Leading mortgage industry expert Ray Boulger comments on what will shape the UK renter market, and the housing market more broadly over the upcoming months.
In regards to the recently announced 95% LTV Mortgage rates, Boulger had this to say on the renters market.
‘When 95% LTV mortgages re-emerged around 2014 it didn’t have much impact on demand for rental properties and so there seems no reason to expect it to do so this time round, especially as 95% mortgages have only not been generally available (except on new build with Help to Buy) for about 7 months.’
‘What is likely to have more impact on landlords is a change in the type and location of property tenants are looking for. Also, landlords with tenants who have not paid their rent as a result of COVID but have not been allowed to evict them might see this as a last straw after the tax increases of the last few years and steadily increasing regulation.’
I asked Boulger what he though of recent data from Halifax suggesting pointing to a 7.3% year-on-year rise in house prices,
‘As Halifax refuses to make its real figures publicly available and only discloses manipulated (or seasonally adjusted to use the technical term) figures I find the Nationwide index must more useful as Nationwide also publishes the real figures.
‘I struggle to understand why anyone believes that seasonal factors are still more important than other issues, such as a stamp duty holiday, that affect house prices. The real Nationwide index showed an increase of 5.0% in the first 8 months of this year and I expect prices to continue increasing until March next year, despite the increased redundancies we know will happen over the winter.’
Elaborating on what he expects to happen over the new year, Boulger said,
‘The majority of people have not been made redundant and the desire from some of that cohort to buy before the stamp duty reduction ends will have a bigger impact on prices than the fact that redundancy or worries about their job will result in some people needing to sell. The Nationwide index was virtually unchanged in the last 3 months of 2019 and so the further price increases I expect will feed straight through to a higher index number.
‘Therefore I expect prices, based on the Nationwide index, to increase by 7-8% this year, with a further rise in Q1 next year, followed by a modest decline, which will be limited by 95% LTV mortgages becoming more readily available and monthly mortgage costs not only remaining low but declining as the increases recently imposed by lenders to try to stem demand are reversed.
‘If the Government wants to cool the market the obvious thing to do would be for The Chancellor to announce an extension, say for a year, of the current stamp duty rates. Such a move would spread the increased demand for property over a much longer period and avoid what looks like being a very difficult March for all participants in the housing market, especially solicitors, as the 31 March stamp duty deadline looms.’