A momentous year for mortgages
Posted on 15 January 2015
Well it’s that time of year again, as we begin the long recovery period from Turkey overdose (is that what they mean by going ‘Cold Turkey’?) and the New Year sales are wooing our Christmas cash, it’s a good time to stop for a moment and pause to reflect on a fairly momentous year for the mortgage market. And as we emerge from the busy Christmas sporting period, it’s fair to say that 2014 can be described as a game of two halves.
In April, we saw the arrival of the regulator’s much anticipated Mortgage Market Review, which has caused more than a few ripples and has undoubtedly made it more challenging to get a mortgage for many people. The imminent arrival of the MMR caused a flurry of activity upto the start date of 26th April, as lenders and borrowers took advantage of some very low rates, fuelled by talk of a first rise in the bank rate later in the year.
For those borrowers looking to go direct to a lender, MMR has caused delays in getting to see a mortgage adviser, due to the increased time each interview now takes under the new rules. This in turn has proved useful to the intermediary market, as the increased timescales have meant that many of the high street branches have struggled to cope, and so more borrowers are contacting brokers who can do all the shopping around for them. At the end of the third quarter, the share of the intermediary market stood at 62%.
The delays and strict new rules around affordability are now starting to slow the housing market, particularly in London and South East, and the stricter rules continue to bite, and we’ve seen approvals, (particularly remortgages) fall month-on-month since July 2014.
In the second half of the year, we saw the threat of an imminent rise in the bank rate recede, with the majority of analysts and economists now expecting the first rise to come sometime after the election in May 2015.Europe is looking rocky again, with deflation of 0.2% in December whilst in the UK inflation dropped to 0.5% in December and wage growth is nothing to write home about.
The big news was the long overdue overhaul of Stamp Duty in the Chancellor’s Autumn Statement was the proverbial “rabbit from the hat” and we hope that this unexpected move will create more activity in the housing market next year. This would be a welcome move as greater supply could lead to a slowing of property price rises.
So as we bid farewell to 2014 and welcome in 2015, we wonder what the New Year will hold for the mortgage market? We think once again it will be a “game of two halves” with the election, and all the fun that brings dominating upto May, and then the second half of the year accelerating as the question of the “rise of the bank rate” once again becomes the focus of attention.
It certainly looks as though mortgage rates could remain ‘low’ for the foreseeable future, though how ‘low’ will depend on a number of unknowns, such as the election result, the eurozone, and the overall global economic outlook.
In the meantime, may we wish all a very Happy New Year!
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