Whisper it, but the mortgage market ended 2012 on something of a high, all things considered.
Approvals reached a three-year high– thanks in part to the Funding for Lending scheme which the government had introduced earlier in the year.
But what will 2013 have in store for mortgages?
WILL IT BE ANY EASIER TO GET A MORTGAGE IN 2013?
It depends. It would appear that if you’ve got equity or a deposit of 20% or more on your side, then you’ll be able to enjoy some rather tasty rates on account of the low base rate.
And even if you're a prospective first-time buyer who doesn't have a 20% deposit or more, the market for lower deposit mortgages is showing signs of life. “We’ve already seen lenders offer better deals for those with 5-10% deposits,” says James Cotton, mortgages expert at mortgage broker London & Country.
WHAT'S GOING ON WITH BUY-TO-LET?
This is an area of the market which is postiviely booming. With average UK rents rising by about 13.6% since 2009 according to Rightmove, it's not difficult to see why it's popular. However, buy-to-let mortgages will usually require a whopping deposit of at least 25% of the home's value, and sometimes even as much as 40%.
If, by any chance, you've got the readies to get on the buy-to-let bandwagon, now might be as good a time as any to strike - sellers get rather anxious in the winter, and may sell cheaply. Oh, and don't forget your landlord insurance. But you knew that already, right?
HOW ABOUT INTEREST-ONLY MORTGAGES?
One of the defining features of the pre-crash mortgage market was how easy it was to get an interest-only deal. Lenders were practically handing them out like sweeties.
Quite understandably, these have become fairly difficult things to get hold of in the post-credit crunch world, unless you have a credit rating as pure as the driven snow. And they don’t look like they’ll be back in too much of a hurry.
“All signs suggest it’s going to get harder, not easier to get an interest-only mortgage in the future – certainly for people who don’t have very big mortgages or bags of equity,” says James Cotton. “Virgin has become the latest lender to tighten up – they’ve done what Woolwich did a while ago and bring in a £300k minimum loan requirement.”
Even if you have equity in your home, you may still have to provide evidence you can repay the mortgage at the end of the term.
WHAT IF YOU’RE HOPING TO REMORTGAGE OR MOVE?
Again, if you’ve got the equity, you can take your pick of some rather tasty mortgage rates. Unfortunately, if you don’t, then things might be rather less exciting. “Remortgaging with less than a 10% deposit or equity is difficult, and will remain to be,” says James.
However, if you’re currently on a Standard Variable Rate (SVR) mortgage, then it might be worth perusing the market in order to make a saving. “Even if it’s a saving of 1% on your current deal it could save you a lot of money,” says James.
WILL COMPETITION BETWEEN LENDERS DRIVE PRICES DOWN?
Last year saw something of a ‘mortgage war’ break out between Britain’s lenders, which was rather good news for consumers.
This year, full-scale war between the lenders doesn’t look as if it’s on the cards quite yet. “All-out war doesn’t look too likely – but perhaps there’ll be the odd skirmish here and there,” says James. “The problem is that these battles are being fought in the easier end of the market – a 40% deposit can get you a 1.9% fixed rate mortgage. But with those without large deposits or equity, it can be like seeing a shop which has loads of cheap items in it, but not being allowed in.”
As we’ve discussed before, 2013 is the Chinese Year of the Snake, which is associated with ‘steady progress’ – and that’s pretty much how the mortgage market in the UK will be shaping up this year.
With a fairly stagnant housing market – for most of the country, at any rate – and with banks still being rather averse to loosening their purse strings, the mortgage market isn’t about to explode into life. But there is a sense that a little more choice for people with modest deposits and equity is on its way.