2021 proved to be one of the most hectic years to buy and sell a home. We witnessed prices soaring to record highs, mortgages rates at less than 1% and the end of the stamp duty holiday which helped 1.5 million property transactions. According to UK Finance, 2021 was the strongest year for mortgage lending since 2007 but what can we predict for 2022?
From this time last year, the average property price has risen by £24,500 according to Halifax. For 2022 we predict a growth in the market but at a steadier rate which works in favour for first-time buyers. The slower growth may be the result of the cut stamp duty holiday. However, we predict demand will continue in line with a steadier house price growth as people opt for countryside dwellings as companies continue to ask their employees to work from home or visit the office less frequently. Businesses may have either sold their office or downsized as they do not currently plan to return to the office full-time.
In 2021 the lack of supply and delays that affected the market should ease in 2022, speeding up transactions and giving more people and first-time buyers the chance to purchase their dream home. Others may decide not to move, they may renovate their home. In 2021, people borrowed extra when remortgaging their home allowing them to fund their renovations without the big expense.
The Bank of England could be set to relax one of its key lending rules in 2022. It is going to consult on removing the rule which requires lenders to ensure borrowers could afford a 3% rise in their mortgage rate before they approve their application. This could make a once rejected mortgage turn into an accepted one, for some applicants they might be able to take out a bigger loan.
Another way first-time buyers will be helped in 2022 is by their mortgage length. Historically, 25-year mortgages were standard but now we are frequently seeing 35- and 40-year mortgages. According to This is Money, banks are not ruling out the idea of a 50-year mortgage.
As interest rates were so low in 2021, they are predicted to increase this year. This will add a small amount to those with variable mortgages, those with fixed rates will be covered. However, it is predicted that lenders will attract customers in other ways like fee-free mortgages and cashback incentives.
The green mortgage market is still small but is becoming more popular. What Mortgage has revealed mortgage brokers are seeing an increase in the number of inquiries for mortgages offering perks for homes that comply with high eco standards. A green mortgage can offer better rates depending on the energy rating of the home, predominately being new builds or properties that have been insulted.
2022 will also come with higher expectations of the mortgage market, as technology continues to grow people will expect this development in every sector. Some technology companies in the industry have been adopting technology to help digitalise the mortgage application process. When completing a mortgage there are steps to guarantee the mortgage is compliant, accurate and appropriate. By using technology, advisers can change the way their client’s application is dealt with which can revolutionise a cumbersome process into an efficient hassle-free one.
*Ozgur Unlu is the Chief Executive Officer of 360 Dotnet