13 December 2018
What will 2018 be remembered for in the property market?
2018 will mostly be remembered for its uncertainty and for being a challenging year. While the nation became obsessed with Brexit and its fallout, many buyers and sellers have, perhaps understandably, sat on their hands and put off making a decision as big as moving home.
Yet on the mortgage front there has been plenty to attract borrowers. Despite no big hike in interest rates – aside from one solitary quarter-point rise in August, the much anticipated rate rises never came – mortgage pricing remained competitive. We wrote this time last year that ‘five-year fixes had slipped below 2 per cent’ in 2018 and that’s where many of them remain as we head into 2019.
A combination of uncertainty surrounding Brexit and these excellent mortgage rates have contributed to a particularly strong remortgage market. Where the number of housing transactions suffered as people put off house-moving decisions, there was no such issue with those remortgaging. Lenders have been incredibly keen to lend and that is a consistent message we are getting from all of them – how can we do more? They can try to top the ‘best buy’ tables but not everyone can compete on rate, depending on how they are funded. The other option is to drive innovation; for example, accepting just one year’s accounts for self-employed borrowers or offering joint borrower sole proprietor mortgages. There has also been more competition in the 95 per cent loan-to-value space, which is great news for first-time buyers.
The buy-to-let market has remained subdued as we would have expected following a spate of tax and regulatory changes before this year. The industry breathed a sigh of relief that the government didn’t target it any further in the October Budget as a period of consolidation is required. We have found that experienced investors are carrying on adding to their portfolios, often via a company structure, and more lenders offered these products in 2018. With many would-be first-time buyers struggling to get the deposit they need to get on the housing ladder, the demand for rental property continues to be high, and we can’t see that changing anytime soon.
2018 has also seen the ongoing emergence of new lenders, including our very own Lendco. While the mass mortgage market is still very much dominated by the ‘big six’ lenders, the rest of it is really well spread. As a mortgage brokerage, we have arranged mortgages with over 90 lenders this year, which illustrates the vast choice available to consumers. While this is definitely a good thing, it can be confusing and handholding, along with trusted advice, is more essential than ever.