A festive look forward to 2014

Christmas is just around the corner, and I’ve swapped my crystal ball for a more festive snow globe, in order to predict what 2014 holds for the mortgage market.

Rob Barnard
21st November 2013
Rob Barnard - Aldermore

Casting my memory back over 2013, I see no reason not to be jolly going into the New Year.

At this time last year, there were 1.42 million outstanding buy to let mortgages in the UK worth £168.5billion, according to statistics from the Council of Mortgage Lenders. Fastforward to the end of June this year, and BTL mortgages accounted for 13.3% of outstanding lending in the UK, a rise on the 12.9% figure of the year before. Lenders have advanced 40,000 mortgages worth £5.1billion to BTL investors in the second quarter of this year. Comparing this to the second quarter of last year, BTL lending was 19% higher by volume and 31% higher by value in Q2 of 2013. It is, however, worth noting that this recovery is coming from a relatively low base.

According to the ONS, the average price of a house in the UK is £247,000, greater than the previous peak seen in 2008. While most certainly bolstered by an extremely robust market for London property, with prices growing by 9.4%, there is certainly nothing wrong with the more modest overall rise of 2.1% across the rest of the UK.  

Demand has been increased with the introduction of phase 1 of Help to Buy, a government scheme that gives those who don’t have a bank of Mum and Dad a helping hand from Uncle George. Rising prices as a result of high demand have led to fears of a housing bubble and criticism of the Help to Buy.

However, the main problem remains the shortage of housing in the UK, rather than Help to Buy. Although Government figures in August showed that housebuilding rose 6% in the second quarter (work started on 110,000 new homes), this is still way below the amount the country needs and is far below the peak of 183,000 new homes in 2006.

So what does this all mean for 2014? The Government’s Help to Buy scheme has come at a welcome time for many people who felt they might never get onto the property ladder, and with better than expected economic news this year, consumer confidence is on the rise.

Demand for housing will be strong next year, and the activity in the housing market shows no sign of slowing. An increase in the supply of housing would make property more affordable and provide a welcome boost to the construction industry and this will happen over time. I am expecting a buoyant 2014 across the housing market, so watch out for record January sales.

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