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Mortgages – Market Update

Three years after the EU referendum, the housing market whilst not altogether unruffled, remains well-heeled.

Property values are now around 8% higher than in June 2016 and transactions, if anything, have increased. The latest numbers from HM Land Registry show January and February 2019 to be about 4% up on the same period in 2018.

This unfortunately is not reflected in the London property market with the average house price falling 3.8% in the year to February 2019 according to HM Land Registry.

The number of buy-to-let mortgages used for purchasing new properties fell by nearly 8% in February compared to the same month last year, according to the latest UK finance figures. This is no surprise considering the tax and regulatory changes which have hit this sector. With news of further tenant protections being introduced with regards to evictions, landlords are uneasy and increasingly uncomfortable with traditional buy-to-let.

However, on a more positive note, buy-to-let re-mortgaging has increased as borrowers move from fixed rates and lock into new attractive rates.

There has also been an increase in the number of people letting to buy – on many occasions, they may only plan to let for a comparatively short period, but it does allow them to obtain the new purchase without creating a chain which of course is very attractive for vendors and estate agents.

The retreat of landlords from the market is producing more opportunities for first time buyers. These mortgage completions are up 4.1% nationally year on year.

At the other end of the spectrum, lifetime mortgages and equity release lending is steadily increasing and this is expected to continue.

It is now a year since the Financial Conduct Authority (FCA) changed the regulatory classification of retirement interest only mortgages to standard mortgages, rather than lifetime products or equity release plans. This technical change effectively allowed lenders to offer interest only mortgage products to those already in or close to retirement. Rather than stipulate a maximum age, which required the capital to be repaid, these mortgages have no fixed end date.

Whilst lenders first appeared reluctant to enter this market, we have seen some high street lenders moving into this market, offering comprehensive mortgage options for older borrowers, with lifetime mortgage fixed rate products starting at 3.49% pa.

The above content does not represent a personal recommendation. If you have any questions on the buy-to-let sector reforms, rates or the mortgage market in general, our mortgage team is here to help. Please contact the team on 020 7444 4030 or by email.

Your home is at risk of repossession if you do not maintain mortgage payments.