What impact have great mortgage rates had on the property market?

Mortgage Matters Direct’s Sales Director, James Keable, reflects on the effect that great mortgage rates had on the property market over the past 6 months, and looks ahead to what’s in store for 2020.

At a glance:

• The average purchase increased fractionally to just under £344,000.

• The average term reduced to just under 25 years, with the average age of these movers increasing to just over 40.

• 5-year lending has been as low as 1.5% for those with plenty of equity.

• 100% lending could be about to show its face again.

• Remortgages have continued to grow, with borrowers taking advantage of some of the best rates available in lending history.

• Home movers saw the biggest spike, which was up by nearly 33% and grew to almost 57% of our purchase mortgage business.

James Keable – Sales Director, Mortgage Matters Direct

“Despite the B-word looming large for the majority of the second half of the year, especially in the approach and passing of the October 31st deadline and the prospect of a bitter election battle, the British public showed great resilience when it came to mortgages.

At Mortgage Matters Direct we saw an uplift of activity in the mortgage market which continued to accelerate as we went into Quarter 4 just as the politicians were starting to warm up their war engines.

When talking to our customers, the consensus was quite clear: people were tired of the Brexit deadlines and just wanted to get moving, in every sense of the word. Home movers saw the biggest spike, which was up by nearly 33% and grew to almost 57% of our purchase mortgage business. The average term in this sector reduced to just under 25 years while the average age of these movers went up to just over 40.

The surge in newcomers to the housing market seen in the first half of 2019 slowed a little. While we were down 5.5% from the numbers seen in Quarter 1, it still accounted for 43% of our purchase mortgage business.

We particularly saw resilient activity from those looking to take advantage of the Help to Buy scheme in its current format. Conventional lending has continued to be more and more affordable and there are rumours that 100% lending could be about to show its face again, although I don’t know whether this is such a great idea and will be interested to see how this is constructed.

We saw investor purchaser Buy-to-Let applications remain steady but subdued, with landlords still feeling the pressure of changes in legislation that has seen tax relief almost wiped out with the final reduction kicking in this April 2020. The investor community hopes that the re-emboldened political regime might address what has been seen as an unfair war on landlords in the upcoming budget in March. We will see…

Unsurprisingly, remortgages have continued to grow as a percentage of our overall business and the market as a whole. Those not wanting or needing to move are looking for security and to take advantage of some of the best rates available in lending history.

The first six months of trading of 2020 should allow a moderate bounce thanks to the certainty of a resounding election result. This will be until those involved start to worry about the next trade deal deadline looming in November. Purchase activity in the residential sector already shows early signs of increased confidence and if the new administration looks at relaxing the restraints applied to the investment sector, this could further boost a housing market that badly needs some momentum and positive establishment support.

Who knows, if the latest new Housing Minister looks to support the new build market with a coherent long term and thought-through successor to the Help-to-Buy scheme, then we could be looking forward to a pretty good year. That’s my 2020 vision – hopefully not through rose-tinted spectacles! We’ve seen 5-year lending as low as 1.5% for those with plenty of equity. Pricing across the board has been extremely competitive and shorter-term fixed rates are still finding a market.”

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As you can see there’s lots of change over the last period and it’s likely to continue throughout the year.

Get in touch and see how we can help you move forward.

Want to learn more about the current state of the housing market? You can download the full report below:

Download the full biannual report here