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Be prepared for a busy mortgage market, advisers warned

Be prepared for a busy mortgage market, advisers warned
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Mortgage advisers should gear up for a busy, but challenging, year ahead, a bridging lender has said.

Paresh Raja, chief executive of Market Financial Solutions, told FTAdviser: “Financial advisers and brokers were certainly very busy in 2021, and our research shows they should expect more of the same in the months to come."

According to Raja, demand is likely to split quite evenly between first-time buyers and existing homeowners moving property, with many others seeking buy-to-let investments despite the various tinkering with buy-to-let taxation over recent years. 

But he also warned the busy months ahead might come with additional hurdles, especially as inflation, the potential for interest rate rises and affordability issues might affect more clients in 2022.

Raja added: "Finding the right loans for their clients might become more challenging this year compared to last.

"Interest rates look certain to rise throughout 2022, inflation is soaring, and house prices continue to climb upwards – these factors will impact the products and rates available to the borrower, which might require advisers to explore different lenders and hunt out the best options as the economic landscape and property market evolve.”

His comments came as research carried out among 2001 UK adults by Opinium, on behalf of MFS, found 18 per cent of UK adults intended to buy a residential property this year.

According to the research, 14 per cent of those who do not currently own their own home want to buy their first property in 2022, while 20 per cent of existing property owners said they would either sell and buy a new home (14 per cent) or buy another property as an investment (6 per cent).

Even with the economic situation of the UK seeming weaker as a result of Covid, with the prospect of rate rises on the cards and consumer inflation above 5 per cent - which was a significant worry for 66 per cent of prospective homebuyers - MFS said the results showed how eager people still were to own their own home.

Indeed, with 63 per cent of respondents expecting house prices to rise in 2022, compared to 8 per cent who predicted they will decline, it appears people's trust in bricks and mortar as an investment is also still strong.

As reported by FTAdviser earlier this month (January), supply and demand characteristics in the housing market still largely dictate the direction of house prices in the UK.

In his CPD feature for FTAdviser in Focus, Adam Forshaw, managing director of law firm O'Neill Patient, said: "There continues to be a huge shortage of housing with demand continuing to outstrip supply. This, together with the stamp duty holiday, has led to house prices escalating.

"Until the government reaches its aim of building 300,000 properties a year, house prices no doubt will continue to increase, although perhaps at slower rates than we have seen in the past year."