Mortgage and property predictions 2022

My predictions for 2022 are there's going to be a vast amount of remortgaging taking place along with a lot of debt consolidation as people scramble to wipe the slate clean and bring their finances to heel. Other than that, I think we're going to see prices continue to rise as the shortage of homes worsens, further squeezing first-time buyers. The chances are we'll see further base rate rises and the damage of COVID will begin to show. It's really not going to be pleasant but with a little bit of planning and some sensible mortgage advice most people should be ok, if not a little worse off due to the inflationary pressures that both Brexit and COVID have brought.

What will happen to the property market in 2022? • Prices have rocketed in the past two years, but is 2022 the year things could finally slow down? A Halifax forecast today predicts only 1% growth next year. Whilst I don’t thing prices will continue to increase at quite the same the rate at which they have this year as it was partly fuelled by the stamp duty holidays and pent up demand after lockdowns, I still expect a rise as the demand for property is still incredibly strong. There will only be a significant slow down when supply catches up but there doesn’t appear to any real sign of that at the moment. • What could serve to slow house prices down, or keep them rising? Will Omicron have an impact? See answer above. I don’t see Omicron having an impact on prices at all. Prices have continued to rise throughout the pandemic and other variants including Delta so I see no reason for that to change. • And what about the pandemic-led trends such as buying detached homes outside of cities, are they continuing or being reversed? They only appear to be continuing at the moment. The pandemic has changed how a lot of people live their lives and quality of life/work life balance has definitely become a priority for many. As an example in my industry, Atom Bank/Digital Mortgages have just introduced a four day working week alongside many other companies who have done the same or brought in work from home or certainly a lot more flexibility. • Will the shortage of new supply coming to the market ever end? There is no evidence that it is coming to an end at all. The shortage of available property is worse than ever. • Will buyer demand decrease, and what types of homes, or locations, will/won't be in demand in 2022? I think buyer demand will continue at close to the levels we have seen this year. There are many young professionals who have not been negatively affected financially by the pandemic and waiting to purchase their first property. They all say a lack of available property is their main issue though. • And top tips for people looking to sell or buy a home next year. If you are looking for a mortgage, ensure your credit score remains as high as possible and that you maintain all credit repayments as there is no doubt mortgage lenders have tightened up their credit scoring during the pandemic. What will happen to mortgages in 2022? • What are going to be the main mortgage themes in your opinion? First time buyers looking for their first mortgage will remain a particularly busy market. Mortgages for the self employed will also continue to be an issue as all lenders continue to make it very difficult for the self employed with their ultra cautious lending criteria. • After this week's interest rate rise, where could rates be by the end of next year? I would be surprised if we didn’t see two more rate rises by the end of the next year and expect next year to end with rates at between 0.75 and 1%. • What kind of mortgages are likely to be the key battleground next year? First time buyers. • What will the mortgage situation be for different groups, e.g. first-time buyers, remortgagors, movers, downsizers? The mortgage market is still incredibly competitive – I expect to see excellent deals still made available at all levels. • Are there challenges around affordability if household budgets become further stretched? Potentially though household food energy etc budgets don’t tend to have a huge impact on the lenders affordability calculations, it is remaining credit commitments that have a bigger impact. It would change dramatically if they decided to reduce their current income multiples in light of inflation. Currently the majority of lenders will lend between 4 and 5 x income, most are at 4.5 x. If they reduce this then it would mean many people would not be able to get a mortgage as salaries have clearly not risen at anywhere near the rate of inflation in recent years. • And if the Bank of England does decide to scrap the SVR+3% affordability test, how would that change things? I am quite surprised about this in the current climate. Potentially it’s good news for builders, estate agents and mortgage brokers! as I would expect it to mean more people able to take out larger mortgages and potentially then a further increase in house prices. It seems a strange time to do it now though with inflation and house prices rising the way they are so I wait to see if they do scrap it!

The pandemic has changed some of societies thinking towards where they want to live. As long as flexible working continues so will a higher number of house buyers opting to buy outside of cities. Clearly this a lifestyle choice for many older people or those with families. Younger buyers will still favour the hustle and bustle of city life, that is, if they can afford to buy a property there. First time buyers are in the worst position. They are but helpless to watch their dreams of home ownership move further into the distance with each housing price update. They may fail the mortgage lenders affordability test, and have to accept renting a which actually costs more each month! A review of the current mortgage affordability rules could help to address this key issue. House prices are likely to continue to grow into 2022 and though its inevitable some stability has to come into play soon. The market simply cannot keep growing at the rate seen during 2021. Very few actually benefit apart from, downsizers, property investors and those looking to move to a lower cost area. For everyone else, no matter what the current property is worth they have to also think about how much the new purchase will now cost.