News & Views

Every mortgage cloud may have a silver lining

3rd November 2022

Despite the doom and gloom being expressed around the mortgage market in the UK, there may yet be some good news for first-time buyers when the market settles down.

Alison Mitchell 

Alison Mitchell reflects on the marketplace and thinks it isn’t all bad.

“At present, and remember we are only 6 days since the mini budget sent the market into turmoil, there is comment about a perfect storm for the housing market with increased interest rates, fewer mortgage products available and house prices predicted to fall.

But perhaps this is just a sensible adjustment to the marketplace, admittedly triggered by external factors such as the war in Ukraine and government intervention. Interest rates have been extremely low for many years, house prices have been rising annually for just as long and lenders have been offering a huge range of products.

So, with a modicum of calm and stabilisation of the markets, we might see a upward adjustment to mortgage interest rates (lenders don’t have to mirror the Bank of England interest rate), house prices adjusting to more realistic values and lenders continuing to offer a wide range of mortgage products again.

This scenario could favour the first-time buyer and with the increase of stamp allowance to £425,000 (England & Wales only) could mean more people could get on the housing ladder. Scotland has yet to make any adjustments to Stamp Duty which were already higher than elsewhere in the UK.

As mentioned earlier, much of the market reaction and gloomy speculation is based on very recent announcements and so with a bit more time, we might see a clearer picture and be able to better assess what the medium to long term picture is for the mortgage marketplace.”