We are now through the first quarter of 2019, it has been over 2 years since Brexit was announced and we are past the original date we were due to leave the EU.
I made a post here at the beginning of the year which covered off a few thoughts about what may happen this year. In summary, we basically said, Mortgage lenders were hoping/expecting things to carry on normal, their lending targets were still in line with 2018s figures and in essence it was business as usual.
What has happened in the Mortgage world?
The general consensus seems to be that Mortgage transactions are relatively stable if not on the increase (2.7% up). With house prices in general increasing by 0.1%. Overall it seems the housing market is stable but flat. So once you take in to account inflation there is probably a slight drop.
This year there has also been 2 mortgage lenders who have closer their doors to new lending, one is Secure Trust Bank and the other is Magellan Home loans.
Neither of those 2 things sounds too positive do they? However, if you look beyond the initial figures, we have one of the most potentially turbulent times in our history going on, and despite all of that, unemployment levels are down, housing transactions are up and house prices are relatively stable.
Looking at our business volumes and we are fairly consistent with the last 2 years, marginally up on 2017 and marginally down on 2018 but still consistent.
The other issue is 2 mortgage lenders closing down. Both of those lenders were quite specialist, Secure Trust in the self employed market and Magellan in the adverse market. Secure Trust did have some unique selling points, the problem I think is that those selling points were too niche which meant they were probably not picking up enough business to make it viable
Magellan were one of the companies who were able to bring back adverse to the mortgage market after the crash in 2007. The problem they had was that many new companies came to market with better criteria, lower rates and far easier processes. They never really moved on with the times and I think that has come to bite them.
On the face of it, 2 lenders going in quick succession looks bad, but I think there were very valid reasons for them withdrawing from the market.
What will Brexit bring going forward?
So far lenders and brokers seem fairly optimistic for a stable year as a minimum. So despite the Governor of the Bank of England saying potential house price drops of 30% this does not seem realistic. I am sure London has had some major decrease in value, but aside from that the rest of the country seems to be doing fine. There is an argument that London was potentially overpriced anyway so this is more of a correction in the market than a drop.
Mortgage rates seem to have increased a little over the last 12-18 months so I think we have probably seen the lowest of the low rates and going forward they will also be stable – which seems to be the word of the day in this post – lenders now appear to be looking at the higher LTV markets where there is more profit or loosening criteria rather than driving down rates at the lower LTVs in order to keep profit margins up.
It very much appears to be business as usual albeit with a little bit of caution – which is never a bad thing. It still seems a safe bet buying your home, so long as you do not get dragged in to a bidding war and overpay.
If you want to get the latest mortgage offers and advice on the right mortgage for your circumstances give Mortgage Success Manchester a call.