On the back of an exciting start to the new football season, it’s time to turn our attention to a lending market which, brushing off my favourite footballing cliché, could well be heading into a game of two halves. The purchase market has obviously dominated activity levels across the residential, buy-to-let and specialist lending arenas over the first half of 2021 but could we be seeing the tide turn and a remortgage market – which has still performed admirably over this period – take centre stage for the rest of the year?
This remains to be seen but what we do know is that there are a huge number of mortgage deals coming to the end of their two and five-year cycles during this period. For example, data from CACI suggests that we will see around £29bn worth of mortgages move onto a standard variable rate in the month of October alone, meaning plenty of opportunities will emerge for intermediaries to bolster their remortgage business.
It’s no secret that the tapering of the Stamp Duty holiday will impact the volume of residential purchases and this is evident in recent data which suggests that demand may be cooling slightly across the housing market. The latest analysis from RICS for July outlined that new buyer enquiries shrank over the month, with a net balance of -9% of respondents seeing a fall, down from +10% in June, and ending a positive four-month streak for the UK housing market. As a result, the number of agreed sales also reportedly took a dip, posting a net balance of -21% across the UK, with sales volumes slowing most notably in Yorkshire & the Humber, the East Midlands and East Anglia.
House price growth was again influenced by the lack of properties ready for sale, with a net balance of -46% of respondents reporting a fall in new listings (down further from the -35% reported in June). It is therefore unsurprising that +78% of respondents reported house prices rising, although this is slightly down from the +82% reported in the past two months. At the regional level, growth in house prices was seen across the UK, with the North of England, Wales and East Anglia seeing especially strong growth. On the flipside, London saw more moderate feedback, however the latest net balance of +45% is still up when compared with previous results.
These are hardly negative figures and continue to highlight just how robust the current housing market is. The ongoing supply gap is likely to prop up activity levels for the foreseeable future and increased competition continues to result in headline rates hovering around historic lows. And when heightened lending appetites across higher LTV bands are added to the mix, then there are plenty of reasons to remain optimistic.
Having said that, lenders and intermediaries need to stay alert to any trends which might emerge and react accordingly. Whilst consumer confidence is growing, additional complications to personal financial situations mean that the reliance of good, professional advice is also rising. This is a trend which advisers need to tap into and deliver value to a range of new and existing clients to establish long-term relationships which will help all parties to navigate any potential bumps in the road which may lie ahead.
David Lownds is head of marketing & business development at the Hanley Economic Building Society