An uptick is anticipated, but government initiatives could boost the market still further
The mortgage industry has weathered the challenges of stubbornly high inflation, rising interest rates and a dip in consumer confidence, but two leading industry figures have told Mortgage Introducer that they expect an increase in market activity, which could be supported still further by fresh government initiatives.
Natalie McNamara (pictured right), mortgage club manager at finova Payment and Mortgage Services, said that while the moderate activity levels seen recently were likely to continue, due to buyers potentially taking a more cautious approach because of ongoing cost-of-living pressures and higher product rates, she expected to see a slow but steady uptick in activity as the year progressed.
“Time and time again, the housing sector has proven its resilience and does not stay down for long,” she said. “Towards the latter half of the year, we hope to be in a more affordable environment as swap rates fall and economic measures ease pressure on consumer finances, which should boost demand and bring purchase activity levels back to normal.”
McNamara suggested that to ensure this uptick happened, first-time buyers to be encouraged back to the market and a sufficient number of new homes needed to be built.
“The 1.8 million fixed rate mortgages which are due for renewal this year will go far to ensuring activity ticks over for now, but while this will help sustain the market for the first half of this year, a focus on rebuilding purchase demand is essential for stability in the long run,” she said.
In McNamara’s view, the government could support the market by introducing a new scheme to replace the widely popular Help to Buy scheme, which ended last year. With the cost-of-living crisis stretching many household’s incomes, a new scheme that offered substantial support to those with lower deposits could help to drive more activity, she reasoned, adding that increasing the availability of new, affordable homes was needed to sustain demand and steady house prices.
“Schemes such as subsidies for developers, or the introduction of more shared ownership options for first-time buyers, would work to boost housebuilding activity quickly to bring us closer to the level of new homes needed,” McNamara said.
Stuart Wilson, chairman of the later life lending specialist, Air, also predicted an increase in activity, with more people seizing their chance to get onto the property ladder. He believed a reduced housing supply would underpin prices, ensuring market value remained steady despite an unsettled economy. There were still opportunities to support people who wanted to buy homes, for those who wanted to use their housing equity in a more holistic manner, he said, and tax incentives for those who chose to access some of the value of their property could help.
“It is no great secret that the Spring Budget missed several opportunities to support the property market and the circumstances for those in later life,” said Wilson (pictured left). “Paying for care is a prime example. We have seen the reforms that were due to come into effect in 2023 kicked into the long grass, but there are still changes that could be made to support the use of housing equity for this purpose.”
Using equity release to help younger relatives onto the property ladder was a surprisingly simple solution, he reasoned.
“Affordability continues to present an ongoing challenge to first-time buyers, but there are certainly options if families choose to work together,” Wilson said, but acknowledged that not everyone had this option.
There was little doubt that the mini-budget shook the housing market, he recognised, but it was vital to take a longer-term view when considering assets like property and UK residential transactions had shown stability in recent months, remaining at levels similar to the pre-pandemic period. Furthermore, some economists were forecasting a return to more manageable inflation levels towards the end of the year, Wilson noted, hopefully heralding a decrease in interest rates.
Are you expecting for activity in the housing market to rise this year? Let us know in the comment section below.
