Mortgages in 2022 - What Could Happen?

05 February 2022

Independent Mortgage Advisor David Lauder, has made some predictions about the 2022 mortgage and property market.

Making predictions for the coming year is a difficult task given the current climate. However, here is some expected activity for the 2022 mortgage market.

What will the 2022 mortgage market be like?

The market was difficult in 2021, due to the lack of available stock and intense competition. Property selling prices regularly achieved over the Home Report valuation, with homes achieving on average 105% of HRV throughout the second half of 2021.

We hope to see sellers’ confidence remain in 2022, leading to more properties being listed, balancing out the market.

Will interest rates change in 2022?

In 2021, we saw no Bank of England rate rises, but any impending changes are likely to be increases.

As some economists are predicting inflation will continue to rise throughout early 2022, the market is also pricing in potentially two more rate hikes this year, taking the base rate to 1% by the end of 2022.

Increase in small deposit mortgage availability

More mortgage lenders are willing to consider 5% or 10% deposits, subject to eligibility. This is good news, as more buyers can find a solution within an affordable budget, and first-time buyers will benefit in particular.

The challenge for many clients with smaller deposits has been the issue of homes frequently selling for well over their valuation. Mortgage lending is based on the lower of purchase price or valuation, meaning any amount paid over the value cannot be used as part of the deposit for mortgage purposes.

We hope to see further aid available from Government schemes in 2022, although no firm details are currently available.