Property & Mortgage Outlook – March 2022

The MPC is expected to raise bank base rate again in March to try to curb the rapid rise in the cost of living, further increases are expected throughout the year as inflation is on a course to hit a thirty year high.

However, the Bank must be careful not to choke off the economic recovery, already stagnating due to the Omicron Covid variant and the new threats caused by the Russia/Ukraine war.

Best Buys* (as of 3rd March 2022)

Asking prices for UK homes show record rise

Asking prices for homes coming on to the market in Britain rose by a record 2.3% in February, according to the property website Rightmove. The listing site said it was the biggest monthly increase in the 20 years it has kept records and meant the average advertised cost of a home was up by £7,785, to £348,804.

Over the past 12 months, asking prices have gone up by 9.5%. While the number of new property listings increased by 11% during the month, the number of people looking to buy a property rose by 16%, the website said. “This new record means that average asking prices have now risen by nearly £40,000 in the two years since the pandemic started, compared to just over £9,000 in the previous two years,” a spokesperson said.

The figures show a widening gap between the number of buyers and sellers that property experts say will maintain house price inflation this year well above annual salary increases. First-time buyers are expected to lose out in the race to buy the few properties on the market. Wealthier buyers, many of whom have saved large deposits during the pandemic, are among those caught by the “fear of missing out”, which Rightmove said would continue to drive prices higher over the coming months.

Sellers demand £8,000 more as buyers fight over property scraps

House prices rose at the fastest rate on record this month, defying predictions inflation and the cost of living crisis would cool the property market. The average asking price of property rose by 2.3% between January and February, equivalent to more than £7,700. This was the biggest monthly jump in cash terms ever recorded by property website Rightmove.

Asking prices hit a new high of £348,804 as buyers flocked to the market undeterred by rising mortgage rates and a chronic shortage of homes for sale. Buyer demand was 16% higher than February 2021 after the number of house hunters had soared for most of last year. Households are facing the biggest squeeze on their finances in a generation and this, alongside more expensive mortgage rates, was expected to dampen buyer demand and limit house price growth.

Early indicators suggest the acute shortage of homes for sale could also be about to ease, which could also put the brakes on price growth. The number of sellers listing their homes on the market and the volume of people requesting a valuation from an estate agent both rose by 11% in February, compared with the same month last year.

DIY REPAYMENT MORTGAGE

Following the credit crunch most lenders withdrew their interest only options preferring the safer route of the repayment method. However, in recent years lender’s criteria has relaxed and many clients choose the interest only option and use surplus income, bonus, profit distribution, inheritance, future property sales or investments, as the repayment vehicle. Indeed, many choose a mixture which is why we call this a ‘DIY repayment’. Our partners are able to assist Clients in deciding which repayment option is best for themselves.

BOMAD

It will not surprise many to learn that 56% of all first time buyers in 2020 were helped in some way by the Bank of Mum and Dad (BOMAD). Our mortgage partners can help guide Clients through all the options including, gifted deposits, guarantor mortgages, joint borrower sole proprietor and even equity release options.

Whether you are coming to the end of your mortgage product or keen to compare your current rate to the best available elsewhere, please contact your adviser who can put you in touch with our mortgage partners.

* Lending criteria restrictions apply to all products, always seek independent advice.

** Available as of 11th January 2022.

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Source: Professional Mortgage Services & Techlink.