The number of loans for house purchase in February is lower than expected although given the growing sense of foreboding surrounding the big, post-Election tax rises around the corner it is understandable that people are putting the big decisions in their lives on hold.
With the General Election looming these figures suggest that property purchases will continue to tail off until a new government is firmly in place and people know who, and what, they are dealing with.
While we may see a slight uplift due to stamp duty changes for first time buyers and people buying property above £1m wanting to move before the year is out, this is unlikely to occur until after the next Budget.
As I sat watching the Chancellor yesterday on TV, headphones on listening to the radio coverage to drown out the howls of derision hurled at the screen by some of my colleagues, something interesting happened.
It wasn’t the fact that the Labour front bench had made a fashion statement in purple rather than traditional red, nor was it that I started to nod off during a speech that was long on politicism and short on content. Actually it was the sudden realisation that maybe I have finally fallen out of love with politics, something I have always been passionate about.
In January, mortgage borrowing and housing transactions generally fell off a cliff given the sub-zero weather conditions and the end of the stamp duty holiday in December, so February’s slight uptick isn’t too much of a surprise.
Looking forward, we’re not expecting borrowing levels to accelerate significantly in the run-up to the General Election, and they may even fall back slightly post-Election.
Come the second half of the year we’ll know far more about how the mortgage and residential property markets are likely to fare in the short term.
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.
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.
