April 2022 Market Update
Posted on 26th April 2022 at 13:13
April 2022 Market update
With UK property prices continuing to surge on in 2022, with the average house price increasing 14.3%
according to the Nationwide building society house price index. We look at what has happened this
month and what we can expect moving forward.
Lenders are relaxing their criteria
Lenders change their offerings, products and interest rates all the time to attract new customers and
keep current customers. With the property market still booming this competition is only getting hotter. As
a result, lenders are starting to relax criteria to attract customers with some lenders increasing the
maximum age in which they will lend to customers and some high street lenders offering mortgage
products for those with minor adverse credit. More lenders are also returning to the 95% loan to value
product range also to enable those first time buyers buy a home with a minimal deposit as they struggle
to save during a time where the cost of living is increasing.
BTL lenders increasing minimum property value
As property prices continue to increase this year Buy to Let lenders are beginning to increase the
minimum property value that they will lend on. Prior to the pandemic, most lenders had a minimum
property value of £50,000. As we entered lockdowns and the pandemic drew on, some lenders
increased their minimums from anywhere between £75,000 - £100,000. This month we saw of the few
lenders remaining with a minimum of £50,000 increase their minimum to £75,000.
This is partly due to the fact there are very few properties on the market and the properties on the market
that are valued at £50,000 do not meet the standards mortgage companies set. As properties continue to
increase in value this minimum property value may increase further, but I don’t see this happening for a
long time as we would need to see more substantial growth for this to happen.
Potential rate rises
The questions brokers up and down the country get asked more than any other “Will rates continue to
rise?”. This question is very difficult to answer and here’s why. The main reason the Bank of England
increase the base rate is to curb inflation and inflation is currently sitting at around 7% today. Which is
much higher than the Bank of England’s annual target of 2%. So, you would expect interest rates to
increase again to help combat rising inflation. However, with the cost of living increasing – council tax,
utilities and fuel etc, does the Bank of England really have an option to increase the cost of borrowing on
the biggest loan people have?
I personally don’t see an interest rate rise happening until the end of the year. The government needs to
solve the rising cost of living such as setting energy tariffs, creating UK based energy sources and
securing fuel into the country at a lower cost. Until they do that, they cannot apply further stress onto UK
households by increasing the cost of another household expense. A rise of 0.5% on every £100,000
borrowing would see your monthly payments increase by £41.66. For some households who are
struggling to make ends meet this could lead to default and financial ruin.
Although we are seeing interest rate rises rather frequently now (3 rises in 5 months) the interest rates
we are seeing are still below pre pandemic levels. The introduction of the first lockdown in March 2020
saw rates slashed to 0.1%. So the regular increases since then feel like a lot, and rates feel high
compared to the historic lows we experienced in 2020. But we are still below the historical average
interest rate of 6%.
Tagged as: 2022, adviser, broker, buy to let, home, homevalue, house, house market, housevalue, housing market, invest, investment, market, money, mortgage, mortgage advice, mortgage adviser, portfolio, price, property, property portfolio, value
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