However, I think there are a few areas in which we can be relatively confident about making predictions.
Gross lending figures, for example, are unlikely to change much from 2016. All of the factors that have caused the market to be somewhat flat in the second half of this year remain. Brexit is still causing uncertainty across the market – something which is only going to continue once Article 50 is triggered. We may see lending fall slightly but the record-low interest rate environment in which we find ourselves will continue to encourage homeowners to remortgage and this will support the overall lending figure.
I doubt we’ll see any movement in interest rates over the next 12 months. We won’t see another cut; the MPC and the Bank of England will be aware that a reduction of rates now smacks of desperation.
With rising inflation there are obviously calls for a base rate rise, but BoE governor Mark Carney has already made it clear he is willing to tolerate this. Indeed, I imagine we will see inflation edge up during the second half of the year and could finish 2017 at around 3% to 4%.
House prices will show modest increases of around 5%. The government has made it clear the housing market remains a priority with investment in house builders and infrastructure announced in the Autumn Statement and I suspect we’ll see further fiscal measures in the spring Budget. The Chancellor will be looking to stimulate the market and we could well see a reduction in Stamp Duty – something which was called for but not addressed in November.
Buy to let will, of course, take a hit as the changes to landlord tax relief come into effect. Lenders will continue to develop their limited company offerings to address this but undoubtedly we will see some investors leaving the market.
All in all, 2017 could be a good time to buy; prices will be realistic and interest rates low although fixed mortgage rates will start to edge up in the new year as a result of rising SWAP rates.
