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What to expect from the 2020 mortgage and property market

Paloma Kubiak
Written By:
Paloma Kubiak

As the new year and new decade roll in to play, we ask three mortgage and property experts about what homebuyers can expect to see in 2020.

‘We’re hopeful we’ll see activity in the housing market increase’

Dilpreet Bhagrath, mortgage expert at online mortgage broker, Trussle:

Looking ahead to 2020 in the mortgage market, we’ve got to consider how Brexit will continue to impact interest rates and buyer‘s confidence. The UK is due to leave the European Union on 31 January 2020, after Boris Johnson’s Brexit deal was passed by MPs.

Following this, we may see some recovery in the economy and rates might start to rise steadily to maintain inflation. Political uncertainty has gripped the housing market for the past three years with many holding off buying and selling. As a result, there’s been a recent fall in mortgage lending.

However, the reassurance that comes with a five-year administration following the latest general election may encourage those prospective and current homeowners who had previously adopted a ‘wait and see’ approach to commence buying and selling. We’re hopeful we’ll see activity in the housing market increase.

With 35,010 new first-time buyer mortgages completed in the summer of 2019 we’re also hoping that the level of first-time buyers entering the market will continue to grow. It’s clear that despite Brexit, first-time buyers still aspire to get on the property ladder.

However, while the Help to Buy ISA has assisted more than 225,000 home buyers since 2013, this was withdrawn by the government in November. The government also plans to end the Help to Buy equity scheme by 2023.

For those who do want to protect themselves against Brexit-linked uncertainty, it’s worth considering a fixed-rate deal. Knowing how much repayments will cost each month will give some peace of mind. However, it’s always important to take any personal and future circumstances into account when securing a mortgage and seek advice from a broker to ensure you’re aware of the options.

‘Growing feeling that the London market has now bottomed out’

Andrew Montlake, managing director of UK mortgage broker Coreco:

With the General Election result finally delivering political clarity in relation to our exit from the EU, transaction levels look set to pick up in 2020.

Clearly a lot of the hard work around Brexit has yet to be done, but the political stability provided by a strong Conservative majority will give a lot of people the confidence to finally move home.

There’s a huge amount of pent-up demand for property and that will start to show through quite early in the New Year. In 2020, Spring for the property market is likely to start in mid-January.

With competition among lenders reaching feverish new heights, mortgage rates will remain highly attractive during 2020, giving people even more reason to buy and sell.

In recent years, the regions have outperformed the capital and while this trend may continue in 2020, there is a growing feeling that the London market has now bottomed out.

Affordability will remain a key issue for many borrowers, especially in London and the South East, and so the Bank of Mum and Dad, or Gran and Grandad, will play as critical a role as ever.

The first half of the year may see more activity than the second, as the feel-good factor caused by the General Election result slowly fades and the complexity of the trade negotiations ahead becomes clearer.

Overall, we expect average prices to rise by 2–3% during 2020, conservative growth in historical terms but significantly up on the sub-1% growth of recent years.

‘Degree of certainty may trigger flurry of activity’

More than a quarter (28%) of estate agents expect house prices to fall next year, down from 43% last year when agents were asked the same question. Over half (56%) of agents expect house prices to stay the same, according to NAEA Propertymark (National Association of Estate Agents).

 A quarter think the number of sales made to first-time buyers will increase and over half (58%) expect it to stay the same. A third expect demand to decrease and a further quarter (28%) think supply will increase.

Mark Hayward, chief executive, NAEA Propertymark:

The changing political landscape throughout 2019 has undoubtedly caused uncertainty in the housing market, which in turn has affected sentiment and decision-making. Once the current political impasse is resolved and it’s clear how and when we’ll be leaving the EU, we hope there will be a degree of certainty which may trigger a flurry of activity.

Regardless of the colour of the new government, housing must be a priority. A clear strategy is needed to tackle key issues such as stamp duty costs.

Additionally, we’d like to see the government commit to bringing regulation into the sector as soon as they can in the New Year and to consider the introduction of digital logbooks to allow for a more interactive, streamlined and transparent process for home buyers and sellers.

The housing market needs reassurance from the government, which will in turn inject some confidence in the market for both buyers and sellers.

Despite the difficult year, the UK property market remains a strong sector overall, and has demonstrated a huge amount of resilience in the face of political turmoil. We hope for a more certain outlook and some stability in 2020, which is hopefully provided sooner rather than later.