In the mortgage market, we get ‘harmony and understanding, sympathy and trust abounding, no more falsehoods or derisions, golden living dreams of visions’ – yet we’re afraid of a prediction beyond our pay grade.
It would be nice to think we can accept such claims with full confidence.
However, before you grow your hair long – difficult for some of us – and frolic around your offices paying homage to the mortgage Gods, have some consideration for the purchase side of our market, which judging by some predictions, will barely get out of second gear.
We’re not as convinced as some that this will be the case.
Demand for purchase just as strong
Perhaps instead 2022 will be the dawning of the year of transactions. Certainly, that flood of demand for ownership we saw last year doesn’t appear to have become a trickle – we are working in a marketplace where people are buying houses, often very quickly, and we are even seeing cases of gazumping.
The demand drivers that existed in the last year and a half haven’t really gone away just because the stamp duty holiday ended. Indeed, some people are still waiting, for example, to find out how their work situation might play out in the future.
Many employers are still yet to make decisions about whether to keep offices open, and who will be required in, where, and for what part of the working week.
When this comes out in the wash, we’re likely to have more homeowners deciding they are either in the right or wrong property, which will mean further purchase transactions as those decisions work their way through.
Landlord activity
For landlord borrowers too, there is a perception that this will be the year of remortgage and refinancing and little else. But what are landlords refinancing for?
In our recent advice experience, two-thirds of landlords are capital-raising alongside the remortgage, armed with the confidence and equity of recent house price increases behind them, in order to do this.
However, they are not doing this to carry out works to improve their existing properties’ energy performance certificate (EPC) ratings, for example.
They are capital raising in order to purchase more and add to their portfolios because they believe this to be a strong private rental sector (PRS) to purchase in. So, alongside that landlord remortgage activity we can expect the professional and portfolio players in particular to be looking at what is available to buy.
Supply levels to suppress demand
And it’s that latter point that will be crucial here in terms of how purchasing performs. If 2022 is to be a subdued year, it will be because property remains in short-supply, both new-build and ‘second hand’.
January tends to take a few weeks to get going for the market, and we wouldn’t want to suggest this is indicative of the year ahead, but we’ve talked to a number of agents at the start of the year, and some are suggesting they have not been taking on the numbers of properties onto their books they would normally expect.
Perhaps it is just a slow start to the year? Perhaps it is something to do with the current pandemic circumstances where we’re being told to work from home again where possible? Perhaps some would-be sellers still feel a little in limbo? Perhaps, perhaps, perhaps.
However, the other fundamentals of the market do seem to suggest that purchase activity can be relatively strong this year if we get the supply, we need to meet demand. Alongside what will undoubtedly be a strong year for remortgaging and product transfers, advisers hopefully have everything at their disposal to have a successful and profitable year.
