Alan Cleary

Three trends set to drive growth both for us and brokers

It’s been an interesting start to 2019 — Brexit notwithstanding.

Closer to home, for those of us in the mortgage industry, people are feeling rather down in the dumps about things in the first half of the year.

However, this is mainly because there is still so much political uncertainty for both individuals and businesses at the moment. In fact, the reality is that the underlying fundamentals in the housing market are still pretty resilient.

House price inflation is relatively stable and rising almost everywhere except in London and the South East. Lenders have not shown a decline in their appetite to lend, either in the residential or buy-to-let markets. Price competition on mortgage rates in both markets remains fierce.

Weaker consumer confidence aside, we’re quietly confident about the coming year. Partly, that’s based on three demographic trends that have little or nothing to do with Brexit or consumer confidence.

The rise of the self-employed

Homeowners with more complex income sources and those running their own businesses are still seeking out specialist lenders on the advice of their broker. There remains a need for lenders that will take a commonsense approach to underwriting their remortgage and purchase applications.

There are now around five million self-employed people in the UK, a contingent of our workforce that continues to rise with the growth of the gig economy and a move towards more flexible working. We’re expecting to see that demographic trend continue this year and well into the future, deal or no deal.

Professionalising the private rented sector

The shape of the buy-to-let market is also undoubtedly shifting, with most now accepting that the so-called ‘amateur landlord’ with one or two buy-to-lets has either exited the market or is preparing to do so.

This has impacted our business positively as we have always focused on niches and professional landlords with larger portfolios, complex multi-lets and HMOs have been our bread and butter.

We’re expecting this to ramp up over the course of 2019 and suspect that preparing for January’s self-assessment tax deadline focused the minds of those remaining landlords who had not perhaps fully anticipated the effect of reducing tax relief on their buy-to-let mortgage interest.

The downsizers

That brings me on to the bridging sector, which has had a decade-long run of growth. The majority of lending we do at Precise Mortgages in the short-term sector is regulated and, increasingly, has served homeowners looking to downsize.

In a perfect world (or housing market) there would be sufficient stock of the right type and in the right location for everyone to move freely and buy and sell simultaneously. But the world is far from perfect, and one of the practical results of lower homeowner confidence has been a drop in stock levels on estate agents’ books.

This has driven an uptick in the number of households looking to bridging to fund the gap between buying the perfect smaller home, often nearer children, and selling the larger family home, often further out of town and requiring a little longer on the market to shift.

We think this type of lending is critical to keeping the wider housing market moving and it provides a lifeline for those families who want to be closer together as their lives change and move on.

No matter what else 2019 has in store for us, these three trends are set to continue and drive growth both for us and for brokers who are perfectly placed to advise worried borrowers through any imminent choppy waters.

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