The new normal for the mortgage market
04 June 2021
04 June 2021
Summer seems like it could be here and while we hopefully might be able to take those holidays we’re all no doubt craving, this next three-month period (and beyond) seems like it could present a number of opportunities, particularly if you are prepared for them.
There’s no doubting the mortgage market is strong, fuelled by excellent demand if not entirely matched by supply. I saw some recent statistics from NAEA Propertymark which said there are, on average, 16 buyers currently for every available property. With that being the case, predictions of a drop in house prices seem highly unlikely.
Mortgage advisers will undoubtedly have benefited from this purchase demand, given an even greater boost by the stamp duty holidays, and also continuing to be assisted by its phased-out approach, not forgetting the greater confidence afforded by lockdown easing, specifically in terms of opening up homes to physical viewings.
We have now almost reached stage four of the Government’s roadmap out of lockdown, where (at present) from the 21st June, we would see the opening of larger venues, events and performances albeit with ongoing pilot events, reduced capacity and the like. At the time of writing, this does however remain in the balance given the prevalence of the Indian variant of COVID, and its spread.
That said, even if stage four is pushed back, there is enough to suggest a far greater degree of normality than we have seen since the end of the first lockdown. However, this is not going to be ‘normal‘ as we might have previously known it – in fact there’s a very strong argument to suggest that a pre-pandemic normal will never exist again – but it is a version of ‘normal‘ that looks far more recognisable than perhaps anything we’ve had since.
So, why might this impact on the property market and advisers in particular? Well, it’s not the specifics of this so much as the cumulative effect of all the ongoing lockdown easing, especially in terms of what it means particularly to those parts of the country where such decisions have a big impact.
The future of city centre living has been much debated recently, and this could be one significant area which begins to show life again, particularly in the rental space, where there has been some over-supply of property, but now there appears to be a growing return of tenants as the amenties of city centre living open up.
In that regard, we might expect to see buy-to-let landlords reviewing their portfolios, eyeing up the incredibly competitive finance options currently available, and thinking that now might be the time to make a further move or to look at the properties on the market. One might also anticipate that city developments could also look different to recent history, with more outside space baked in, and potentially a growing number of retail units shifting to residential use.
And, it’s also fair to say, that the number of product maturities presenting remortgage and product transfer opportunities is at very strong levels. Many existing homeowners are looking at how they can reshape their homes to work within a potentially different work/life balance, with more time spent working from home, less time travelling, and much less time in an office environment. To that end, the home now needs to do more and there will undoubtedly be a continued increase in capital raising in order to carry out the works which are wanted and necessary.
Purchase demand too is likely to be maintained, even after the stamp duty holidays end, as homeowners who are not in a position to reshape their current surroundings begin to look at what options are available, which will fulfil their needs.
So, while we might see a slight dip in terms of the purchase activity levels we’ve seen over the past six months, it may not be as severe as some have predicted; indeed, almost all lenders/surveyors/conveyancers and other mortgage/housing-related business appear to be actively bringing in resource to deal with increased business. That’s reassuring and should give advisers plenty of confidence to go out and actively grasp the opportunities available.
Bob Hunt is Chief Executive of Paradigm Mortgage Services
This document is believed to be accurate but is not intended as a basis of knowledge upon which advice can be given. Neither the author (personal or corporate), the CII group, local institute or Society, or any of the officers or employees of those organisations accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of the data or opinions included in this material. Opinions expressed are those of the author or authors and not necessarily those of the CII group, local institutes, or Societies.