comes to remortgaging, 0:12:20.400 --> 0:12:23.880 don't really know that fact, and you know, they wait 0:12:23.960 --> 0:12:29.320 and wait and wait hoping for a better situation. Whereas 0:12:29.480 --> 0:12:31.960 you can do it as early as you want and 0:12:32.000 --> 0:12:35.320 then just review and review and review every month for 0:12:35.400 --> 0:12:38.480 the next five or six months. We can get a 0:12:38.600 --> 0:12:41.839 change of products up until the mid of the month 0:12:41.920 --> 0:12:46.200 before your rate expires. So if your rate expires in June, 0:12:46.400 --> 0:12:49.440 we can get you know, a change in product up 0:12:49.480 --> 0:12:50.560 to the fifteenth To make. 0:12:51.240 --> 0:12:55.280 Interesting because I've been noticing that deals are taking longer 0:12:55.320 --> 0:12:58.160 and longer to go through than they were even a 0:12:58.240 --> 0:13:00.719 year ago because of Chain's collapse, saying in a very 0:13:00.760 --> 0:13:03.400 sort of olden datish type of way. So if you 0:13:03.480 --> 0:13:05.360 have that length, this is really useful information. 0:13:06.240 --> 0:13:11.160 That's on the purchase side of things, absolutely, you know purchases. 0:13:12.040 --> 0:13:15.320 The whole system and the way it works is somewhat archaic, 0:13:16.040 --> 0:13:18.640 but I don't really see it changing. We used to 0:13:18.720 --> 0:13:22.800 have the you know, the implementation of that Buyer's pack, 0:13:22.840 --> 0:13:27.040 which I thought would actually revolutionize things in a very 0:13:27.080 --> 0:13:31.600 positive way. Scotland manages to get everything sorted out before 0:13:31.640 --> 0:13:35.560 they put their house on the market. Can't really understand 0:13:35.559 --> 0:13:38.800 why England hasn't followed suits. You go to other parts 0:13:38.800 --> 0:13:41.960 of the world twenty eight days from the day you accept. 0:13:42.320 --> 0:13:45.760 After seven days it goes unconditional and away you go. 0:13:46.480 --> 0:13:48.800 So it's just a different way of looking at it. 0:13:48.840 --> 0:13:51.440 But change is something that most people don't like. 0:13:54.320 --> 0:13:56.160 Well, one thing I was going to ask, and I 0:13:56.200 --> 0:13:57.880 think this is something a lot of people will be 0:13:57.960 --> 0:14:02.400 curious about. So obviously the fixtureet has shot up to 0:14:02.800 --> 0:14:05.480 about four and a half four point seven, four point 0:14:05.520 --> 0:14:09.240 eight percent you can still get a tracker THET four 0:14:09.520 --> 0:14:13.280 ish four point one. Are you seeing people asking you 0:14:13.320 --> 0:14:16.240 for trackers? And what's your general teake on that. 0:14:17.960 --> 0:14:21.120 The tracker differentiation? I mean I looked at interest rates 0:14:21.120 --> 0:14:24.280 in preparation for this at sixty percent loan to value. 0:14:24.320 --> 0:14:28.400 For example, the track RADS currently is three point nine six, 0:14:29.040 --> 0:14:33.400 whereas the same product fixed rate is four point four 0:14:33.400 --> 0:14:36.280 to two, So you're looking at nearly half a percent 0:14:36.360 --> 0:14:42.000 difference between the two products. Now that means that you 0:14:42.040 --> 0:14:45.880 could probably take two Bank of England based rate increases 0:14:46.040 --> 0:14:50.560 before you reached the situation where your fixed rate would 0:14:50.560 --> 0:14:53.760 put you. Most of the truckers as well don't seem 0:14:53.800 --> 0:14:57.280 to have early repayment charges applicable to them, so it 0:14:57.280 --> 0:15:00.680 gives you more freedom to be able to make over 0:15:00.760 --> 0:15:05.280 payments refinance at a stage that the market may have improved. 0:15:05.960 --> 0:15:09.840 And it really just comes down to what you as 0:15:09.840 --> 0:15:15.120 an applicant have as a risk appetite. Because we have 0:15:15.200 --> 0:15:19.400 already somewhat priced into Bank of England based rate increases, 0:15:20.040 --> 0:15:22.400 so it is highly likely that by the end of 0:15:22.440 --> 0:15:26.040 this year you will probably be looking at nearly four 0:15:26.080 --> 0:15:30.080 and a half percent on that track rate. However, if 0:15:30.120 --> 0:15:33.280 the rate then turns around and starts going downwards just 0:15:33.320 --> 0:15:36.200 as quickly as it went upwards, then you might very 0:15:36.200 --> 0:15:40.560 well find that product beneficial. If it keeps on going north, 0:15:41.280 --> 0:15:43.600 then that product is not as clever. 