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We wish all of our clients and business partners a very happy Christmas. Thank you for your support in 2015 – we look forward to continuing to be of service to you in the New Year. Talking of 2016, here are our predictions for the mortgage market over the next twelve months.
1. The interest rate outlook will remain stable
An interest rate hike is likely to be held off for most of 2016. If a rate hike were to be brought in next year, it is likely to be by small increases in the later part of the year. Fixed rate deals continue to present excellent value for money in the current market although we would strongly recommend that all borrowers review their mortgage strategies in the first half of next year so as not to miss out on what will have been some of the best mortgage deals we have ever seen or are likely to see again.
2. Buy to let stamp duty hike will not be as bad as it seems
Following the announcement of a planned stamp duty hike on buy to let property in the recent Autumn Statement, we are urging clients not to panic as our outlook for the sector remains positive in spite of these changes. Our latest research indicates that even with the 3% increase in stamp duty and gradual reduction of higher rate relief, the likely returns from buy to let property are still enough to deliver satisfactory yields to investors when compared to alternative investments.
The biggest drag on the buy to let sector will be the adjustments that lenders are making to their criteria and lower yields, both of which impact on borrowing limits. Being able to achieve a 60% loan to value where capital gain is the objective will be an achievement with closer to 50% being the norm.
We do expect the corporate structure to emerge as a more mainstream method by which investors will participate in the buy to let sector. Lenders are likely to offer a range of products specifically targeting this development.
3. The European Mortgage Credit Directive will make for a busy start to the year and there will be unintended consequences
It is our view that most lenders are now generally EMCD ready, perhaps as a result of having to make significant changes to their systems following 2014’s Mortgage Market Review (MMR). We expect the market will be very competitive at the start of the year as lenders try to close as much business as possible before the new legislation becomes effective. Most lenders are likely to adopt this strategy so they have a quieter, calmer business period whilst they are adjusting to the requirements of the EMCD. As with any new regulation, it will take several weeks for lenders and consumers to adjust to this ‘new world’.
The market of 2015 has been largely dominated and driven by activity in London. However, it is our belief that this trend will decline as we enter the New Year which will see more activity in other areas, particularly commuter towns around the M25. This ‘ripple’ effect will ensure that property buying and selling in 2016 returns to a market that is much more characteristic of a ‘business as usual’ environment and prices in London are highly likely to reflect that trend.
Established in 1999, Private Finance has successfully negotiated billions of pounds worth of mortgages. It is an independent mortgage broker whose mission is to exceed expectations by securing competitively priced terms and suitable financial solutions on behalf of its clients as quickly and efficiently as possible.
Private Finance is not limited in the range of mortgages it will consider for its clients. It is well respected by a wide number of mainstream institutions and private banks, meaning clients gain access to specialist products that may not otherwise be available to them.
The Private Finance team are qualified professionals who understand and empathise with the needs of discerning individuals. They manage all mortgage applications proactively in order to meet vital deadlines and take great pride in helping clients fulfil their property aspirations well beyond their expectations.