Dr James, 0s:

Let's talk mortgages, because it's been a little while since we've done that on the Dentists Who Invest podcast. We have with us today specialist mortgage broker to dentists, Mrs Sarah Grace. We're going to be talking about how the recent Bank of England interest rate freeze affects our mortgages on an ongoing basis and also upcoming changes to stamp duty, which everybody out there who has a mortgage or is considering getting a mortgage anytime soon needs to know. I'm also super excited today to announce a brand new feature for the Dentists Who Invest platform, and that is free verifiable CPD to all UK dentists who have enjoyed this podcast episode. Whenever you finish the episode, all you have to do is click the link in the podcast description. It'll take you right through the Dentists Who Invest website. You'll be able to complete a short questionnaire and, once passed, you fill in your reflections and we'll go ahead and email over to you your verifiable CPD certificate, which is entirely free. What that means is this podcast episode will be able to contribute towards your verifiable CPD hours during this learning cycle. Sarah, we're here today to talk about mortgages. Comes with the territory, because that's obviously your forte. Let's talk about the Bank of England base rate and what's moved around there recently.

Sarah, 1m 15s:

Okay. So the Bank of England had a meeting yesterday, which was on the 20th of March, and, yeah, eight to one voted in favour of keeping it at 4.5%. So no reduction there. And I don't think and this is what people far more intelligent than me are predicting in the marketplace. They're predicting sort of probably Augustust, um, we will see the, the next rate reduction, um, and possibly another one before the end of the year. Uh, so we hopefully, christmas time we will have a bank base rate of four percent I see, and what do you reckon their logic was?

Dr James, 2m 3s:

and keeping it where it is?

Sarah, 2m 11s:

Well, there's a few things that they take into account when they're looking at the bank base rate, so inflation being one which that's sort of ticking up at the moment. So that's the reason for them being cautious and not reducing bank base rate. And then it's what's going on in the economy and also the worldwide economy. So there's a few things going on with Mr Donald Trump, be it putting trade tariffs on various countries around the world, and then, obviously, what's going on in the Ukraine and that, so there's a little bit of volatility going on in the market. So I think, you know, that's the reason why everybody was being ultra cautious.

Dr James, 2m 55s:

Understood and let's bring this home, shall we? For the listeners. How does what we've just talked about affect the mortgages side of things, and what else can you see on the horizon, not just necessarily linked to interest rates, but other things that are relevant to people who have mortgages that are coming up sooner they should know about?

Sarah, 3m 14s:

yeah. So this year is a bumper year for people coming off fixed rates. So you know, we've we've got clients coming off rate, starting with a one on a five-year fixed at the moment this year, and apparently lenders are saying this year and next year are bumper years for people coming off five-year deals. So there's going to be a lot of payment shocks if you're going from a rate of uh, you know, 1.59 I've just done some research, um for somebody and they're going to go on to a rate of 4.09. So there's a little bit of a payment shock there. So what you know, a lot of people think so our phones go really hot as soon as the Bank of England reduce their base rate is our phones go really hot with clients have got mortgage applications going through saying, oh, does that mean my fixed rate that I've, uh, I've got secured um is going to be cheaper because of the news today and it doesn't. The way the way fixed rates work is is. So last time, when we did have the bank of england base rate, we actually was in a cycle of fixed rates increasing, so it was the reverse. There is a slight correlation, but how lenders secure fixed rates is based on swap rates, which swap rates is a sort of a financial model that lenders use to secure rates on the money markets and they're swapping their variable rate for a fixed rate, so they're hedging their risk Swap rates. I've just been looking at swap rates. So, compared to the 20th of February, so a month ago the two-year money and the five-year money and everything is all very, very similar. They're quite static. So anybody that secured a two-year, five-year fixed rate which is what most lenders offer is two and five-year fixed rates rates if you secured a rate two months ago, there might be a 0.1% reduction now today, but it's very static. There's not really much change in the SWOT rates. So that means that fixed rates are very stable at the moment, but there could be a bit of volatility uh, going around, you know, especially if anything does happen with the ukraine or anything that will affect swap rates I see, and you mentioned there was some other considerations that people who have mortgages or potentially secure in a mortgage need to know about over the next few months with regards to the tax side of things yeah, so stamp duty is changing um on the first of april. Uh, so if you're, if you're a home mover, uh, you know, typically the additional stamp duty that somebody will pay from the first of april is about two and a half K. If you're a first time buyer, that that's what's really going to impact, because they're reducing the threshold down to 300 K now. So it's back to where it was prior to September 23, when Liz trusted the first time buyer sort of enhanced stamp duty reduction, which was only up until March 25. And Labour haven't done anything. Any changes with that. So, unfortunately, the first time buyers that are buying houses over 300k purchase price, they are going to be adversely affected and it, you know, I've got a client who's buying at 508,000, who wants to complete before the 31st of March. If he doesn't, um, it's going to cost him an extra 11k in stamp duty. So it's a bit of a whammy, uh, for first-time buyers, unfortunately. But you never know. We've got the uh spring budget on the 26th of march. You know whether, whether they will do anything there. Keep, keep your eyes peeled.