Over the past couple of years, the mortgages pendulum has swung back towards the big lenders with innovation, demographic shifts and some favourable legislation driving the trend.
But what does this mean for consumers in this uncertain time of slow wage growth, sluggish house price growth and Brexit?
Mortgage rates should start to rise in 2020
A slowdown in the property market this year kickstarted a string of industry incentives to get people buying again. Mortgage rate approvals hit a two-year high earlier this summer and banks are practically fighting over customers as we head into the end of the year, offering ultra-low mortgage rates to try and bolster their share of the market.
But the headline for 2020 is that interest rates will start to creep up again with The Bank of England forecasting an average increase of 1.25% across the year. This should spell the start of a 0.25% year-on-year growth for the foreseeable future. As rates rise again, consumers will increasingly seek impartial counsel from a local advisor to find the best options.
First-time buyers remain an industry priority
July 2019 saw a 5.8% annual increase in first-time buyer mortgages. With house price growth slowing, and a range of government initiatives to create more young home-owners, there will continue to be incentives designed to attract first-time buyers. The rise of the guarantor mortgage will also help to sustain growth in this area.
Refinancing will become less attractive in 2020
While the product resale and remortgaging markets have held strong this year, expect these to taper off come 2020 as interest rates start to climb. Some homeowners have been driven towards remortgaging to prepare for the great unknown of Brexit, with some locking rates in for up to ten years.
With the fog presumably starting to clear (who knows what it will reveal) next year, this trend will show an understandable decrease. More to the point, with increasing numbers taking on long-term deals, a greater number of homeowners will be locked into deals and not looking to remortgage anyway.
Brexit: the mammoth in the basement
Uncertainty over Brexit has made the property market skittish. In a No Deal Brexit scenario, accountancy firm KPMG predicted that the average house would see a shock depreciation of 6-20%. After initial stability following the referendum, house prices saw a steep decline this past summer with Brexit veering ever closer.
All of this will make it difficult for people considering remortgaging or moving house. Given historically low mortgage rates, fixed rate mortgages may look attractively secure at this moment in time. But a more flexible product will offer you a better chance of weathering the Brexit storm. Ultimately, a house is a long-term investment and prices will stabilise over the course of your ownership.
Brexit is just one variable in what could be a year of ups and downs. The one certainty is uncertainty with the property market already showing some indications of serious change come 2020.