What does 2015 have in store for mortgages? The experts tell all
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Personal finance in 2014 was strong, with bankers’ bonuses leading to a steady mortgage market in Belsize Park and great rates in Crouch End
Andrew Solomonides Adv CeMAP, director Crystal Life, Crouch End
2014 began with demand for properties continuing to outstrip supply and, as a consequence, prices remained very high. However, we gradually began to see more and more properties being down-valued by the lenders and there were early signs that the month on month increases during 2013 were not going to continue at the same level, as vendors finally began to lower their asking price.
By April new tighter financial regulations were introduced and this had an effect both before and after the 26th of April. Many more applications were submitted to lenders prior to the changes to ensure they were assessed under the more flexible current rules.
After April there was a very noticeable slow down as the whole mortgage industry was coming to terms with the new regulations.
It was not until the autumn when we began to notice fixed rate products across all lenders reducing as there was a fair amount of money they had wanted to lend in 2014 but hadn’t, due to the changes. This has proved to be really good news for the consumer as a mortgage price war began and lenders were reducing their rates almost every other week in order to gain more business.
Many more vendors were also continuing to price their properties more realistically too.
Property prices in 2015 are likely to continue to remain steady and it’s now looking more likely that interest rates will continue to remain reasonably low throughout the year. The mortgage price war will soon end, so at some point next year I expect we will see slightly higher fixed rate products on offer.
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As inflation, and in particular the oil price, continues to fall, there is a possibility that the Bank of England base rate will not increase as predicted in 2015 either.
All in all I can see another good year for our local property market in Crouch End with even more first time buyers looking at their first purchase as opposed to renting. By extending the mortgage term most first time purchasers will be paying a similar monthly mortgage payment to what they are currently paying in rent.
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Colin Payne, associate director, Chapelgate Private Finance
The local mortgage market in Belsize Park started very strongly in 2014 and is ending equally strongly. Whilst property prices are certainly starting to cool, mortgage rates are ending the year at record lows with one lender offering a starting rate of only 0.99%!
This year saw the biggest change in the mortgage industry for over a decade with the introduction of the Mortgage Market Review (MMR) with tighter affordability criteria and lending into retirement restrictions all helping to dampen the market somewhat, although it remains stronger than 2013.
Lenders such as Halifax and NatWest introduced income multiple caps for larger loans, which has resulted in them taking a lower share of the local market.
Interest only mortgages are now exceptionally difficult to obtain and whilst certainly not suitable for all are appropriate for a significant number of purchasers in and around Belsize Park, who often have bonus-orientated incomes.
So, what is in store for next year, with oil prices continuing to fall, and any likelihood of an increase in bank rate in the first half of 2015 almost non-existent?
Mortgage rates are likely to stay at their current lows well into next year but they will certainly start increasing before any increase in bank rate, so now is a good time to consider reviewing your mortgage if you are on a lender’s standard variable rate.
The general election in May will probably mean that at the very top end of the market (£2 million+) a continued slowing down will occur given uncertainties around the so-called mansion tax, both backed by Labour and the Liberal Democrats.
New pension legislation comes into effect enabling anyone aged over 55 to have full access to their pension savings, there will no longer be an obligation to purchase an annuity, which may result in surge in interest for buy-to-let. However, with relatively low rental yields in many parts of London and lenders looking to make stress tests harder on buy-to-let, it may not have as great an impact as some commentators feel.
Overall, I believe the mortgage market will continue to improve in 2015 in terms of overall lending; lenders will take stock of changes they made this year and may relax some criteria on residential mortgages; and rates will continue to remain favourable.
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