This is our take on what is currently happening in the mortgage market. Our views are often cited in several national publications, including; BBC News, The Times, Telegraph, City AM, FT Adviser and Daily Mail, as well as a number of key trade publications, so this should keep you ahead of the curve. If you have any questions on any of these stories, or would like further information, please do not hesitate to get in touch.

  • Long-term rent adding to the increased cost of moving
  • Increase in enquiries for mortgages on flats
  • Competition continues in the BTL market with further rate cuts
  • Increased lead time on mortgage enquiries

 Long-term rent adding to the increased cost of moving

We continue to hear from clients who sold their primary residence in the fiercely competitive market over the last 18 months in the run up to the end of the SDLT holiday so they could be chain free and have larger deposits and leverage this fact to get a better deal in the purchase market, still struggling to find somewhere to move to. We have seen many of these people unwilling to pay the above asking price offers a lot of people have been selling for over the last 12 months and this has meant they continue to be stuck in limbo. We have reports of low stock and properties still being snapped up by many interested parties when they do come on, with one of our agency partners, Jackson Stops reporting that nationally there are 19 buyers for every newly listed home.

  • As a consequence, we have seen several clients moving from short-term renting to long-term renting and now costs are stacking up with potential savings from the SDLT holiday have long been eroded and increasing house prices coupled with the cost of renting. The question this situation poses is at what stage do renters have to just pay a premium to get back on the ladder? Arguably this demand and lack of supply will continue to drive up prices in the short term and it seems that waiting for prices to fall in the UK market is not necessarily a prudent strategy…

 Increase in enquiries for mortgages on flats

We have noticed an increase in the number of enquiries from clients looking to purchase flats for both residential and investment purposes and this marries up with recent feedback from our estate agency partners in London and the South-East.

  • Will the return to the status quo present issues for borrowers who purchased homes in certain areas that saw up to 29% increase in pre-pandemic market value? We are already starting to see borrowers come back to us looking at family homes in London and pieds-a-terre’s following moves to more far-flung areas of the UK from where it is not possible to commute. Therefore, we believe we will see another increase in the number of let-to-buy mortgages that we undertake this year or people porting recently taken mortgages.

Competition continues in the BTL market with further rate cuts

The normally more conservative BTL mortgage market defied expectation in the latter half of 2021 and BTL rates continue to be at rock-bottom, with the best 2-year fixed product still sub-1% (0.99% although accompanied by large fees). Competition in this space between lenders is fierce and we have seen a great deal of product innovation and the relaxation of criteria, the most recent being Accord’s no-ERCs 5-year fixed BTL product, which gives borrowers full flexibility in combination with the rental calculation a 5-year fixed term gives. Thus, it comes as no surprise, that this competition has extended to limited company and portfolio BTL market where the rates are looking increasingly tempting to investors with a number now at under 3% and lots of limited-edition products coming on to the market – for example Zephyr have recently reduced most of their rates. Often now you do need a property with an A-C EPC in order to secure the best specialist BTL rates though.

  • The appetite for lenders to compete in this space, both in terms of product innovation and rate reductions does not seem to be abating any time soon and we suspect this will be a feature of the market in 2022 even as base rates rise.
  • There have been a fair few new entrants in this market in the last couple of years and depending on how these lenders are funded as time goes on and any investors in these companies start to see great returns with low fall throughs / repossessions their appetite to reduce rates to increase loans taken increases

Increased lead time on mortgage enquiries

Due to supply-side issues in the housing market discussed above and the potential for further base rate rises affecting those looking to remortgage in medium term we are seeing an increasing lead-time on enquiries with some clients not looking to actually proceed with their remortgage for up to 6 months (so sometimes a year away from their product ending) but looking to lock in the low rates now and far more than usual we are seeing speculative enquiries with borrowers far from starting their property search just looking to see what they can borrow when they do start looking.   

  • This situation means we suspect borrowing figures will be much reduced in the first quarter of this year than predicted in 2021, with the potential for a further boom in demand once supply-side pressures ease.  
  • Where borrowers are exploring their options earlier this is something we very much encourage as some of these purchasers we are helping to guide them through changes they can make before buying that gives them the best chances to buy when they can.
  • Borrowers can lock in a remortgage generally up to 6 months before their current product runs out so it is always best to make contact with a broker early.
Share this article: