Turning on the nightly news reminds me of Bill Murray’s “Groundhog Day” with the dreaded “B” word still taking centre stage night after night, after night….
Trying to forecast what the market might look like is a difficult enough task at the best of times. But when faced with the backdrop of the current political and economic uncertainty, making predictions is increasingly difficult.
As a case in point; leading mortgage lender Halifax is predicting house price growth for the coming year of between 2% and 4%. This time last year their estimate for growth was between 0% and 3%, with the actual figure coming in at 0.3%.
This stagnation follows a period fuelled by historically low inflation rates, deals designed to aid first time buyers and a lack of new build homes.
Brexit has certainly dampened consumer confidence in the purchase market, with many buyers and sellers adopting a wait and see approach, and other would be sellers preferring instead to invest in property extensions rather than moving up the housing ladder.
We know that the Bank of England has spoken about any bank rate increases being introduced slowly and steadily over the next few years, but whichever way the political pendulum swings in the coming months, it is not inconceivable that rates could remain on hold or even be reduced should there be a slowdown or contraction in GDP growth.
On a more positive note, residential re-mortgages are likely to remain fairly buoyant with borrowers faced with a wider choice of products from the increasing number of lenders originating in the market.
Lending into retirement and equity release schemes will also see growth in 2019. Last year we saw the reintroduction of retirement interest-only mortgages (RIO’s), helping to push the equity release market towards the £4 billion mark.
With the “ticking time-bomb” of interest-only mortgages without a repayment vehicle maturing, the FCA and UK lenders have been exploring innovative ways to service this market.
When combined with increasing needs of older borrowers to supplement pension and savings pots, the need to pay for care costs, or even to aid younger family members with getting onto the property ladder, more lenders will continue to look to this growth area.
Whilst Groundhog Day saw Bill Murray’s cynical weatherman initially seeing his predicament as a curse, he ultimately found a way of turning his situation to his advantage.
Like-wise many UK lenders are also looking to turn current market dynamics in their favour, realising the need to compete in areas outside of price.
This increasingly means investing in a seamless customer journey, providing digital streamlined mortgage applications, data insight to personalise relevant products and content, and robotic process automation to improve back office efficiency, reduce handoffs to manual processes and control costs.
Customer centricity will be the battleground for lenders in 2019, irrespective of the “B” word.