Beginning of a new dawn?

London homes – UK housing and mortgage market

Cautious hopes of a more stable housing market become visible over the horizon

Borrowers and those thinking of taking the plunge into home ownership could have been forgiven for holding their breath in recent months, but we are finally starting to see the very first signs of greater stability becoming visible. And of course, these are being cautiously welcomed.

Inflation is one of the key drivers of this – a fall in the UK’s headline inflation figure from 8.7% in May to 7.9% in June was a relief to everyone, including policymakers. That’s not least because it was ahead of economist predictions of a fall to 8.2% – the first time in many months that has happened. Crucially, this means inflation is now at its lowest level for more than a year, having been stuck at 8.7% since April on its way down from a high of 11.1% in October. In the wake of this news, many lenders have started to reduce rates and we are seeing decreases of as much as 0.4%. We are hopeful this means more decreases are on the way.

Andrew Bailey, the Bank of England Governor, has made it clear he is determined to keep pressing so that inflation falls all the way back to the target of 2%. In a speech at Mansion House last month he said, “no ifs or buts”, that the Bank’s clear focus was on bringing down inflation: “That’s our job, and that’s what we will do.”

Even as confidence starts to rise again, recent turbulence has inevitably had an impact on property sales, with some estate agent estimates claiming that homes are selling at the slowest rate for a decade. Here at Henry Dannell, however, we are feeling increasingly optimistic for a brighter future and road ahead. Inflation beginning to lower – albeit not as far and as fast as anyone would like – and SWAP rates also being pushed down suggests more positive market news ahead, particularly on the interest rates front.

Lenders, meanwhile, remain keen to lend, and we are able to make mortgages more affordable for clients in the short term. For commercial or residential investors – or those tempted to make the leap – opportunities are also brimming with potential good deals to take advantage of as properties are offloaded.

These themes are playing out in what we are seeing in-house: we’ve witnessed a 126% increase in remortgage enquiries from May to June, a 50% increase in bridging finance enquiries, and a 100% increase in commercial enquiries.

What does this mean for mortgages?

Trackers remain a top choice for many of our clients at the moment, with the low margin of 0.14% over base rate representing an undeniable opportunity to steady outgoings as far as possible amid an economy which remains challenging.

We also have other options available to negate any potential further interest rate rises and keep payments as low as possible. These include extending mortgage terms or switching repayment methods to make mortgages more affordable in the immediate future. Borrowers should also be reassured that many lenders are changing policies in sympathetic understanding of the financial hardships some are finding themselves in – between this and our housing market expertise, clients really couldn’t be in safer or more supportive hands.

Tracking trends

While lender appetite certainly remains high, underwriting has become more stringent across the board, with more pressure being applied to ensure would-be borrowers can afford the mortgage they want. This is not unexpected, and again our expertise means we are able to give a realistic appraisal of options, taking into account all potential assets, as well as advise on the types of lenders best suited to individual budgets and circumstances.

Some property landlords, who cannot or do not want to ride out the storm offer an opportunity to others to take advantage of those wanting to offload property stock, reflected in increased enquiries to us. This is a trend we expect to see continue over the coming weeks and months, and one that we are well placed to help clients capitalise on.

As always, the Henry Dannell team is here to provide expert advice and guidance which will enable you to make informed decisions. Get in touch with us to find out more about our offering and how we can help you achieve your mortgage goals.

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Please note: a mortgage is secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.