Mortgages and business finance

ended 03. January 2022

Tomorrow morning at 09:30, the Bank of England is publishing the latest mortgage approvals and SME finance data. We want your thoughts (just answer the bits that are relevant to you), e.g.

  • What were the main themes of the mortgage market in the closing stages of 2021?
  • Are rising rates and soaring inflation going to kneecap lender appetite in the months ahead?
  • Which sub-sectors of the mortgage market are strong, and which are weak?
  • Howe easy is it for small businesses to secure loans and finance in the current climate?
  • Are businesses actively looking for growth capital or are they more interested in self-preservation?

As ever, soundbites please, not essays. If you manage to get the words ‘Theatre of Cruelty’ (Artaud - check it out) into your response there's a better chance I'll pin it to the top. Premium responses will be edited as normal.


5 responses from the Newspage community

Star Quote
"The end of 2021 saw a flurry of remortgages as people looked to secure historically low rates. With the amount of competition in the mortgage market, I expect low rates to continue, with lenders given peace of mind about values by the sheer lack of supply. Also, if a global pandemic can't dampen the housing market, then what on earth can? First-time buyers remain out in force and lenders keep increasing the amount they are willing to lend to them. We thought 5.5 times income was the maximum but now some can even borrow seven times their annual income. Those that know what they are doing can avoid the theatre of cruelty that is the rent market."
"We have noticed far fewer businesses looking to borrow for investment purposes and significantly more raising finance simply to prop up cashflow, especially in the hospitality sector. To make matters worse, the Government has just reduced its Covid Recovery Loan Scheme lender guarantee to just 70%. We expect this to make business loans harder to obtain for SMEs impacted by Covid. The SME finance landscape is going to be a highly challenging one in 2022. Anyone foreseeing cashflow issues needs to get ahead of the curve."
"There are some huge uncertainties around house prices. Interest rates could edge up close to 1%, possibly higher, by the end of the year. Rates will still be historically low, but the direction of travel is likely to dampen demand. And even if Omicron isn't the disaster first feared, high inflation looks nailed on for much of 2022. With the energy price cap being raised in April, mortgage lenders will need to take into account 50% higher fuel bills when making affordability assessments. We therefore expect lenders to become more cautious, especially with self-employed borrowers. I think the most likely scenario is that house prices will plateau or even fall slightly this year, given that 2021's massive price increases were due to the stamp duty holiday and all-time low mortgage rates."
"We have seen much higher demand for impaired credit mortgages in recent months. Many potential home buyers have had a tough time over the past couple of years, and consequently have missed payments on their loans and credit agreements. High street lenders just don't have the appetite for this area and this pushes buyers towards higher cost solutions from specialist mortgage lenders, which simply accentuates the pain. Given the continued economic uncertainty as we head into 2022, we expect the demand for impaired credit mortgages to increase materially."
"Towards the end of 2021 we saw increased remortgage activity which is likely to be a main driver of approvals in 2022. Despite the uncertainty around the economy and the prospect of more rates to come, there is a lot of positive sentiment out there, especially among first-time buyers. However, the chronic lack of suitable housing stock is the main problem everyone faces. There appear to be two questions on most people's lips: firstly, will fix rates rise, and secondly will house prices come down? The answer to the first is yes but the second is anyone's guess. The UK property market is a law unto itself."