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This is our take on what is currently happening in the mortgage market. Our views are often cited in several national publications, including; BBC News, The Times, Telegraph, City AM, FT Adviser and Daily Mail, as well as a number of key trade publications, so this should keep you ahead of the curve. If you have any questions on any of these stories, or would like further information, please do not hesitate to get in touch.
Demand for flats and city centre property soars as does BTL mortgages
Recent data from Rightmove has illustrated that flats have seen a 39% rise in buyer demand in April 2021, compared to January 2021 and this is interlinked with city centre demand being up 35% since January 2021 (https://www.rightmove.co.uk/press-centre/first-time-buyer-demand-and-stalled-price-growth-help-city-centres-bounce-back/).
This is hardly surprising given the relaxation of Covid restrictions as people want to be back where the action is, with space to work and gardens becoming less important as the status quo resumes, and this was part of the reason why we believe the next place to see big demand and increases in property prices would be London, especially central London. This data interlinks with the high demand we are seeing for finance from buy-to-let investors, both first time and those with existing portfolios.
Will inflation lead to rate rises soon?
There has been a lot of commentary around inflation with rate increasing in April to 1.6%. This was predicted due to the natural bounce back from the pandemic and huge increase in consumer spending that goes hand-in-hand with lockdown easing, however some commentators see it as a long-term threat to stability. Significantly rising inflation matters because, not only does it squeeze peoples purchasing power, it can also lead to increased costs of borrowing as interest rates are one of the core macroeconomic tools used to curb inflation – there is an inverse relationship between the two measures, as interest rates are reduced, people can borrow more and thus spend more and drive up inflation and the opposite is true when rates increase.
An offset mortgage renaissance?
A mortgage type that had fallen out of favour somewhat in recent years, we have been seeing increasing demand for offset mortgages of late, as borrowers look to capitalise on the cash they have in the bank and we suspect this interest will continue increase in the coming weeks and months. The likely driving force being savings rates being incredibly low and people feeling more confident in a strong economic recovery and that the worst of the Covid pandemic is behind us, thus they willing to utilise their savings and looking for ways to make the best use out of them. This is good news for lenders and banks who are actively looking to increase the amount of deposits from savers.