0:15:44.160 --> 0:15:46.680 Suddenly everyone has to be an expert on inflation. 0:15:46.360 --> 0:15:51.240 Right, correct. And I think it's being used more by 0:15:51.320 --> 0:15:55.760 people who are expecting some sort of windfall, big bonuses 0:15:56.600 --> 0:16:00.480 in inheritance, some sort of asset payout that they could 0:16:00.520 --> 0:16:03.560 then use that tracker rate and the flexibility that comes 0:16:03.560 --> 0:16:08.040 with it to make it rather large overpayment. Because when 0:16:08.120 --> 0:16:10.160 you're looking at interest rates at st four and a 0:16:10.240 --> 0:16:13.880 half odd percent, to achieve that as a net return 0:16:13.960 --> 0:16:16.880 in the market is a little bit more difficult than 0:16:17.120 --> 0:16:20.800 most people would like. So therefore we're seeing a lot 0:16:20.840 --> 0:16:25.680 more people reduce their outside their mortgage lending because of 0:16:25.680 --> 0:16:28.200 the fact that it's got a guaranteed return if you. 0:16:28.280 --> 0:16:33.560 Like, yeah, well the offset mortgage. Are you seeing demand 0:16:33.600 --> 0:16:34.680 for that less? 0:16:34.960 --> 0:16:37.680 Yeah? Less and less popular, mainly because of the fact 0:16:37.720 --> 0:16:40.320 that it costs the lenders so much to administer it. 0:16:41.000 --> 0:16:43.680 Okay, so it's the lender who's finding it unattractive, not 0:16:43.720 --> 0:16:44.240 the borrower. 0:16:45.400 --> 0:16:48.360 The borough will generally find it quite attractive if it's 0:16:48.440 --> 0:16:52.080 used correctly. But what we see on our side is 0:16:52.080 --> 0:16:55.400 that offset mortgages are generally around about sort of fifteen 0:16:55.440 --> 0:17:00.760 to seventeen percent more expensive in rate than you'd be 0:17:00.800 --> 0:17:03.920 able to get a standard product for now, that means 0:17:03.920 --> 0:17:06.320 that you have to have that amount of money or 0:17:06.359 --> 0:17:09.479 more in your offset account at all points during your 0:17:09.480 --> 0:17:12.199 mortgage in order to be able to meet what you 0:17:12.240 --> 0:17:15.280 could have got on a standard mortgage. It's only if 0:17:15.280 --> 0:17:17.800 you've got more than that sort of seventeen percent that 0:17:17.880 --> 0:17:20.240 you start to benefit compared to what you would have 0:17:20.280 --> 0:17:23.520 had on a normal mortgage. It works quite nicely for 0:17:23.600 --> 0:17:27.440 people who are capital raising because they are at the 0:17:27.520 --> 0:17:29.480 end of their fixed rates and they want to do 0:17:30.440 --> 0:17:33.879 a massive home renovation and all that money needs to 0:17:33.960 --> 0:17:39.240 set somewhere while they drip it out over time. But 0:17:40.160 --> 0:17:42.800 you know, if you haven't got the right situation for 0:17:42.840 --> 0:17:46.320 the requirement for that, then it isn't a product that 0:17:47.040 --> 0:17:49.600 is as popular as you want as you might think. 0:17:50.240 --> 0:17:53.080 Most people who have that cash available try and pay 0:17:53.080 --> 0:17:54.080 off the mortgage with it. 0:17:55.400 --> 0:17:58.879 Yeah, okay, so this all seems relatively straightforward. We'd have 0:17:58.920 --> 0:18:00.440 no idea what's going to happen. Next in terms of 0:18:00.520 --> 0:18:02.760 interest rates. So you might as well get a deal 0:18:02.840 --> 0:18:05.200 on the table, whether you are buying for the first 0:18:05.200 --> 0:18:08.360 time or whether you were remortgaging, and just keep reviewing 0:18:08.359 --> 0:18:10.600 it up until the last minute and take it from there. 0:18:10.640 --> 0:18:12.480 But there's no point in sitting around waiting. 0:18:12.880 --> 0:18:15.320 I definitely wouldn't advocate that atrole. 0:18:16.440 --> 0:18:17.679 John, I interpreted you again. 0:18:17.840 --> 0:18:21.240 Sorry, No, this is a really minor point. But one 0:18:21.280 --> 0:18:25.040 thing I have noticed and sort of keeps the current 0:18:25.080 --> 0:18:27.600 to me, is that whenever we used to talk about 0:18:27.600 --> 0:18:31.520 the property market prior to the financial crisis, there was 0:18:31.600 --> 0:18:34.600 basically no such thing as a setup fee other than 0:18:34.600 --> 0:18:38.719 an awful lot of free mortgages. And now you know, 0:18:38.800 --> 0:18:40.520 set up fees are as you say, they see me, 0:18:40.640 --> 0:18:43.080 start about a grand and go as high as two. 0:18:44.640 --> 0:18:46.800 How do you what do you say to people in 0:18:46.840 --> 0:18:49.679 terms of thinking about set up fees? What should you 0:18:49.720 --> 0:18:51.760 be looking out for, What do you need to consider 0:18:52.800 --> 0:18:55.359 in terms of how it actually affects the cost of 0:18:55.400 --> 0:18:56.000 the product. 