Expert delivers his expectations for the market this spring
While spring is often a busy period for the housing market, the level of activity expected this year has been questioned by some due to current conditions.
However, despite the current outlook, with UK Finance estimating that 1.8 million fixed rate mortgages are due to expire in 2023, the remortgage side of the market is likely to remain busy.
Danny Belton (pictured), head of lender relationships at Legal & General Mortgage Club, said he believed spring activity would be busier than the start of 2023, but quieter than the sky-high levels seen last year.
Activity in spring
While some customers have paused their plans due to the cost-of-living and higher interest rates, Belton said activity in other areas was picking up.
“Most spring lending is likely to involve refinancing, with UK Finance estimating that 1.8 million fixed-rate mortgages are due to end this year, but it is also encouraging to see some first-time buyers pressing ahead too,” Belton said.
Belton explained that Legal & General Mortgage Club’s SmartrFit data showed a 12% uptick in adviser searches on behalf of first-time buyers in February.
Despite affordability issues expected to blight the market this year, resulting in some borrowers finding options more limited than in the past, with widespread availability of internal product transfers, UK Finance anticipated refinancing overall to be strong throughout the year.
A report from UK Finance showed it expected to see around £212 billion of product transfers to take place in 2023, compared with an estimated £197 billion in 2022.
Providing stability
Belton believed a rise in activity might help provide stability for the housing market going forward, and added the mortgage market was incredibly stable and resilient.
He said that lenders still had funds to lend at present and remained keen to add to their loan books and compete on market share.
“There is still a variety of great deals on offer for customers, although most are more expensive than 18 months ago,” Belton suggested.
That said, Belton believed an uptick in activity could give some customers the confidence to complete any transactions currently on hold.
Government support
Belton said he was confident that the housing market would remain a key focus for the year ahead as it has long been an integral part of the UK economy.
“Savills currently values UK housing stock at a whopping £8.7 trillion, and the mortgage and property sectors also provide thousands of jobs,” Belton said.
Given that over 375,000 properties have been bought using the Help to Buy Equity Loan scheme since 2013, according to the Department for Levelling Up, Housing & Communities, Belton said he was sure that many would like to see a replacement scheme introduced.
“However, this looks somewhat unlikely, especially given that the market has proven its resilience without government support,” Belton said.
In the meantime, he believed a lot depends on how quickly inflation could be brought back under control, which should then provide scope for further rate reductions.
Annual inflation in the UK was 10.1% in March, down from the 10.4% recorded in February, according to the latest Consumer Price Index (CPI) figures, from the Office for National Statistics (ONS).
“A reduction to the base rate, which is unlikely for a while, or a drop in swap rates, could help encourage cheaper pricing on mortgage product, boosting affordability and options for customers,” Belton added.
What are your expectations for the mortgage market this spring? Let us know in the comment section below.
