Why 2020 is the year of the remortgage…

Let's be honest, 2019 wasn't the most dynamic year on the surface... however, the UK housing market has had a lot of change over the last 12 months.

Despite a lot of gloomy headlines, there are a lot of positive signs for the housing market in 2020. House price indices and sentiment trackers are showing that the Brexit debate hasn’t had a significant impact on house prices so far. This is because of several factors such as a shortage of homes that are for sale and low levels of house building continue to support high house prices.

Russel Gallery, managing director of Halifax, suggests that “house price growth in 2020 is in the range of 1% to 3”. Although this prediction is following the pattern of weaker house price growth since 2017, it is worth noting that Savills are forecasting an overall increase in house prices of 15% over the next five years.

This is important because as the housing market slowed down last year, lender competition became fierce, resulting in rates falling throughout 2019 and forced lenders to widen their criteria to attract new business.

In 2020 we expect to see lenders continue to widen their lending criteria and focus more on service and customer experience. Offering the best service with a frictionless application process should and will be on lenders' agendas as the industry gains momentum in its technological advances.

We also anticipate rental growth to accelerate as the supply and demand gap intensifies. The latest RICS report looking at the year ahead had the following comment:

“Rental growth to accelerate to 2.5%. The lettings market has continued to run-up against its own supply challenges over the past year, with the flow of fresh rental listings weakening consistently. The RICS indicator capturing new landlord instructions has now been stuck in negative territory for fourteen straight quarters, the longest stretch of declining supply since the survey began back in 1999.”

Why you should remortgage in 2020
With the general election concluded with a strong majority and a clear plan for exiting the UK, confidence should start to return to the property market. With a more buoyant property market and increased demand for mortgages, lenders will be under less pressure to compress their margins and thus mortgage pricing will increase.

In addition to this, the new Government has made some pretty strong spending commitments which are, by nature, inflationary. This indicates that interest rates will go up at some stage. Combined with SWAP rates starting to increase, mortgage rates are unlikely to go any lower than they are now.

If you took out a two-year fixed mortgage in 2017, are on a tracker mortgage, or are simply due to remortgage, you should consider remortgaging now so you can lock into the last of the 2019 pricing and before the new 2020 rates kick in.