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Mortgage market aims to ride out Brexit, tax changes and lending uncertainty

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Mortgage market experts expect this year will bring consumer confidence worries, a boom in specialist lending, an increased regulatory burden and suppressed transactions.

But they also showed a marked confidence about the future of the sector.

Association of Mortgage Intermediaries chief executive Robert Sinclair says he hopes lenders keep lending and consumer confidence remains high.

He says: “That’s my biggest hope for 2017. If that happens then we will see a mortgage market that continues to grow.

The other big things for us are making sure the evidence we give to the FCA’s mortgage market competition review is balanced, fair and expert, and making sure we get a better compensation scheme in 2017. The bills that are being asked of mortgage advisers for things they have never done are out of control.”

Brexit barriers?

London & Country Mortgages director Pat Bunton says Brexit is the big uncertainty for the mortgage market in 2017.

He says: “The only thing where we don’t know how it’s going to play out is the whole Brexit scenario, which is still ongoing. But we’re pretty confident about the market.”

Legal & General Mortgage Club director Jeremy Duncombe says he expects remortgaging volumes to continue to pick up this year.

He says: “We also expect to see more lenders rewarding the hard work that brokers do to secure the best deal for their clients by paying retention procuration fees.

“We expect 2017 completions to be flat at around £140bn, but with the intermediary still being the focal route for lenders and customers.”

OneSavings Bank sales and marketing director John Eastgate says that regulation and tax changes will also shape the mortgage landscape this year.

He says: “The triggering of Article 50, changes to mortgage interest tax relief and the new Prudential Regulation Authority underwriting standards will all add to the uncertainty that has characterised the past year, but the market is well equipped to respond and more importantly, has the will to do so.”

Rents will likely rise by around 3 per cent this year, Eastgate believes.

He says: “The new stamp duty levy, the removal of mortgage interest tax relief, and the ban on letting fees, all have the potential to drive up running costs for landlords, and many will choose to pass on the costs to tenants.”

Government guarantees

Eastgate says a promised Government white paper on housing will also affect UK mortgages.

He says: “Hopefully it will point to a portfolio of remedies for our housing crisis, not the single, and failed, strategy of the pursuit of home ownership favoured by Messrs Cameron and Osborne.”

Northview Group vice-chairman Keith Street predicts that specialist lenders will have a good year in 2017.

He says: “As the number of self-employed and contract workers grows in 2017, so will the importance of the specialist lenders, with more business owners, freelancers and sole traders looking for a mortgage for their specific needs. We expect the 2017 specialist lending market to be highly competitive as overall lending volumes will be roughly static.”

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  1. Housing will eventually become more affordable to first time buyers (FTBs) as Government programmes complete. In addition as far as the traditional economic cycle clock published by the “Evening Standard” is concerned, we are at “12 O’clock which is Rising House Prices & BOOM. At one O’clock we reach Rising Interest Rates and SLUMP! We have to go though Falling Share Prices, Falling Commodity Prices, Falling Overseas Reserves, and Tighter Money before we reach Falling House Prices at six O’clock!
    Brexit and a large sell off of Buy To Let properties will I believe bring forward a substantial fall in house prices over the next three years. This will greatly benefit the “Millennials” and redistribute wealth in favour of the younger generation at the expense of the “Baby Boomers”. How John Eastgate can state David Cameron & George Osborne’s had only one housing strategy which failed “beggars belief”, he obviously did not read the November 2011 White Paper “Laying the foundations: A housing strategy for England”.These two politicians with the help of the Bank of England acted courageously and correctly after winning the 2015 election to reduce the growth of the BTL market in the UK.
    Rents which are also at an all time high, will I believe also fall eventually, as many hundreds of thousands of young adults become FTBs as well as landlords in order to offset their mortgage costs.

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