Mortgage Strategy - challenges for the year ahead

Rocketing property prices, lack of supply, dwindling affordability and raising rates, its going to be a very dissapointing year for many who want to get on the property ladder, until something is done about the lack of affordable housing generation rent is only going to get bigger

Rising living costs will be the greatest challenge of the next 12 months. With the rising cost of living, lenders will be reviewing their affordability calculators to compensate. With rising property prices across the UK, still increasing at a huge rate, borrowers will likely be facing increased property prices with reduced lending. This could create a massive gap. Especially in the First Time Buyer space, where a lot of first time buyers are struggling to get on the property ladder already.

Our biggest challenge will be growing our mortgage business in the face of strong headwinds. We actually expect house prices to fall this year, particularly in the second half. The property market is a bubble waiting to burst, overinflated by Rishi's stamp duty giveaway on top of years of ultra cheap credit. Market sentiment could change quickly, particularly in the spring/summer after higher interest rates, National Insurance increases and the energy cap rise kick in.

In my opinion the biggest challenge is going to be a combination of capacity blended with uncertainty. We have seen already that the market has faced the largest pricing increases in the first month since 2005, on top of that we have news saying that rents are increasing faster then ever before, this is bringing in a lot more investors to the market that might have been more cautious during the pandemic. Couple that with the interest rates rising once already, expected to rise again shortly and then again later in the year hence not only do you have a rush from new investors but on top of that, the hurry from existing property owners who wish to refinance onto new long fixed term rates before they change again. Likewise with the rates changing, every single lender will be revising their product offering and hence needing to read even more, call more lenders and so on to stay up to date an remain competitive.

I think one of the biggest challenges this year will be staying on top of a potentially very dynamic market; with rates increasing frequently and with little warning. I am not looking forward to going back to the days of having to drop everything you're doing because an email arrives at 4:30pm to say that lender X is pulling all their rates and you have until 5pm to submit any business you have - cue fraught phone calls to clients and furious typing to try and beat the deadline.

The major challenge to both brokers and potential borrowers alike will be the rising interest rate environment. With the Bank of England widely forecast to hike rates at least once in the coming months, borrowers will be on alert to secure mortgage rates before they increase with their brokers working hard to help them secure them.

As a specialist commercial mortgage broker, we will face some unique challenges this year. One of the biggest is banks still not willing to lend against properties in sectors effected by covid. The main ones being hotels, retail units, bars/pubs and in some areas offices. We are hoping that lending appetite will in these sectors as the year progresses.