There is much uncertainty in the UK currently around Brexit and the ongoing implications for the country. The looming effect of which is an unknown for the Mortgage Industry.
The Brexit Effect:
How the mortgage market performs this year is going to be somewhat dependent on Brexit and its impact on general economic conditions and consumer confidence. There is general apprehension that buyers may remain cautious whilst waiting for the Brexit deal to complete. This may mean that the usual spike in sales in the first few months is not evident.
There are however, some positive areas in the current climate….
Low Mortgage Rates
Mortgage rates are incredibly low currently and many will want to fix into a low rate to give themselves security as we move into a period of uncertainty.
David Blake of Which? Mortgage Advisers says ‘Don’t just jump into a fixed rate without considering the alternatives – there are plenty of flexible products that would leave your options to remortgage open if rates did start to change. Brexit is still a complete unknown”.
Henry Knight, Managing Director from Springtide Capital comments:
“In using a mortgage broker, you will receive an expert opinion on which is the best mortgage for you in terms of the interest rate and the likelihood of your application being accepted. This expertise will save significant time and by having an in depth understanding of the whole market, a broker is able to add value by advising on what is and isn’t possible from the outset in this current uncertain climate”
Positive foundations for Housebuilding
Arguably the largest obstacle facing the housing market in general, is demand and was highlighted in a recent warning that English housebuilding figures are set to be the lowest in any decade since the Second World War.
The government is aiming for 30% of new housing in England to be self-build and custom build, which means there are opportunities for mortgage providers to be part of this growth.
The Autumn Budget and the extension to the Help to Buy scheme for a further 2 years was welcomed. The demand for new-build homes remains strong helping builders to plan ahead to increase output in the coming years.
Both the government and the lending community are working hard to close the supply gap, and we should expect to see this continue over the coming year.
Stewart Baseley, executive chairman of the Home Builders Federation, says: ‘Unlike the wider housing market, where transactions have dropped considerably from the historical norm, the new-build market has remained strong in recent months – a trend we expect to continue. ‘The confirmation in the Budget of an extension to the Help to Buy scheme was welcome. The scheme is ensuring demand for new-build homes remains strong [and]… the certainty of demand is enabling builders to plan ahead to increase output in the coming years, as is demonstrated by the record high number of planning permissions being granted.’
First Time Buyer Market Share at Highest Level Since 1995
One positive growth area currently is in the First Time buyer market. Analysis from Yorkshire Building Society estimates that 367,038 first-time buyers secured mortgages in 2018, up from 362,800 in 2017.
The current figure represents almost double that of 2008 (193,300) and stands just 9% lower than the 2006 pre-crisis peak of 402,800. First-time buyer levels are now said to represent 50% of all homes bought with a mortgage, meaning that the first-time buyer market share has reached its highest level since 1995.
Strong competition in the market that have been driving mortgage rates down have helped this figure. As have Government initiatives such as Stamp Duty relief, Help to Buy equity loans and Help to Buy ISAs.
One thing that all elements of the Mortgage market will be looking forward to is a period of stability post Brexit. And whilst there are positive steps being taken and some growth areas, Brexit is undoubtedly fuelling a sense of apprehension in the housing market. With details of the final deal still unknown, there is a high probability that both buyers and sellers will continue to hold off on making decisions. The Mortgage industry remains realistic in their expectations for 2019.
At Springtide Capital we provide high quality impartial mortgage advice. We are a specialist mortgage broking business committed to providing a personal and efficient service. We understand the complexities of finding the right loan to suit both your financial and personal circumstance.
To speak to us today, call Springtide Capital on 020 3040 4400