What does 2015 have in store?
Posted on 15 January 2015 by
What does 2015 hold in store for the mortgage industry? The Mortgage Market Review continues to have an impact on the market, with borrowers finding that though they may still be eligible for a mortgage, it might be for less than they would have been able to borrow before the changes came in. Looking into my crystal ball, I think we may see lenders looking at their lending criteria and deciding that in some cases they went further than required by the legislation and making further, fairer changes to their criteria. Lending clearly needs to be responsible, but not to the point where good business is turned away. Luckily a number of lenders are actively talking to brokers about what needs to be changed so hopefully we can look forward to some positive moves in the coming months.
The biggest changes, I think, will be in the buy to let world, where the FCA is currently consulting on “accidental landlords”, where a client is either forced or decides to keep their current home, turn it into an investment and raise capital on this, with the funds going towards the purchase of a new home.
It looks like lenders will be asked to make sure that a client’s income will be able to cover both mortgages, which will restrict this area enormously. There is also talk of the Council of Mortgage Lenders enacting a voluntary set of rules on buy to lets with more emphasis on income and affordability – this will be an attempt to stave off formal legislation.
I believe that mortgage rates will remain reasonably low as swap rates continue to reduce and competition between the main lenders will keep products at impressive rates. (Swap rates are a measure of the cost of borrowing between banks). Because of this, I would be surprised if the Bank of England increase their base rate before the election in May. Of course, my crystal ball isn’t always accurate – but that’s the way it looks at the moment!
The effects of the change in stamp duty will hopefully lead to a steady increase in mortgage lending and a steady upward trend in both activity and prices in the housing market across many parts of the country.
Of course, with an election in May, it’s very difficult to predict exactly what will happen later in the year!
One thing will be certain though – the path to obtaining a mortgage in 2015 will be trickier and more confusing than ever before, so having the services of an expert will be even more important. If you want to discuss your lending requirements please contact myself or one of my broker colleagues.
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