My Mortgage Direct has predicted a blossoming housing market in 2006.
Paul Hearnden, director of MMD, says: We believe springtime will come early for the first-time buyer market. Q4 of 2005 showed those all-important borrowers gradually returning to the housing market, encouraged by price stability and affordability, and we believe that will continue in the New Year.
2005 was a jittery year for the housing market but fears that it was due to crash and burn proved unfounded and confidence has steadily returned. As a nation of home owners, it would take a much bigger downturn to stop the British people from attempting to get on the ladder.
Despite a positive outlook, MMD is not predicting a boom – house prices show little prospect of rising at the rates home owners have enjoyed over the past few years. House price inflation did not collapse as predicted by some pundits but levelled out instead and now appears to be climbing at a sedate but safe pace.
But borrowers will be exercising a degree of caution as a result of the chancellors U-turn on Self-Invested Personal Pensions, which burst the prospective bubble of hope for linking property and pensions.
Hearnden says: This was so unexpected that I believe the more experienced borrowers will be watching carefully for any more knee-jerk decisions from the government.
Soaring redemption and application fees have been a prominent feature of the 2005 mortgage market but MMD believes borrowers are now more savvy about this issue and not prepared to be charged through the nose in the future.
Hearnden says: While borrowers accept nothing comes for free, they are baulking at paying hundreds of pounds in admin costs. I believe the tide will begin to turn until a mutually acceptable level of fee structures is reached.
Taking centre stage in 2006 will be Home Information Packs provided the government doesnt have second thoughts.
Hearnden warns: The coming year will see HIPs crystallise into reality and produce a potentially useful tool for purchasers in 2007. The doubt is how the sellers will adapt to yet more upfront costs without knowing if anyone will buy their house. This does mean more thought should be taken before vendors decide to sell, but this in turn could stop the impulse sale or purchase that completes a chain.
Information upfront should mean less deals fall through at the last minute honesty is the best policy.