It seems depressingly appropriate that one of the most bitter and relentless winters on record should strike when the economy is fighting to get off its knees.
Just as green shoots were appearing Jack Frost dealt us a cruel hand. At the very moment the mortgage industry was trying to put 2009 behind it and start afresh freak weather conditions caused chaos.
In early February we usually know the lie of the land for the first part of the year but last month’s been affected by the icy conditions so it’s difficult to tell how Q1 2010 will turn out.
But we do know that winter weather does not last all year and while some commentators are gloomy about the outlook for 2010, predicting a W-shaped recession, I am not convinced.
A double dip in the economy depends on unemployment increasing significantly this year but the Office for National Statistics paint a different picture. In fact, latest figures show the number of unemployed individuals has fallen to 2.46 million.
Although this is a huge number it is thankfully some way short of the three million some were speculating about for the year.
This means that even if the winner of the general election decides to sack everyone on the civil service payroll we’d still be shy of the dreaded figure of three million.
So although a double dip is unlikely it’s just as unlikely that we’ll see a sharp rise in economic growth in 2010 – any improvement is more likely to be gradual.
Despite some areas of the mortgage market falling away consumers will still need somewhere to live
New lenders such as Aldermore, Tesco and Virgin Money along with the re-emergence of the likes of Barclays and NatWest will put a rocket up house prices, as the current level of prices reflects the relative lack of competition in the lending market.
Another result of more players getting busy is that the price of certain mortgage products will fall, which will be great news for property investors.
But while the mortgage market generally will warm up this year some sectors will be left stranded in the snow.
Buy-to-let mortgages are unlikely to be available to speculative landlords at the LTVs we saw in the glory days. Indeed, the proposed regulation of the sector could spell the end of speculative landlords.
Meanwhile, sub-prime may never return. If it does, it won’t be for a number of years.
But despite these areas of the market falling away consumers will still need somewhere to live. The population is predicted to hit 70 million by 2031, piling the pressure on housing stock.
The social sector won’t be able to cope with this demand so the private rented sector will have to provide a safety net. This means a significant market shift towards private provision.
Throughout 2009 professional landlords showed they have the cash and desire to take advantage of low property prices to boost their portfolios. Demand from this source will only increase this year.
More products designed for professional landlords will be introduced soon, providing investors with a golden opportunity to prepare for the inevitable shift in market focus.
So January may have been a mortgage white-out but the rest of the year doesn’t have to be.
MORTGAGES FOR BUSINESS