The main concerns are that the property market will suffer a sharp fall in values, particularly if a hard no deal Brexit is the outcome.
So Mortgage Solutions asked this week’s Marketwatch panel, what brokers are seeing and what they are suggesting to their clients.
Vince Sammon, director of Sammon Mortgages
Brexit has undoubtedly affected the mortgage market. Uncertainty has definitely made some buyers and sellers put their plans on hold until they know how Brexit unfolds.
However, if a property is being purchased to live in, then clients are investing for the long term and are not deterred by a possible drop in value short term. Their view is that the market will have corrected itself by the time they move on.
The same goes for highly desired or unique properties; for the right property there will always be a buyer waiting in the wings no matter what the market says.
The remortgage market on the other hand is buoyant and clients are spoilt for choice with a multitude of lenders offering great rates. The only obstacle to this is the regular stream of down-valuations from nervous valuers. This is less of a problem for the lower geared clients but can have a significant impact on loan to values (LTVs) of 70% or above.
Brexit has not been totally gloomy, however. Uncertainty has also brought opportunity for portfolio landlords, particularly those with a well-capitalised portfolio. These landlords are benefiting from low cost capital raising to snap up properties at a discount and thus increase their stock.
There is no doubt that the market will settle and activity will come back. Until then purchasers should focus on the long term and brokers need to proactively work their remortgage client bank.
Gary McKenna, mortgage and insurance consultant at Hawke Financial Services
The common conversation among colleagues, lender account managers and clients is: whatever the outcome of Brexit, people just want a conclusion so we can move on.
Any periods of uncertainty stall the mortgage market to a degree and I have seen that among some of my clients over the last few months, particularly in 2019.
There are some positives in the form of first-time buyers, remortgages and some professional landlords. The stamp duty benefit for first time buyers has kept this flow of business quite steady and some of my landlords are releasing equity across their portfolios in anticipation of picking up some good deals over the next six months.
The group of clients that does appear to have held back is next time movers.
Our enquiries from this demographic seem to be more aimed towards the ability to release equity and improve their current homes, rather than looking to step up the ladder and buy bigger properties.
Many clients are opting for five-year fixed rates in residential and buy to let, given the current low rates and that uncertainty, but I cannot see rates moving greatly for a while.
A recent trend I have seen is a greater increase in ex-pat and foreign national enquiries looking to purchase UK property as an investment property. These clients may have seen an opportunity with the weak pound and low interest rates, which they can use to their benefit. These have been across the globe from the US, Australia, Dubai and Hong Kong.
With all this said, the start to 2019 has been very busy in general with a good mix of remortgages, buy to let and first-time buyers.
Simon Jones, director at Affinity Mortgages
We are not seeing too many people holding back due to Brexit.
Our supporting agents have advised that they are struggling to get new instructions on their books and clients are now waiting to assess the lay of the land post March 29.
While as brokers we understand that product interest rates are often not the most important part of an application, they are nonetheless the key metric clients’ benchmark the market by.
With the Bank of England raising Base Rate to 0.75%, some economists are suggesting that this could remain stable over the next two years. This gives first-time buyers a massive boost in our opinion as their concerns relating to property prices are allayed somewhat.
Having said that, since rates are at an almost historical low, we are seeing clients’ lock in these attractively low products for longer terms on average due to future uncertainty.
To be sure, we are continuing to advise clients as best we can in these uncertain times, which often means business as usual while taking into account their concerns relating to Brexit.
We continue to advise clients’ that if they are buying to get onto the property ladder then there is no time like the present, as next month they may well be priced out of the market as has been the trend in the last few years.
As with any major socio-economic event, people generally lack confidence and when this happens the status quo seems to be their default position.
The majority of clients we speak to feel that national press coverage will be the root cause of any future decline in the market, we however feel this could be a positive turn in the market which could lead into another few years of growth.
