Mortgages in March – Part 2!

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I made a post earlier in the month about previous predictions and updates in the market.

A lot has happened since then which was only 11 days ago!

This morning we were on a conference with one of the biggest lenders, in addition to that we had a meeting with a smaller lender. Both of them were saying the same thing. The expectation seems to be that the base rate will be between 1.75% and 2% by the end of 2022.

What that means for Mortgage rates

That in the strictest sense seems to assume then that Mortgage Interest rates are going to be around 1% more than they are at the moment. Some may be more, some may be less. As mortgage lenders only have very small margins it is difficult for them to eat up much of those rate rises so it must mean higher rates. Although I suspect some lenders may take a hit on the margins at the lower LTVs as this usually allows them to lend more at the higher LTVs where they can make bigger margins.

Property values

The other thing discussed in the conference was what to expect with property prices. It is expected that property prices will rise by around another 4% by the end of the year, which will give a price rise of around 12% for 2022 (I think my prediction was around 3%).

They followed that up with the expectation that house prices are expected to generally level off and next year will only have small increases of around 2-3% which may even be lower than inflation. A little fact they mentioned is that now roughly in 1 in every 42 properties is worth at least £1m!

Purchases

The market is generally bunged up at the moment due to a lack of supply. You have first time buyers wanting to buy but sellers are not putting their properties on the market until they have found a property to buy which then means there are more buyers than sellers.

Summary

I suppose the general outlook is that things should start to level off towards the end of the year, possibly even small drops in real figures once inflation is taken into account. We should hopefully start to see a return to pre-covid levels and normality to return but we are relying on more people putting their properties on the market or general demand to drop.