BoE mortgage approvals data – “recession set to hit us as squarely as Tyson Fury found Dillian Whyte’s chin” – reaction

by | May 4, 2022

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Bank of England

Following the Bank of England (BOE) money and credit report for March a selection of mortgage brokers have reacted:

Andrew Montlake, managing director of the UK-wide mortgage broker, Coreco: “Overall, the mortgage market remained strong during the first three to four months of the year, but is being straitjacketed by the lack of stock. There are, of course, countless headwinds ahead. Interest rates are rising to contain spiralling inflation, energy, food and fuel bills have gone through the roof and tax hikes have arrived with a bang.

“In the months ahead, it’s likely that people’s borrowing power will wane as lenders take into account the extra cost of living. However, though rates are rising, they are still low in historical terms and with competition among lenders fierce, this will continue to drive a certain level of transactions during the summer.

“A lot will depend on the jobs market and how it holds up during 2022, especially if we enter recession.”

Ross Boyd, founder of the always-on mortgage comparison platform, Dashly.com: “The mortgage market remained busy during the early stages of 2022, supported by first-time buyer demand and the race for space, which is still very real. Obscene rents are also proving a massive incentive for first-time buyers to do their utmost to get onto the property ladder.

“A growing number of people are also remortgaging, wary of the direction rates are headed, which is up. The major challenges facing the market right now are a scandalous lack of stock, interest rate rises and what is shaping up to be an unprecedented cost of living crisis. Rate rises and soaring inflation mean affordability is set to be the defining narrative of 2022.

“Lenders are now starting to look at people’s finances in ever more forensic detail. This is particularly the case given that the annual growth rate for all consumer credit rose to 5.2% in March, the highest rate since February 2020.”

Charles Yuille, managing director of Bath-based independent mortgage broker, Willow Brook Mortgages: “In the first few months of the year, lenders remained busy with the property market still thriving in most areas of the country. The desire to move home is always higher during the spring and summer months, and people are continuing to look for more outdoor space.

“The race for space, make no mistake, is still ongoing. Stock levels for people selling properties and looking to buy are currently extremely low in many areas of the country and that is impacting the number of mortgages being taken out. Due to the lack of stock on the market, we’re finding a lot more people are looking at taking equity out of their properties to improve or extend their current homes. 

“Rising interest rates don’t seem to have had an effect on the market quite yet but with criteria tightening and more stringent affordability restrictions being imposed by lenders, this will have an impact on people’s budgets and ability to move home. The base rate rises have been marginal so far and I would expect at least three more increases this year to take Bank rate to at least 1.5%.”

Lewis Shaw, founder of Mansfield-based Shaw Financial Services“Remortgage business is the biggest hive of activity at present. People are scrambling to lock into the lowest rates possible and consolidate debt to clear their balance sheets before the inevitable recession hits us as squarely as Tyson Fury found Dillian Whyte’s chin.

“For now at least, the property market is still strangely robust but rising rates, coupled with reduced affordability, will lower the rate of house price growth throughout the year. My view is that the Bank of England base rate will be circa 2% come December. As I have said repeatedly in recent months, Winter is coming.” 

Imran Hussain, director at Nottingham-based Harmony Financial Services: “Demand for mortgages is still as high as ever due to many homeowners looking to remortgage and first-time buyers desperate to get onto the housing ladder. Despite the considerable economic headwinds, demand for housing has shown no sign of slowing down yet but the market will be tested during 2022.

“The Bank of England base rate is likely to hit anywhere from 1.5% to 2% by December and that will almost certainly subdue demand. For now, the most active segment of the market is first-time buyers and home movers.”

Graham Cox, founder of the Bristol-based broker, SelfEmployedMortgageHub.com: “The acid test for mortgage demand is what happens to the housing market and broader economy. If, as seems likely, we go into recession later this year and mortgage rates continue to increase, demand will invariably drop off. 

“There’s a possibility the Bank of England base rate could be raised by 0.5% to 1.25% on Thursday and I wouldn’t be surprised if interest rates are north of 2% by the year end. If house prices start falling, then all bets are off.

”While we’re still seeing healthy demand from company directors and contractors, we’ve not yet felt the full effects of recent hikes in interest rates, National Insurance and the energy cap.”

Rob Gill, founder of London-based Altura Mortgage Finance: “Demand in the mortgage sector is increasingly being driven by remortgages as borrowers race to secure the best possible rates ahead of daily rate rises from mortgage lenders.

“First-time buyer interest is also strong as people seek bargains in a relatively slow market for city centre flats, with sellers made up of those seeking more space in the post-pandemic world, and landlords put off by increased regulation and higher taxes.”

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