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Mortgages & House Prices in 2019

07.01.19

Happy New Year to you all and here we go again! What will happen to house prices in 2019?

A bright, shiny new year always offers new hope, new challenges and new opportunities for everyone and this year promises to be an interesting one in every respect.

What ultimately happens in the wider economy depends on so many things we can’t ultimately control, but what we can control are the messages we put out and way we deal with much of the negative press around. To be honest, we believe that most of this is put out there by people just trying to get noticed and it is important we present to all our clients an open and honest assessment of the market.

UK house prices in 2019

Any kind of prediction at all in the face of the unique position we find ourselves in is fraught with danger, but leaving aside any further unforeseen events, the pace of growth looks relatively clear.

Like this year, house price growth will vary dramatically between regions, with some experiencing higher growth than others, where slight falls could still occur.

Whilst London & the South East seems to have had its share of price falls, particularly in Prime Central London, there is a feeling that this is starting to recover, with buyers looking for good deals once more.

There has been a resurgence in overseas buyers in London, buoyed by the weakness in the Pound and a belief that property prices will bounce back over the next 5 years. Whichever way Brexit goes, the UK is still a stable country compared to many others and an end to all the current uncertainty will make a huge difference. Once people know exactly what situation they face decisions around property purchases can be made and any removal of uncertainty will have a positive affect on house prices in 2019..

There is also potentially something to be said for buyers to have property investments outside of the EU which could then go through a particularly bumpy time. You would also see the Government desperate to showcase the UK as a place to invest and we could see a wealth of tax changes and laws put in place to encourage this.

We are still not building enough of the right type of homes in the right areas and the fundamentals of why people move; moving out of home, starting a family, moving schools or jobs and getting divorced will not change.

Overall, however, I suspect we will see a pretty flat market with house prices in 2019 increasing slightly around the 1% to 2% level, with growth improving into 2020 and beyond.

There will always be deals to be done and as I have said before, we are still not building enough of the right type of homes in the right areas and the fundamentals of why people move; moving out of home, starting a family, moving schools or jobs and getting divorced will not change.

Interest Rates & The Economy

The overall economic environment will continue to have an effect on house prices in 2019, but outside of this regulation, interest rates and mortgage affordability will also play their part.

There is no doubt that some borrowers are going to find things getting a little tougher if interest rates do rise. We have been used to the prevailing low interest rates for so long now that higher rates have a more dramatic effect than they usually have.

Despite his “unreliable boyfriend” tag, the Bank of England Governor Mark Carney will not wish to deviate from his proclaimed course and continue the gentle pace of interest rate rises, with one or two rises of 0.25% easing rates up over the next 12 months.

Mortgages & Affordability

Mortgage availability is expected to remain robust whilst, with only gentle interest rate rises predicted and a big increase in competition between mortgage lenders, rates should remain at attractively low levels.

The biggest issue is affordability stress testing which was introduced to ensure affordability in the future at around 3% above current rates. If this is not changed when rates increase, then it will prove problematic for many more people to pass these stringent rules.

Hopefully, as rates rise this stress will reduce as risk reduces proportionally.

There are still some excellent rates on offer. For standard residential mortgages, borrowers can obtain 2-year fixes at 1.39%, (4.80% APRC) and 5-year fixes from 1.79%, (3.84% APRC) whilst variable tracker rates are around from 1.38%, (4.77% APRC).

Those looking at Buy-To-Let can still obtain products from just 1.44%, (4.44% APRC) for a 2-year tracker or 5-year fixes are available from 1.99% (4.06% APRC).

Wishing you all a great, healthy & prosperous 2019!

If you want any further information please call us on 020 7220 5100 or click here 

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