Housing market predictions for 2013
House prices property market estate agent signs
How was 2012 for you? If you were expecting things to get a lot easier in the housing market, you'll no doubt have been disappointed. However, it is possible to find some positive developments from the past 12 months.
Mortgage availability improved and average deposits required by lenders, while still high, fell below 20% for the first time in four years.
But what are the experts predicting for 2013? Will there be any reason for optimism? House prices For the most part, UK house prices remained stable in 2012 with any small falls negated by small rises. In 2013, the experts are predicting more of the same.
"House prices generally will be subject to wider economic concerns and consumer sentiment," says Jane Harrison, a director at London & Country mortgage brokers. "Falling inflation and some growth in the economy - even if weak - should help that, so we'd expect prices to be flat or see modest growth in 2013, but with significant regional variation." Adrian Anderson, director of property finance specialist Anderson Harris, also expects the North/South divide to become more apparent. "It looks set to deepen," he says. "London and the South East seem to be completely detached from the rest of the country." Mortgages The Bank of England base rate has now been at 0.5% since March 2009 and it's showing no sign of moving. However, while the base rate may be going nowhere fast, mortgage rates could be a different story, thanks to the government's Funding for Lending Scheme, which sees banks given the opportunity to borrow money at cheaper rates on the condition that they lend more to individuals and businesses.
"As the Funding for Lending scheme really gets into gear, we expect mortgage rates to fall further, particularly for borrowers requiring higher loan-to-values (LTVs) who until now have had to pay a significant premium on their mortgage rate compared to those with larger deposits," says Mark Harris, chief executive of mortgage broker SPF Private Clients.
When the economic crisis hit in 2008, mortgage finance all but dried up, meaning getting a home loan was a challenge. In 2012, it did improve slightly - there were 3,169 residential mortgage products on offer in November 2012, compared with 2,853 a year earlier.
But an investigation into the mortgage market (the Mortgage Market Review or MMR) has led the Financial Services Authority to impose tougher regulation, further tightening lenders' criteria. Whether or not mortgage availability will change in 2013 divides opinion. "Most banks have pre-empted the MMR and tightened their criteria already, so we don't expect it to become any easier to get a mortgage; if anything, it might become slightly harder," says Anderson.
"The problem is that property prices are still way out of kilter with income multiples. Banks are looking far more closely at how the mortgage will be repaid and are no longer happy if the borrower is relying on the sale of the property." Andrew Montlake, director of mortgage broker Coreco, is more optimistic. "As the Funding for Lending Scheme begins to have more of an effect, coupled with the fact that lenders have set targets in excess of what they have lent in 2012, we will see more mortgage products available," he says.
So what about first-time buyers? They're the 'lifeblood of the housing market', yet they've been squeezed out in recent years as LTVs have been slashed and lenders have become much more risk averse. Sadly, they shouldn't expect things to get much easier this year.