Quarterly market review

Written by Nikki Haworth, Sales & Marketing Director at Ingard

What a crazy quarter!

As I write this article, a hung parliament has just been announced. Expected by a few and the clear worry of uncertainty for many.

After the triggering of Article 50 on 29th March, on 18th April, just when you thought things were settling down a bit, Theresa May called the General Election with a view to gaining a clear mandate to make a success of Brexit. Probably THE biggest backfire of her career! As Gavin Barlow lost his seat in the election and is now Chief of Staff, we are now in line for a new Housing Minister. Let’s hope they are up to the job with a clear policy to help first-time buyers and home movers across the country!

With all the uncertainties, it’s not a surprise that the average UK house price rises fell 2.1 per cent in May, according to the latest Nationwide house price index. We’ve also seen a 0.2 per cent month-on-month drop in house prices. In addition, the lender estimates the average UK property is now worth £208,711. Regardless of the figure, with limited wage increases, it’s getting harder for the first-time buyer and the Bank of Mum and Dad is moving up the list of top lenders!

Despite this and with the base rate remaining at 0.25% with only one way to go, first-time buyer activity is at a 5-year high. While the base rate remains so low, continued affordable mortgages have provided first-time buyers with an ideal opportunity to take their first step onto the property ladder. For those with enough savings for a deposit, now is a great time to buy.

The supply of new homes and existing properties available for sale remains low, this combined with historically low mortgage rates and a high employment rate, is likely to support house price levels over the coming months.

I find it astonishing (and scary) that 2 million borrowers who are not actually mortgage prisoners are on their lenders SVR. Recent research by Trussle shows 18% of all mortgagors are on a SVR, with inertia being the main reason as 1 in 4 borrowers don’t even know what a SVR means. More needs to be done to educate homeowners and there is a massive need for brokers to assist.

Data from the Council of Mortgages Lenders shows that buy to let purchase transactions peaked at 29,100 in March 2016 and now over a year on they are down to 6,000 per month, while remortgage levels have remained relatively stable. Buy-to-let is going through a period of adjustment with the changes to mortgage interest tax relief far more significant than the 3 per cent stamp duty surcharge on investment properties.

It is clear many landlords have not yet felt the full impact of the changes because these are being phased in, and there is uncertainty as investors are not yet sure what it will mean for their bottom line. There is definitely more caution than previously.

With the complexities of the regulatory changes, more and more consumers are turning to Intermediaries for help with buy to let and non-standard applications. Two-thirds of specialist mortgages are now via Intermediaries so we are well placed for a positive outlook.

The good news is that there is no sign of market collapse while mortgage rates remain low.


*Information provided is correct at the time of publishing – 11/06/2017.