The mortgage market of 2018 has been a mixed bag but one that has benefited from fierce competition between lenders. That has helped to maintain extremely low rates for mortgage borrowers and it looks unlikely that competition will decline.
There is little to suggest that lenders will radically curtail their appetite even with the unknown territory of leaving the EU. As a result, product pricing is likely to remain extremely sharp.
Brexit has already had an impact on the market though and consumer confidence has weakened in the face of ongoing uncertainty. As a result, activity in the purchase market looks set to remain muted, especially in the first quarter as buyers and sellers adopt a wait and see approach. How those activity levels recover will very much depend not only on the outcome but also how it’s perceived by consumers. If the departure is smooth then we could see a return to some semblance of normality relatively quickly.
Interest rate movement will have a big bearing and is just as entwined in Brexit. Further weakening in the pound could exert upward pressure on inflation, which would typically be met with higher interest rates. However, the Bank of England showed at the time of the referendum that it will equally consider the wider support required and could easily take the decision to cut interest rates.
Either way fixed rates look set to remain the product of choice for owner occupiers and landlords alike. The buy-to-let market is still in transition when it comes to the tax relief changes and those landlords that haven’t assessed the impact may be getting their first taste of higher tax bills when they submit their returns in January. As a result remortgage activity is likely to continue as landlords manage their costs whilst the limited company market could see further expansion in lender and product choice.
Taking a moment away from the question of Brexit, this year should see more developments in the way that technology can improve the mortgage process, both from a lender and broker perspective. Improved connectivity as part of the application process and enhanced customer options as to how they can deal with their adviser can offer greater time efficiencies and most importantly a better all round experience for customers.