But even as the dust settles on the mortgage market frenzy of September to October, underlying economic factors still remain that will affect homeowners and prospective buyers.
These include persistently high levels of inflation, the prospect of a cruel winter with soaring energy prices, and uncertainty over the geopolitical ambitions of certain pugilistic world leaders.
Amid this uncertain environment, FTAdviser In Focus spoke with Jessica Burton, associate director of Anderson Harris, to find out what clients are asking and what advisers are telling them.
FTAdviser: Dip, crash, soft landing - what are mortgage advisers expecting?
Jessica Burton: Referring to the mortgage market - we have been in such a low interest rate environment for such a long time, it has become what feels like the norm when actually it's not really that normal.
I think we will see Bank of England base rate continue to increase to help control inflation.
It’s a really challenging time for first-time home buyers.I hope that the current fixed rate mortgages that are available have already priced in the potential increases and therefore do not continue to increase.
The current fixed rates are really pushing the edges of affordability hence borrowers would love to see the fixed rates reduce so that the monthly payments on fixed-rate mortgages are much more manageable.
FTA: What about the property market itself?
JB: There is some correlation between the availability/pricing of mortgage finance and property values, hence we are expecting at least a softening in property values.
In some areas values may come down because of the cost of borrowing and other factors such as the cost of living.
However, I do not think that there will be a crash.
With rates fixed at approximately 5 per cent, many borrowers are not prepared to commit themselves to a large mortgage at a time when other outgoings are increasing too.
Many borrowers will be hoping fixed rates will come down further soon. There is still a lack of decent available housing stock in many areas, which may limit the decreases in values.
FTA: What sort of strategies are advisers employing to help customers?
JB: The main thing is making sure to contact clients as early as possible to look at their mortgage options.
Borrowers can secure a remortgage rate six months away from their current mortgage rate ending with most lenders, and they can look at options with their existing lender three to six months away from their current mortgage rate ending.
We are making sure to contact all clients that have a rate coming up in the next 12 months so that we can prepare them for what's to come and make sure that their plans can be realised at the end of their current deal.
We are advising clients to consider overpaying where possible while they are on a lower mortgage rate to soften the potential increase in the monthly payment when their existing rate comes to an end.
This also means they are refinancing a smaller balance onto a potentially higher rate.
A lower mortgage balance may help with the loan-to-valuation if a re-finance is required to secure a new rate.
Another thing is making sure to educate our clients on the different types of products that are available and where they might be able to benefit within these.
We are advising clients to consider overpaying where possible while they are on a lower mortgage rate.However, there are other options available that may be more relevant in the current market, depending on the client's preferences and profile, such as variable rates which may suit some clients.
We are also carefully considering the way banks issue their offers within our recommendation, and the length of time offers are valid for.
Some banks will issue an offer which is valid for six months from the date of the application submission and some will issue it for six months from the date of issue, which sometimes can give us an extra couple of months enabling us to secure a rate earlier.
For purchase applications we are carefully considering which banks allow a change of property once the offer or application is in progress, in case the chain falls apart.
FTA: Has mortgage business tailed off amid this economic uncertainty or is it still booming?
JB: We are still, for the time being, very busy! However, the type of business that we are working on has shifted and we are doing much more remortgage business than purchase business.
We are seeing the banks’ processing times increasing and applications are taking longer to be agreed due to the volume of applications they are receiving, but again this is mostly remortgage business.
On the purchase side everything is very sticky, everything is taking longer and if mortgage offers lapse, then the cost of borrowing is making people think twice about whether this is the right time for them to purchase or move house.
Some clients have decided not to proceed with a purchase.
For new purchases it’s likely there will be pressure on the mortgage valuation figures.
If prices cannot be renegotiated and the deal falls apart, some banks will not allow a change of property during an application without a new product being selected.
And, at the rate they are changing/increasing we need to have more certainty that they retain the original rate.
FTA: What does Britain need to help mend the housing market?
JB: A key part of the market which is not discussed as much as it should be is older homeowners.
There is focus on helping first-time buyers get onto the housing ladder but there should also be incentives for older people to sell and downsize to free up the housing stock.
This could be in the form of more stamp duty cuts encouraging people to downsize earlier rather than taking equity release or living in properties too large for their needs.
More rules and regulation on the agent side of the housing market, qualifications for estate agents, in the same way the mortgage market was reviewed in the mid noughties.
An overhaul of the process through agents to allow for fairer bidding on properties and caps on maximum bids over the asking price.
The top end of the market can access specialist buying agents to help and advise them on the process, first time buyers in most areas don't necessarily have this.
It's a choice between whether you want to own a property and pay down the mortgage (albeit with higher interest) or wait and continue to pay rent.Lack of housing stock was contributing to rising prices - people are bidding over asking prices which is inflating the market.
Potentially one of the issues causing this is some people having access to large amounts of cash from their parents which allows them to pay over the odds.
A way to restrict this could be taxation on gifts from parents above a certain level.
One of the biggest barriers is being able to save for the deposit, so for first time buyers if they could defer some income into a 'deposit fund' tax free with no limit, then that could help people to save more themselves towards purchasing a property.
The most obvious issue which is widely known is the lack of housing supply, building more homes is key. However there needs to be a balance of quality and quantity.
FTA: If a first-time buyer comes through your door, wanting a mortgage, what advice are you giving them right now?
JB: I think the main thing would be the type of property they are thinking of buying and trying wherever possible to purchase a property they can stay in longer-term, so that they can avoid the costs of moving and we can give them some certainty on their mortgage costs for longer.
We are based in London and the changes to stamp duty mean that some first time buyers in our part of the market are massively benefitting from this tax cut.
The problem is they are paying so much more in interest on their mortgage than they would have 12 months ago so on a monthly basis costs are still tight.
Rent is also increasing, so it's a choice between whether you want to own a property and pay down the mortgage (albeit with higher interest) or wait and continue to pay rent.
However, rent is also likely to be increased, due to landlords having to pay more interest on their mortgages.
FTA: What about deposits?
JB: It also depends on the level of deposit they have, and how stretched the overall affordability is for them to purchase the right property.
If we are maxing them out in terms of affordability to enable them to purchase a property which they would outgrow very quickly, then I would question whether this is the right time for them to purchase.
They may not be able to move on again that easily in the short term.
It’s a really challenging time for first-time home buyers.
Mortgage rates are the highest we have seen for 14 years, and the expectation is that property values may go down, so they don't want to make the wrong decision and pay over the odds for a property.
FTA: Are the lenders still open for business? Are there any unsung heroes out there among BDMs you might want to give a shout-out to?
JB: Yes.
There was a period shortly after the 'mini' budget when products were pulled because the markets were in turmoil and the banks didn't know where to price (they were also overwhelmed with a large number of applications following the 'mini' budget).
However, most of the lenders came back to the market - it is just the products that they came back with were about 1-2 per cent higher than they were before.
Everyone focuses on the fixed rates as they have been the most popular products over the last decade, and at the moment these are the most expensive product type.
However, there are other options available, and some of the other product rates available are still at sub 4 per cent - it just depends on what's right for the individual.
Now, more than ever, it is absolutely essential to speak to an adviser about your options.
simoney.kyriakou@ft.com
