The start to 2020 has been strong for the property market due to a more favourable political landscape which has boosted buyer sentiment. Mortgage approval numbers have reached 70,900 in January 2020 which is the highest level since February 2016 provided by the Bank of England. According to Nationwide house price growth has reached its highest level for 18 months at 2.3% for the year to February.
The Buy-To-Let mortgage market currently has over 2,500 products available. Competition within the market has seen an increase by 50% within the last two years. The shift in the marketplace since the government reforms in 2016 has led to landlords seeking higher income returns by turning to the HMO space. Figures provided from the National Landlords Association show HMO average yields were 6.5% between July and September 2019. The innovation within the marketplace has also allowed clients to use ‘Top Slicing’. Top slicing allows landlords to use their personal income to help meet the higher interest coverage ratio calculations now applied for short-term mortgage deals. Innovation within the market will continue due to the increased competition and tax reforms by the UK government.
2020 will be no smooth ride for the property market with the ongoing Brexit negotiations and the threat of Coronavirus outbreak which could impact the UK economy. The US federal reserve cut its interest rates this week to stimulate the economy over the fears of the impact of Coronavirus. The big question is the Bank of England willing to follow suit and how will this impact mortgage interest rates? The property market is expected to remain buoyant throughout 2020 but will face many challenges ahead. All eyes will be on the upcoming March budget next week to see what this will mean for the property market.