Mortgage trends in 2018 – what did we learn?

Posted 11-01-2019


There were various activities in the mortgage market in 2018 that we can learn from this year. We look at the main mortgage market trends in 2018 and discuss what we learnt from it, how it could influence borrowing today, and how we can evolve with the changing demographics of the industry.

 

Subdued property transactions

RICS reported new buyer enquiries, new instructions and average stock on estate agents’ books at record lows in 2018. This stalemate propped up prices, which were largely flat, did little to stimulate new business for brokers. With RICS reporting new appraisals by property values to be down on the previous year, there is little to suggest the market will pick up any time soon.

 

Increased remortgage activity

Fortunately, as property sales slowed, remortgaging boomed, with UK Finance reporting in November that it had reached its highest level in almost a decade. With a large number of fixed rate deals coming to an end, this trend looks set to continue into 2019.

 

The resurgence of first-time buyers

A stagnant purchase market created opportunity for first-time buyers to become the stand-out performers and first-time buyers now account for more than half of all mortgage financed house purchases, up from 38% in 2008.

 

Regional price variations in a flat market

Property prices were relatively flat in 2018, but some regions did perform better than anticipated. Rightmove’s forecast for house price growth of the course of the year was just 1%, but as the year drew to a close some areas had significantly outperformed this benchmark. Wales led the way with annual growth of +6.2%, while the East Midlands, West Midlands and Yorkshire & the Humber all posted price rises of between +4% and +5%.

 

The resilience of Buy to Let

2018 was the year that Buy to Let demonstrated its resilience, defying expectations as Buy to Let lending actually grew despite the huge change the market had to absorb. Total lending was £35.4bn in the 12 months up to October 2018, which was £0.4bn more than the previous 12 months. The vast majority of the activity was remortgage activity and there was a noticeable increase in limited company Buy to Let.

 

Specialist becoming the new mainstream

Changing demographics, shifting work patterns, and a growing mountain of unsecured debt are leading to more customers whose circumstances don’t meet the automated approach of the high street. 2018 was characterised by the growth in specialist lending as more brokers realised the ease of accessing flexible underwriting at reasonable prices for their clients.

 

Looking ahead to 2019

Every year brings its own challenges and opportunities.

It’s important to consider the impacts the political environment may have on the housing market over the next 12 months, and it would be prudent for brokers to plan for ways to grow their business in a flat market.

Fortunately, the market has shown that there will always be areas of growth and there is increasing opportunity for brokers to help a growing number of clients.