Experts reveal expectations for the housing market
Easter has long been seen as the point in the year when those homeowners with an eye on a move complete their spring clean and prep work, ready for their property to go on the market.
In addition, it is traditionally the time when aspiring buyers emerge from the gloom of winter with a desire to find a home and move over the course of the summer.
However, David Hollingworth (pictured left), associate director of communications at L&C Mortgages, said the cost-of-living crisis, higher inflation and interest rate hikes may dampen this spring’s activity.
While Hollingworth expects activity levels in the mainstream market to be down in comparison to past years, one expert believes the economic outlook presents an opportunity for another sector this spring.
Mainstream market
Hollingworth said recent years have had plenty of factors at play impacting the market positively, whether it was the lockdown driving demand, or the Chancellor’s support for the market through stamp duty incentives.
“However, the cost-of-living, higher inflation and consequent hike in interest rates have taken their toll in the last year or so and dampened market demand,” Hollingworth said.
Hollingworth added that the mini budget then really hit home and sent buyers and sellers running for cover.
“I am hopeful that the improvement in mortgage rates that have been feeding back into the market this year, coupled with signs that the base rate is closing in on what may be its peak, will help bring consumers back to the market,” Hollingworth said.
Clearly, mortgage rates have not subsided to be anywhere near the lows of recent years, the disappearance of which, Hollingworth said, will have compounded the pain of the higher cost-of-living for many.
“Those that can readjust their budget to where rates currently sit, with growing confidence that base rate will not continue to climb at the same pace, may now start to return to the market,” Hollingworth said.
Equity release market
Mark Gregory (pictured right), founder and chief executive of Equity Release Supermarket, said that one market is set to thrive – the equity release sector. He is anticipating a rise in equity release activity levels as people look to release equity from their homes to fund the ramifications of the cost-of-living crisis, as well as home improvements.
“We have witnessed a rising number of customers using monies to pay off their existing mortgage and utilise the funds to help support everyday needs, with the difficulties of general utility costs,” he said.
Gregory added that it is often believed the over 50s are financially comfortable, but the truth is far more complex, across both age ranges and geographically.
“We are finding that due to the cost-of-living crisis, many people aged 50+ are looking to make major financial decisions about their home to generate extra cash,” Gregory said.
The Equity Release Supermarket’s findings showcase that 25% of equity release is utilised to fund home improvements, which Gregory expects to increase further throughout the year. Given that the home is still likely to be one of the most significant financial assets many homeowners have, he expects equity release will continue to form a large support pool for retirement needs, lifestyle goals, home improvements, affordability and gifting.
“Several lenders have pivoted more recently, adjusting their rates considerably particularly in the last few weeks, suggesting that they too are expecting a busier period as we embark on spring time,” Gregory said.
What are you expecting to see in terms of activity levels this spring? Let us know in the comment section below.
