Blog Article

The mortgage market heats up

The mortgage market heats up

Date: 29 April 2021 | By: cosgrove

First-time buyers with small deposits may now find it easier to get a mortgage, with 90% and 95% deals becoming more readily available but house prices could still hold them back as the mortgage market heats up.

New housing data show that house prices may have started to level off with there being no change from January to February 2021; but they are still an eye watering 8.6% higher than a year ago. These sky high prices continue to be at odds with the turbulent economic year just gone. As yet, they do not take into account the likely uplift from the new 95% mortgage guarantee scheme, which may hot up prices further.

With housing stock starting to dwindle in parts of the UK, we may see a new surge of buyers who are now able to afford the deposit to get on the housing ladder thanks to the scheme. This may inadvertently push prices up even further as people scramble for a new home to take advantage of the stamp duty holiday  - which is still in play and will be tapered down come June. In turn, this may leave them exposed to the risks of negative equity, if there is a house price correction in the future.

What's ahead for the housing market?

The trajectory of house prices looks like it will continue to be dictated by what types of measures the government put in place as the mortgage market heats up. Once government give-aways and reliefs are rescinded a correction is likely. However, money remains cheap and as the country gets moving again we may see a less sharp correction than originally predicted.

In the same vain, it will be fascinating to see if people’s desire for specific housing stock continues to shift. We have seen a definite change in people’s willingness to live further out from city centres to enjoy more space, despite longer commutes, as the future of our working lives looks set to evolve.