Time and time again, the UK housing market has proved its appeal and resilience in a variety of ways.
Inevitably, there are periods when it will come under greater scrutiny in terms of price, supply and activity.
As it currently stands, questions do remain over the impact of escalating living costs, rising interest rates and mortgage rates which have steadily increased in recent months to reflect upward swap rate movement.
Recent announcements over energy prices and how much people are likely to be hit in the pocket over the rest of 2022 and into 2023 have also served to increase the pressure on households and make us all assess our regular, and any irregular, outgoings.
There is little doubt that this combination will impact activity levels and lending figures to an extent in Q3 and Q4 but it’s also prudent to point out that we are operating from some very solid foundations. A factor evident in Q2 and July figures which demonstrated how the housing and mortgage markets continued to outperform many expectations.
Data from Search Acumen showed that legal firms’ average property caseloads were up 34% on pre-pandemic levels, with the typical firm registering 76 transactions in Q2 2022, compared with 57 in Q2 2019.
The latest Money and Credit statistics from the Bank of England outlined that mortgage approvals increased to 63,800 in July, up from 63,200 in June. Net mortgage borrowing decreased slightly to £5.1bn in July, from £5.3bn in June.
However, this was suggested to be above the pre-pandemic average of £4.3bn in the 12 months up to February 2020. In addition, gross lending increased to £26.1bn in July from £24.6bn in June, and gross repayments increased to £20.8bn, from £19.4bn.
HMRC statistics also showed that UK residential property transactions edged up by 7.2% between June and July to 110,970 sales, recording an annual rise of 32.9%. On a seasonally adjusted basis, transactions totalled 104,470 – up 3.2% from June and 36.7% higher than in July 2021.
These represent some highly positive statistics, although that’s not to downplay the role of rising inflation and growing affordability constraints facing many potential borrowers.
As new and existing borrowers financial circumstances change, the mortgage journey will become that bit more complex.
This will place an even greater emphasis on specialist residential lenders and a manual underwriting process which has the capabilities to take a more holistic approach when assessing individual circumstances.
An approach which will allow lenders to support an array of credit-worthy borrowers and reach more flexible but responsible lending decisions going forward.
Simplifying the mortgage process and maintaining the highest possible service standards – for both clients and intermediary partners in their homebuying or remortgage journey – also remain key and this is certainly not lost in an intermediary marketplace which has seen its fair share of lending issues in recent weeks.
The additional aforementioned concerns are likely to result in more existing and potential homeowners being pushed beyond traditional lending boundaries and automated underwriting requirements.
Thankfully, a growing number of specialist lenders are stepping up to the plate to provide an array of solutions which meet a variety of property-related needs and financial expectations. And long may this continue.
George Gee is managing director (commercial) at Foundation Home Loans
