We are now entering a particularly interesting phase in both the mortgage and property markets, as the economy teeters on the brink of either recovery or a double–dip recession. Whilst economists argue over the immediate future and politicians hit the campaign trail in earnest, the general public may be forgiven for feeling a little left out as in all honesty it is their every day experience that really matters.
January has never been a particularly strong month for mortgage data and this year the drop has been exacerbated by the stamp duty holiday that ended in December and last month’s dire weather.
However, activity picked up towards the end of January and into February so we expect to see stronger figures from February on until they begin to tail off again in the second half of the year.
January’s figures shouldn’t dampen the spirits as the mortgage market has got off to a flyer compared to this time last year, with hundreds of new products hitting the market and enquiry levels rising dramatically.
Apparently, according to some sources, remortgaging is now back in vogue and enjoying somewhat of a renaissance as it is officially now the case that remortgage products are cheaper than most lenders Standard Variable Rates.
Some of us have already been talking about this since the start of the year, and it is nice to be backed up by some weighty reports. Moneysupermarket.com, for example, have stated that even when taking the new mortgage product arrangement fees into account the “best” fixed rate and the “best” tracker product over 2 years will beat the majority of lenders SVR’s.
There has been alot of press recently about the fact tracker rate products are more “popular” than fixed rates and whilst this is undoubtedly the case, could this be a big problem in the making?
It is of course no surprise that in recent times the popularity of the fixed rate product has waned as people come to terms with the financial environment. The “as cheap as possible please” line has been even more popular than usual as not only have many clients expected that Bank Base will stay low, but also that low tracker rates now are a shot in the arm to many, helping to keep the wolf from the door.
Today’s inflation figures, rising dramatically to 2.9%, could well bring to an end the ‘rate complacency’ we have seen among borrowers over the past year or so.
Whilst there are suggestions that this spike in inflation has been expected and is merely temporary, it is unlikely to drop off sharply if recovery does continue to grow and will undoubtedly put pressure on the Bank of England to seriously consider finally raising interest rates.
This is a real shot across the bows for borrowers, many of whom are quietly banking on a low interest rate environment in the short term. But this is a risky game to play.
Andrew Montlake, Communications Director at Coreco and ‘Mortgage Personality of the Year 2008’, gives his views — honest and no holds barred — on the latest developments within the mortgage and property markets.
