Mortgage Market Update with our Director of Mortgages

The mortgage market is generally predicated on confidence, and if that confidence is under threat then it can lead to a downturn in house prices and activity. With this in mind the market seems on an edge currently as to whether it could start to soften, particularly in the purchase area, or whether seasonal trends are all that is happening against data suggesting at this time a slowdown.
 
To show the two sides to the property story, Rightmove reported a 24% jump in the number of prospective sellers bringing homes to market, but findings published by Propertymark, suggest that the housing market is cooling. There are fewer buyers and the average number of viewings per property fell from 6.2 in April to 4.4 in June, with Estate Agents reporting that most sales were completed below the asking price compared to a low of just 15% in March.
 
Indeed, the latest forecast from Savills’ has shown quite a dramatic change in expected price changes for 2022 and 2023. They have pretty much doubled expected price growth for this year, with prices expected to continue at double digit growth for Yorkshire and Humber, Wales and the North East, with the Midlands and Scotland close behind, rising at 8.5%. However, they feel price growth in 2023 will fall, but rise significantly again in 2024 and 2025. Thus, in the short term the market looks strong, in the medium term for a very short period there could be a drop off but the long-term expectations for the housing market are very healthy.
 
Paradigm firms appear well set for any change from purchase to remortgage, as we are seeing a rise in remortgage applications month on month, and Product Transfer business is being exploited early in the period open for change with less self-selection of which customers to target here, as their MI is getting more robust for all clients.
 
Operational issues for lenders continue to dominate the mortgage landscape, as rates continue to be “pulled” at short notice, and lenders strive not to be at the top of sourcing - a marked change to this time last year when every lender was striving for business and rates were at an all time low. Referring to rates if a customer were to take a fixed rate product now, they will be paying 21.5%, or £162.83 more per month, than if they had secured a fixed rate this time last year according to research from Revolution Brokers.
 
The average standard variable rate (SVR) for June reached 4.91% following a rise of 0.13%, and is near the highest rate of 4.94% recorded by Moneyfacts in February 2009. One lender has reported that the average rise in rates for their existing customers transferring to a new product with them means their monthly mortgage payments are jumping by £150 p/m.
 
A worrying aspect recently brought in is where some lenders have stopped taking new business altogether, although mainly restricted to those “smaller” lenders. Choice of lenders for firms is therefore being severely tested, as many lenders are also deliberately priced out of the market, particularly 4 of the top 6 lenders. The market therefore continues to surprise and from a lender perspective frustrate, but opportunities remain for our firms in the less mainstream areas which we can help them exploit.