Three weeks have passed since the news was announced that the leave campaign was victorious after Britain went to the polls to vote in the historic European Union Referendum.
Since then, speculation surrounding the effects on the market has been dominating the conversations of the British public. After a very interesting couple of weeks post-referendum, it is now time to examine how Britain’s decision to leave the European Union has so far impacted the mortgage market.
Despite the initial shock and uncertainty caused by the result, the mortgage market has reassuringly settled. Brokers and lenders have been overwhelmingly communicating a message of ‘business as usual’, and, through the conversations we have been having with them, we are hearing from the market that the outlook is far from pessimistic.
Low rates are still prevalent, and while it is true to say the market has experienced a slight reduction in enquiry levels, this trend is not solely linked to the referendum result. In the lead-up to the vote, the market had already experienced a slight cooling-off period owing to a number of contributing factors, including recent regulatory changes in the buy-to-let sector, stamp duty revisions, and various seasonal factors.
This is not unusual, and mirrors similar patterns in previous years. The nature of the market is such that change is constant, which is why it is paramount that consumers speak to advisers before embarking on what is often the largest financial commitment they will ever make.
If nothing else, the outcome of last month’s vote has given brokers a reason to get in contact with their clients to discuss the options available to them, given this new landscape. So what has changed?
The most significant uplift we are currently experiencing is a flurry of remortgage activity. Our advisors predict that these figures will continue to rise as the market adjusts to the uncertainty surrounding Britain’s decision to leave the EU. In the short to medium term at least, and while lenders still have easy access to funding, we may start to see a downward trend in fixed rates, giving many homeowners the opportunity to switch mortgage deals onto a new product that will save them money over the course of the term.
In terms of new business, we are seeing extremely low pull out rates of around 3-4 per cent, which is very encouraging. On the whole, those opting to cancel transactions tend to be nervous overseas investors, taking stock of the UK market. The good news is that these transactions are not being lost. Due to the high demand of both investors and would-be homeowners, there is generally someone else in the queue ready to take their place.
On the demand side, it will come as no surprise that need for properties continues to exceed the housing supply available in this country. People will always want to buy homes, and while the funding is available, lenders will want to lend. Interestingly, over the last few years demand in the market has come from a variety of sectors and borrowers at various stages of their homeownership journey.
First-time buyers, second steppers, and last time buyers all have a range of needs when it comes to securing a mortgage, and it is essential that brokers respond to the ongoing demographic changes in our society by diversifying their approach to advice.
Overall, the fundamentals of the market are still strong, and the general mood, good. When faced with unpredictable circumstances, for every person who is worried about the future, there will be someone who sees it as an opportunity. This approach highlights the positive attitude of brokers and the resilience of customers who ‘keep calm and carry on’ when faced with the unexpected.
Regardless of your political persuasion, for those brokers and lenders willing to work to ensure best customer and sector outcomes are still achieved, the coming months could provide exciting opportunities. As ever, proactivity and client engagement will doubtless be a key part of any future successes.
With all the change in the market, there has never been a more crucial time for customers to seek professional advice. By talking to a broker, consumers will be better placed to understand their options and the products available to suit their personal circumstances and how that fits into today’s market. Our mortgage brokers are in the perfect place to provide this support and meet the demands of our continuously evolving and exciting market.