Welcome to a brand-new year, full of hope and expectation.
The good news is that this year there is much to look forward to. Even though Brexit is still hanging on the horizon, our politicians continue to squabble about things they pretend to care about and that the Doomsday clock has moved forward 30 seconds to two minutes to midnight, there seems to be a more optimistic vibe.
Many people who put their lives on hold since the Brexit Referendum are ready to do something, First Time buyers are returning to the market as property prices stagnate, stamp duty cuts will help further, whilst mortgage rates remain at low levels.
In fact, competition amongst lenders is set to be the fiercest for years and it looks like Gross Mortgage Lending could well beat the £260 billion level this year.
As inflation has dipped again recently back to the 3% level, though still above the Bank of England’s’ long-term target level, this may have eased a little pressure around a further rate hike after last year’s 0.25% increase. However, there is still a good chance we may well see a further rise in the latter part of the year, though again this would only be by a quarter point.
What may have a more immediate impact on mortgage rates, however, is the end of the Governments Term Funding Scheme on 28th February. This gave banks access to cheaper money, as long as they grew their lending, with the benefit being passed on to consumers. The removal of the scheme could see mortgage rates creep up by around 0.25% over the coming months, although competition may stifle some of this rise.
SWAP rates have already risen in expectation with 2-year money now up at 0.89% and 5-year money at 1.21%.
House Prices are another interesting market to watch this year, with many commentators expecting a relatively benign year for house price growth. However, with mortgage rates remaining low and demand looking like it will increase somewhat against a relatively low supply of property, the doom-mongers expecting any kind of crash will be disappointed again. A growth of between 1%-2% looks more likely.
Then, of course, we have the question as to whether 2018 will really be the year of technology. There has been a lot of rubbish and misinformation spoken on this subject and tech providers and digital brokers need to be very transparent about their offerings. We cannot allow tech to be an excuse for watered down, inferior advice. It has to set the bar higher, using tech to improve the client experience, which is certainly something Coreco aim to be doing as the year progresses. Look out for some exciting news on this front in the not too distant future.
Mortgages are the biggest loan anyone will ever take out and there is a danger that simply commoditising the mortgage as just another product will lead to consumers not receiving the most suitable product for them.
Overall, we are cautiously optimistic about the mortgage market in 2018 and for borrowers looking to remortgage or prospective buyers, it is going to be a competitive market, especially in the first part of the year.
At present, 2-year fixes are available at 1.19%, (3.78% APRC) and 5-year fixes from 1.74%, (3.21% APRC) whilst variable tracker rates are around from 1.24%, (3.56% APRC).
Those looking at a Buy-To-Let can still obtain products from just 1.34%, (4.66% APRC) for a 2-year fix.