No change from the Bank of England, but mortgage rates keep climbing!

Summary

In this episode of the HCH Mortgage Podcast, host James Vley and Samantha Termain from HCH Financial Services discuss current interest rates, market sentiment, and highlight a case study involving home improvements for a holiday let owner. The podcast also covers recent rate hikes from lenders, which are a result of rising swap rates, and explores various mortgage products available for both limited company and personal names. Sam reflects on the past year in the holiday let mortgage sector, discussing both the challenges and opportunities, while offering insights for those looking to invest or remortgage in the short-term rental market.

Takeaways

• 😀 HCH Financial Services specializes in providing access to the best holiday let mortgages on the market.
• 😀 The company offers various services, including life insurance, will writing, residential buy-to-let, and HMO mortgages.
• 😀 Interest rates in the UK have been held at 4.75%, with expectations for potential changes in early 2025.
• 😀 The current market sentiment is cautious, with many clients holding off decisions until the new year.
• 😀 Some lenders have raised rates due to increasing swap rates, withdrawing attractive products and releasing higher-priced alternatives.
• 😀 Lenders may be hedging their margins, expecting less aggressive interest rate cuts from the Bank of England in the future.
• 😀 A recent case study shared by Samantha Termain involved raising funds for home improvements while retaining ownership of a successful holiday let property.
• 😀 Clients with unencumbered holiday let properties can explore options to release funds for various purposes, such as home improvements or personal expenses.
• 😀 Product rates have increased slightly, with personal name rates now around 4.65%, and limited company rates approaching 5%.
• 😀 The holiday let mortgage market saw ups and downs in 2024, with some negative tax changes but positives in rental figures and portfolio diversification.
• 😀 Despite the challenges, holiday let properties remain an attractive investment option for diversifying portfolios and achieving higher rental returns.

Q & A

What is the main goal of the HCH Mortgage Podcast?

The main goal of the HCH Mortgage Podcast is to share valuable information about holiday let mortgages, spotlight leading products on the market, and provide insights into the holiday let borrowing industry.

What does HCH Financial Services specialize in?

HCH Financial Services specializes in providing access to the best holiday let mortgages on the market. They also offer a wide range of other financial products including residential, buy-to-let, HMO mortgages, bridging finance, life insurance, will writing, and equity release.

What event is mentioned in the podcast for those in the short-term rental industry?

The event mentioned is called 'Your A Success – The Ultimate Event for the St Str Industry,' which will be held on Friday, April 4th, in London. It provides an opportunity to connect with experts, learn strategies, and discover tools to boost bookings and streamline operations.

What was the latest news about interest rates discussed in the podcast?

The Bank of England has held interest rates at 4.75%, with expectations that rates may change in the first quarter of 2025. The market sentiment is generally one of stabilization, with some businesses holding fire until after the Christmas break.

How have interest rates impacted lenders recently?

Lenders have reacted to rising swap rates by increasing interest rates on their mortgage products. Some major players have withdrawn their sweeter products and replaced them with new ones that are priced higher.

What factors are causing lenders to adjust interest rates?

Lenders are adjusting interest rates because of the changing trajectory of the Bank of England's rates. They are also hedging their margins, anticipating that the bank may not cut rates as aggressively as expected.

Can you provide an example of a case study shared in the podcast?

A holiday let owner approached HCH Financial Services to raise funds against an unencumbered holiday let property in order to finance significant home improvements on their primary residence. Despite challenges, the team was able to secure the necessary funds quickly.

What are some challenges faced when raising funds against an unencumbered property?

Challenges include ensuring that the funds raised have a clear purpose, meeting the relevant income and stress test requirements, and dealing with lenders who may not allow 100% capital raising.

What is the current sentiment in the holiday let mortgage market according to the podcast?

The sentiment is cautiously optimistic. While there have been some negatives, such as tax regime changes, there are also positives with many investors considering short-term rentals as a diversification strategy for their portfolios.

How does the podcast describe the current state of interest rates and mortgage products?

Interest rates have seen a rise recently, with products on personal names and limited companies increasing. However, the podcast highlights that compared to earlier in 2024, rates are still more favorable. Some products now offer lower rates than at the start of the year, and there are expectations for future rate cuts in 2025.