0:18:57.600 --> 0:19:02.800 The setup fee basically comes down to mathematics. John. You know, 0:19:03.359 --> 0:19:06.639 if the differentiation between a product with a fee and 0:19:06.800 --> 0:19:10.040 one without a fee, multiplied by your loan balance over 0:19:10.080 --> 0:19:12.200 a two, three, or five year period that you take 0:19:12.240 --> 0:19:16.680 the mortgage for generally will always you know, we'd advocate 0:19:16.680 --> 0:19:20.760 the product with the fee if the savings are more 0:19:20.800 --> 0:19:23.960 than the cost of the fee. And as far as 0:19:23.960 --> 0:19:28.080 the fee is concerned, obviously we're talking earlier about, you know, 0:19:28.119 --> 0:19:31.240 the financial impact of applying for a mortgage. We never 0:19:31.280 --> 0:19:34.240 really advocate that a client pays for a pays for 0:19:34.280 --> 0:19:38.080 an arrangement fee upfront, mainly because of the fact that 0:19:38.560 --> 0:19:41.160 if we change lender, you then have to go back 0:19:41.200 --> 0:19:43.560 to them and ask for a refund. And there's a 0:19:43.560 --> 0:19:46.440 little bit luck dealing with HMRC quick to take your money, 0:19:46.480 --> 0:19:50.240 but really slow to get it back. So I would 0:19:50.280 --> 0:19:52.239 say to you that, you know, you add it to 0:19:52.280 --> 0:19:55.040 your mortgage, but each one of the lenders generally has 0:19:55.080 --> 0:19:58.680 an overpayment facility allowed, which is ten percent of the 0:19:58.720 --> 0:20:03.840 outstanding mortgage balance. So if you add the fee, best 0:20:03.880 --> 0:20:07.280 practice would be your first payment goes out, you ring 0:20:07.320 --> 0:20:10.320 the lender up, you make that one thousand pounds cash payments, 0:20:10.840 --> 0:20:14.320 and effectively you won't be incurring any interest on that money, 0:20:14.440 --> 0:20:16.840 but you still be benefiting from the cheaper rate that 0:20:16.840 --> 0:20:20.639 that product gives you. We generally find the magic number 0:20:20.680 --> 0:20:23.040 seems to be around about one hundred and seventy one 0:20:23.080 --> 0:20:27.919 thousand pounds, because at that sort of level of loan size, 0:20:28.119 --> 0:20:32.159 the multiple between the rate difference means that paying the 0:20:32.200 --> 0:20:34.399 fee at thee thousand pounds is either worth it or not. 0:20:35.320 --> 0:20:38.040 Once you go to two hundred three hundred, four hundred 0:20:38.040 --> 0:20:41.160 thousand pounds worth of lending, then generally speaking, the fee 0:20:41.560 --> 0:20:43.479 product is always worth taking. 0:20:44.080 --> 0:20:46.360 Yeah, yeah, Okay, that's. 0:20:46.240 --> 0:20:47.240 Just all have on that. 0:20:48.119 --> 0:20:52.320 Okay, last question, last question, I'm going to ask you 0:20:52.320 --> 0:20:55.480 the impossible question away from mortgages. When you look at 0:20:55.520 --> 0:20:57.760 the property market in general, and I know that you 0:20:57.800 --> 0:20:59.800 just said that maybe there are good deals around on 0:21:00.160 --> 0:21:02.679 flats for younger people who maybe first time buyers, etcetera. 0:21:02.760 --> 0:21:05.720 But then there are all those worries about plodding service charges, 0:21:05.760 --> 0:21:08.840 all that kind of thing around the edge, the uncertainty 0:21:08.840 --> 0:21:11.040 about what's going to happen with leaseholds, all these kind 0:21:11.080 --> 0:21:13.000 of things are all that out there as uncertainties. But 0:21:13.160 --> 0:21:16.160 across the market as a whole, how does it look 0:21:16.200 --> 0:21:18.919 to you? And we've seen a lot of real terms, 0:21:19.000 --> 0:21:23.199 quite dramatic declines, particularly in London, did it look to 0:21:23.280 --> 0:21:24.800 you like things are going to pick up? From here, 0:21:24.880 --> 0:21:26.520 or does it look to you from the business you're 0:21:26.520 --> 0:21:29.560 seeing that everything's going to stay a little uncertain for 0:21:29.560 --> 0:21:29.880 a while. 0:21:31.240 --> 0:21:34.560 I think the market is split, in my opinion, into three. 0:21:34.760 --> 0:21:38.359 You've got your super prime London properties which you know, 0:21:38.800 --> 0:21:42.560 very very high values, lots of foreign buyers coming in 0:21:42.760 --> 0:21:45.159 and buying those properties or not, as it might be, 0:21:45.920 --> 0:21:49.240