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Mortgage body urges government to act on Brexit

Mortgage body urges government to act on Brexit

The future is ‘too unpredictable’ to know what 2019 might look like for the mortgage market, trade body UK Finance has stated as it urged the government to help reduce uncertainty in the marketplace.

Speaking at the annual mortgage lunch last Friday (April 12), Richard Rowntree, chair of UK Finance’s mortgage personal finance board, said: "At this point it’s just too unpredictable to know what 2019 might look like.

"The performance of the mortgage market is more than ever going to be dependent on consumer confidence and that in turn is going to depend on Brexit and its impact on the economy."

Speaking at the same lunch, Stephen Jones, chief executive of UK Finance, said the first of the trade body’s priorities for the year ahead was to mitigate the impact of the UK’s exit from the EU across all segments.

He said: "We are calling on the government and MPs to remove the cloud of uncertainty that is hanging over consumers, business and the economy, by working together to agree a way forward over Brexit."

However, Mr Rowntree went on to say he expected remortgaging and product transfers to remain strong in 2019 as many two and three-year fixed rate products come to an end. But he added the overall ‘churn’ rate would slow as more people opted for five-year fixed rate deals due to uncertainty.

Mr Jones agreed: "Amid this uncertainty, we are seeing increasing numbers of customers locking into competitive fixed-rate deals.

"Over 475,000 borrowers remortgaged onto fixed rates in 2018. We expect even stronger growth in remortgaging this year, as more tranches of fixed-rate mortgages come to an end and customers refinance onto attractive new deals."

UK Finance also celebrated the rise in the number of first-time buyers in 2018.

Mr Jones said there were 370,000 first-time buyers in 2018, which is the highest number since 2006.

He added: "That’s over 1,000 customers every day buying their first home thanks to the mortgage industry.

"This success has been boosted by schemes like Help-to-Buy enabling first-time buyers to get onto the housing ladder. A new phase of the scheme has been announced in England until 2023 and we are now pushing for clarity over extension of the Help to Buy schemes in Scotland and Wales."

But Mr Rowntree said there was a danger innovation such as guarantor or parental supported mortgages, alongside a continued use of ‘the bank of mum and dad’ for deposits, could result in homeownership becoming a ‘hereditary entitlement’.

He said: "It’s good to see that Help-to-Buy has been extended and growing development of these schemes is welcome, as long as they are fair and transparent to customers."

Commenting on the speeches, Craig Parkinson, mortgage and protection consultant at Continuum, said: "At the moment Brexit is stopping the move for those moving for luxury reasons. In my opinion, people with options are sitting back and taking stock.

"Brexit or no Brexit, people will still need to move due to circumstance.