"Two-year fixed rates saw 'notable' reductions in the last week, with many lenders dropping rates back below 5%."
It’s getting to that time of year when Christmas lists are being written, wishes are being made and resolutions starting to form in people’s minds for the year ahead. I imagine that a large proportion of the intermediary mortgage market will be glad to see the back of 2022 after what proved to be a tumultuous final few months following a mini-budget which helped spark a disastrous domino effect for borrowers, lenders, surveyors and advisers. A period from which we are still recovering.
The well-documented impact on mortgage interest rates has led to a wealth of financial implications for many potential borrowers and homeowners whose cheap fixed rate deals have matured or are about to mature. Implications which have been compounded by inflationary and additional cost of living pressures.
As such, when asked in a recent CSS webinar poll what one wish they had for the UK property market in 2023, it came as little surprise that 60% of property professional respondents opted for decreasing interest rates. 17% wished for the cladding dispute to be resolved while 13% coveted a deposit solution for first-time buyers. The launch of an alternative to Help to Buy commanded 5% of responses, whilst 3% demanded a delay in EPC regulation and 2% sought increased funding for lending.
Thankfully, we are already seeing some movement in the right direction from a product perspective. Analysis from L&C released on the 6th December outlined that two-year fixed rates saw 'notable' reductions in the last week, with many lenders dropping rates back below 5%. This followed data from the previous week which highlighted a substantial downward shift in fixed rates over the course of November.
The second most popular wish from respondents in the webinar poll was an interesting one and the good news is there is a decent chance that the long-running cladding issue could be resolved in the new year. 1,000s of people have been either trapped because works are required or because they have waited for an EWS for far too long. A much needed culmination of this long-running saga will help release these ‘cladding prisoners’ who have inadvertently suffered through no fault of their own. In addition, it would also provide a further stimulus to the housing market by allowing these homeowners to upsize and create more affordable opportunities for first-time buyers where possible.
The need for further options to support first-time buyers in 2023 was also firmly on the mind of respondents as a combined 18% coveted a deposit solution for first-time buyers and/or the launch of an alternative to Help to Buy. In recent days, Homes England has confirmed a one-month extension for completions under the government's Help to Buy scheme after some builders said homes would not be ready by the end of this year but this still leaves a substantial gap for lenders to fill moving forward.
On the back of such a challenging period, what we can take into 2023 is that, largely speaking, confidence levels remain healthy in and around the housing and mortgage markets. Homeownership aspirations remain strong and there is room, appetite and demand for product innovation, especially when it comes to first-time buyer solutions and in the green mortgage space.
Let’s hope that rates continue to trend downwards over the course of the new year and lenders hit the ground running in 2023 to deliver the products which continue to stimulate the housing and mortgage market and generate a swell of positive momentum.
