24 January 2020

What does 2020 hold in store for mortgages?

We are cautiously optimistic about 2020. The election result brings a degree of political certainty, which has been reflected in the pick-up in business since the start of this year. London estate agents report a significant uptick in viewings, with a similar surge in the number of sellers putting their homes up for sale. The last couple of years have been a slog; we have traded well but it’s been hard work. The industry is hoping that 2020 will see an improved market and more favourable trading conditions.

There is renewed speculation about a cut in interest rates, perhaps at the January meeting of the Monetary Policy Committee. We certainly don’t expect rates to move a great deal this year, if at all, and we don’t expect them to rise.

As far as lending is concerned, the prime residential market remains extremely competitive. The big lenders with the big balance sheets will continue to dominate, such as HSBC, Barclays, Lloyds, Nationwide and Santander. It is increasingly difficult for smaller lenders to compete in the residential space. There are still some opportunities for lenders who are nimble and have decent service, particularly targeting those borrowers with buy-to-lets who are moving them into company names.

Other lenders have to work out how they can attract business. If they can’t compete on price, they need to innovate. That doesn’t mean they will dive down the quality curve but may be adept at moving criteria, pricing and service – all good news for borrowers.

We are not seeing a mass exodus of investors, nor do we expect to. Serious landlords are invested for the long term, with many simply restructuring how they own their properties and moving assets out of personal names into partnership or company names. In London and the southeast, you need an average deposit of £90,000-odd to buy a house so would-be first-time buyers are going to be tenants for longer. There will be plenty of opportunities for landlords who remain in the buy-to-let sector.