How you view the prospects of the mortgage and housing markets in 2016 will depend largely on your personality type, but there is no denying the industry faces significant headwinds over the coming 12 months.
Last year the buy-to-let market dominated the headlines and this is likely to continue.
The sector’s strong growth caused alarm among policymakers and we will soon learn how the measures they have taken will affect the market. In April, a 3 per cent surcharge will be introduced for buy-to-let and second-home transactions. Moreover, the Financial Policy Committee will soon be given powers of direction over the market, most likely in the form of stress tests and a variety of affordability caps.
Should the FPC decide it is necessary to use its powers, one only hopes it bears in mind the potentially damaging effects of too much interference in the market.
Buy-to-let is not the only area that will experience significant upheaval, however. For the first time, the second charge sector will be governed by the same set of rules as the first charge market. This should be welcomed, but the transition is unlikely to be easy and some market disruption should be expected. Eventually, though, the rules will lead to a more robust and professional seconds market – something few would argue against.
Then there is base rate. One is reticent to make any predictions, but some respected bodies – the Council of Mortgage Lenders included – believe we could see the first rate rise since March 2009 in the second half of 2016. While this should provide a boost to the remortgage market, there will be casualties, and those already struggling with their repayments may well lose their homes.
In terms of distribution, there is little to suggest brokers will not continue their dominance. However, we should not get complacent and technology should be at the forefront of the advice sector’s mind as lenders look to win back direct business.
The CML predicts growth of about 10 per cent to £237bn this year – no mean feat considering the obstacles in the way. But brokers are a resilient bunch, so while 2016 will be challenging, the market should end the year in a stronger position than at the start.
Happy New Year from everyone at Mortgage Strategy.