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A New Year, A New Mortgage Market


As we all spend the next few days getting back into the swing of things, writing 2017 instead of 2018 and trying to avoid Australian flu, it is worth taking stock and looking forward to the prospect of a challenging yet ultimately rewarding New year.

The year has started as last year ended with a glut of very different news and economic reports, some negative and some positive and it is important to keep focused on the positive. Always remember that no one says anything without a reason!

This year we know that housing will continue to be in the spotlight and whilst no one expects any great moves in house prices, we think there will be an overall rise of around 1% – 2% this year, the positive is that this means there could be more transactional activity, which is ultimately what we all want.

First Time Buyers started to return to the market last year and this should continue, especially with the additional Stamp Duty assistance and the decline in the number of people looking at investment properties given recent tax changes.

Saying that however, professional landlords still seem to be pretty active as they seek opportunities to expand their business.

The remortgage market will continue to strengthen as the mortgage market remains competitive so it looks as though Gross Mortgage Lending could reach circa £260 billion this year.

It looks likely that Bank Base will remain at 0.5% for majority of year and there may be a 0.25% rise in Quarter 3.

The big move may come in February as the Bank of England removes their Term Funding Scheme, which enables banks to borrow at low rates to lend out. Once this stops we could well see an overall rise in mortgage rates, although with competition amongst lenders reaching fever pitch, products look set to remain low for a while yet.

At present, 2-year fixes are available at 1.25%, (4.21% APRC) and 5-year fixes from 1.75%, (3.48% 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 1.32%, (3.87% APRC) for a 2-year fix.

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