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The mortgage market has always been a moving, changing beast. 2022 looks set to be one of the most changeable in recent history. In this article we recap on some of the recent predictions by industry experts on what this year has in stock.

Unemployment levels

Current figures indicate that unemployment levels are falling quicker than expected, particularly when you consider the seismic shift in the employment market since the pandemic first began.

Current projections indicate that the unemployment rate will be under 4% very shortly (it was 4.1% at the time of writing, just ahead of the next set of figures from the ONS due on 15th February 2022).

This figure is down from the recent high of 5.2% in October 2020.

In January, the number of job vacancies in October to December 2021 rose to a new record of 1,247,000, an increase of 462,000 from the pre-coronavirus (COVID-19) pandemic level in January to March 2020.

In October to December 2021, the total number of vacancies increased by 127,800 (11.4%) on the quarter, with the largest increase seen in human health and social work which was up 26,800 (14.9%) to a new record of 206,000.

Whilst it remains to be seen if there will be any sting in the tail of the figures since the end of the Coronavirus Job Retention Scheme; the current outlook is very positive as this will fuel continued confidence in the mortgage market.

Inflation & Interest Rates

This month the Bank of England (BoE) raised the UK’s Bank Rate of interest from 0.25% to 0.5%. This is the second-rate increase over recent months.

The BoE have done this as a tool to try and control the recent spike in the rate of inflation, ahead of projections that inflation will exceed 7% in the spring. For context, the BoE has set a target of an inflation rate of 2% over the second half of this year.

We often get asked about whether interest rates will continue to rise; whilst nothing is confirmed, we do expect further, small, increases over the coming months.

Bank Rate of interest rises may or may not affect you personally, it really depends on your financial situation and mortgage status.

It is important to understand how a change in interest rates could impact your ability to borrow if you are looking to purchase a property or remortgage a property.

If you feel you could benefit from some free expert advice, we recommend you speak to Mortgage Advice Bureau on 01293525525.

UK House Prices

It has been well documented the House Prices in the UK have increased significantly since the pandemic began.

In fact, UK house prices increased by 10% over the year to November 2021. The UK average house price rose to £271,000 which is £25,000 higher than this time last year.

Regionally, the South East saw a 9.6% YoY increase, with the South West (up 12.9%) and London (up 5.1%) being the best and ‘worst’ performers.

Total mortgage lending in the UK increased again, however this is believed to be largely down to higher house prices rather than the total number of mortgages approved.

A rising market will, typically, provide lenders with higher confidence and therefore ‘looser’ lending criteria meaning it is easier to obtain a mortgage. Should this confidence wain, expect new mortgage approvals to fall as lenders look to protect their investments as much as possible.

Kensington Mortgages panel debate key points

On a recent webinar panel debate, industry experts discussed their views on what 2022 could hold in store for the industry. We have listed some of the viewpoints for the debate below:

  • Total remortgage volumes are looking to reach £90billion in 2022. This figure would represent a 10% year on year increase.
  • Q1 2022 purchase mortgage numbers are likely to be lower year on year. This is due to lower stock levels of available properties to buy. In January 2022 just 400,000 came to the market vs. 620,000 properties in January 2021.
  • Green Mortgages will become more commonplace over the coming years as the industry looks to become more environmentally friendly.
  • The upcoming changes to the Minimum Energy Efficiency Standards (MEES), due to change start changing in 2025, are likely to cause landlords issues with new purchase and remortgages. In 2025, all new tenancies will need to be rated ‘C’ or above, and then by 2028 all let properties will need to be rated ‘C’ or above to be legally let. Landlords need to start reviewing their portfolios sooner, rather than later.

Overall, the mortgage market appears to be looking ahead at another strong year. Whilst this may not be as strong as last year (due to the Stamp Duty holiday ending), all signs are looking like it’ll be the 2nd strongest year on record.

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