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2019: Are things as bad as they seem?
The news is abuzz with pessimistic projections for 2019: If we leave the EU, we’ll be thrown into anarchy; if we remain, we’ll be defying the people’s vote, making a mockery of our democracy. If we leave the EU with a deal, we’ll be so tightly bound to the continent as to make our exit pointless; and if we leave without one, we’ll be in even worse shape. No matter where we end up, no matter what we do, the situation is without hope – or so we’re being told.
‘GDP will take a hit.’ ‘The housing market will take a pummeling.’ ‘Unemployment levels will rise as jobs are moved out of the UK and into the EU.’ Such are the kinds of predictions being bandied about by the press, and some of the economic data currently being circulated seems to support this negativity: last week, for example, The Royal Institute of Chartered Surveyors released a report showing that housing sales expectations for the first three months of the year are as low as they have ever been since the survey began in 1999. They appended this report with the dismal prediction that housing prices would come to a complete “standstill” in 2019; and Nationwide provided further cause for concern by stating that in 2018 house prices grew at their slowest rate since 2013. In addition to this, the value of the pound has failed to return to its pre-referendum peaks, and some pundits are predicting a further slide if we leave the EU without a deal. If this is the case, the Bank of England may be forced to raise the base rate in order to curtail import-driven inflation, which will inevitably lead to a rise in the mortgage rates being offered by lenders.
All is not lost
Given all that has just been said, you’ll be forgiven for thinking that the future is bleak, and that there is little left to do but grit our teeth, batten down the hatches, and attempt to weather the storm that is surely headed our way. But this is only half of the story; the full picture provides many reasons for optimism: wages are finally rising at a faster rate than both inflation and house prices, meaning that wage earners are, for the first time in recent memory, enjoying an increase in their spending power. To add to this, the inflation rate has fallen to 2.1% – only 0.1% off of the Bank of England’s target rate. Annual GDP growth is modest but steady at 1.5%. Unemployment is at a forty-year low. The number of job vacancies is at an all-time high. And this is to say nothing of the recent developments in the mortgage market, which are converging to create singularly favourable conditions for borrowers.
Mortgages
According to the Bank of England’s Credit Conditions Survey, demand for ‘secured credit to households’ (which includes mortgages) decreased over the last quarter of 2018 and is expected to continue falling in the first quarter of this year. This fall in demand is no doubt primarily a result of Brexit, and its effects can already be seen in the kinds of deals being offered by lenders to mortgage-seekers. Last week, for example, HSBC dropped rates on 31 different mortgage products; and Coventry building society has just lowered the interest rate on its 10 year fixed mortgage – already one of the most competitive in the market – by 0.1%, down to 2.25%.
Private Finance’s Chris Sykes commented on these developments in a recent Guardian article:
“So far January has seen falling rates from HSBC, Furness building society and Accord Mortgages, with the latter making significant cuts in some cases, as well as increasing cashback amounts and decreasing fees on selected products. Virgin Money and Barclays have followed suit, reducing some fees and rates.”
The upshot of all of this is that 2019 is as opportune a time as any to consider, or reconsider, your mortgage options. Private Finance’s brokers are kept constantly aware of the various rate cuts being introduced into the market – some of which are accessible exclusively to brokers. If you are interested in exploring any of these possibilities further, you can get in touch by emailing us at info@privatefinance.co.uk or calling 02073172820.
