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House price growth set to drop into negative territory

The UK’s current house price inflation has slowed to 7.8%, the slowest rate of growth recorded since November 2021, according to Zoopla.

Following October’s mini budget which then saw the property market stall, the property portal says that the housing market is transitioning from an unsustainably strong market to one more balanced, albeit with affordability challenges for homebuyers most reliant on mortgage finance and a weaker economic outlook for 2023.

Buyer demand has dropped 44% year-on-year with a slower decline seen in sales at -28%, which are now back to pre-pandemic levels.

New sales have fallen by up to 50% in the previous market hotspots and high-value areas where higher mortgage rates will hit buying power hardest such as the mid to upper price bands in Southern England (excluding London), East Midlands and Wales. Sales have fallen less in more affordable areas and London where market conditions have been weaker.

Agents will welcome the fact that more homes are coming to the market for sale with the total stock of homes available up 40% vs 2021 – but still almost 20% below pre-pandemic levels and rising supply will boost choice for consumers.

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House price inflation is losing momentum fast, with more recent trends over the last quarter growth rates running at less than a third of the last year. However, Zoopla’s data is yet to record price falls over the last three months across UK countries, regions or major UK cities.

The property website expects price growth to dip into negative territory in H1 2023 as the market adjusts to weaker buying power and concerns over the economic outlook.

It adds that sellers now have to accept discounts to asking prices in order to achieve a sale – a trend that has become more apparent in recent weeks.

The average price achieved in recent weeks has been 3% below asking price when for much of 2021 and the first half of 2022 it has been 0%. Zoopla expects discounts to widen further in 2023.

The portals says that history shows that when discounts reach 5-6% this points to flat to falling prices., it is important sellers who want to achieve a sale are realistic on selling prices and speak to agents for the right advice for their home.

Falling demand and sales mean new and current sellers are being forced to set asking prices at more realistic levels to help secure buyer interest. 1 in 10 homes (11%) have recorded a price reduction of 5%+ (although this remains below 2018 levels) and 1 in 4 (25%) have experienced a price reduction of any size since 1 September 2022.

Asking price reductions are greatest in Southern England, where sales volumes have fallen the most with almost 1 in 3 homes in the South East and East of England reducing asking prices to attract more demand.

The outlook for mortgage rates is the most important factor for home buyers and those planning to move in 2023.

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Looking ahead, Zoopla expects sales volumes to drop back to 1 million over 2023 (from 1.3m in 2022) with house price falls of up to 5%, concentrated in the high-value markets most sensitive to higher borrowing costs

Richard Donnell, executive director at Zoopla, said: “The housing market is adjusting to a reset in the level of mortgage rates but the likelihood of double-digit house price falls at a UK level remains low.

“While the outlook for house prices is weak, we see a shift to more needs driven motivations to move in 2023 and beyond which will support sales volumes. Ongoing pandemic impacts, increased labour market flexibility plus more retirement will continue to encourage moves. Cost of living pressures will compound these trends encouraging homeowners to consider their next move. The rapid growth in rents, which shows little signs of slowing, will add to cost-of-living pressures and add continued impetus to first time buyer demand.

“Sharing advice for sellers looking to list their home for sale, Polly Ogden Duffy, Managing Director at John D Wood & Co. comments: “Tidy up, freshen up, and clean up! Presentation is everything when it comes to selling a home in a competitive market. As well as setting realistic expectations on the price you will achieve. If your property comes with a compromise, such as having a small garden, it’s on a busy road, or it requires a replacement kitchen or bathroom – you need to price accordingly. Competing with other properties at the same price point that come without these drawbacks, will only mean that yours will be last to sell. A combination of waiting too long to adjust your price, and more property coming to the market in the New Year will only provide even more choice for buyers.”

By Marc Da Silva

Source: Property Industry Eye

mortgage rates
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Where does the housing market stand with a 3% base rate?

With constant increases in the Bank of England base rate, mortgage rates have been hitting the headlines with regularity.

While rates have risen, housing market sentiment has fallen. A record half (52 per cent) of adults across Britain disagreed it was a good time to buy a property, according to a September survey by the Building Societies Association.

So where does this leave first-time buyers, and those looking to remortgage?

Mark Harris, chief executive of SPF Private Clients, says that for first-time buyers it is arguably as good a time as any to buy, if they have found a home they want to purchase, are happy with the price they are paying, can afford to pay it and are prepared to stay put for a few years.

“Buyers will be aware that there is talk of property prices falling and potential negative equity for first-time buyers in particular because they tend to take on higher loan-to-value mortgages.

“But such issues are only really a problem if the buyer intends to sell again in the short term. Over time, prices tend to appreciate in value and usually recover even if they dip initially.”

Richard Howes, director of mortgages at Paradigm Mortgage Services, says first-time buyers could take advantage of any fall in house prices, but adds: “It’s the issue of affordability coupled with the cost of living increases that could really impinge on their ability to buy.”

With falling house prices widely predicted across the market, Simon Gammon, managing partner of Knight Frank Finance, says it is reasonable to expect lenders to be hesitant about offering competitive high LTV mortgages.

“We have already seen a reduction in the number of 90 per cent and 95 per cent mortgages available, and those that are still available come at a significant premium in terms of rate. We can therefore expect it to be harder for first-time buyers to get onto the property ladder in the foreseeable future.”

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Just Mortgages national director Carl Parker says it is without doubt becoming more challenging for both first-time buyers and those looking to remortgage after a low fixed rate.

“This is just because rates have risen so quickly, making it hard for people to adjust. However, swap rates are starting to fall back and therefore mortgage rates are dropping a little too. However, they are unlikely to ever return to the historic lows of the past 10 years.”

Vikki Jefferies, proposition director at Primis Mortgage Network, also points to fixed rates stabilising despite the 0.75 percentage point increase in bank rate. But she agrees that borrowers reaching the end of a fixed rate will be faced with higher rates than they are used to.

“This may come as quite a shock for some, especially with house prices falling and reductions in loan-to-value ratios. As a result, product transfer could prove to be a better option for some as customer loyalty can be considered, which sometimes includes preferential rates.

“With fixed rate mortgages currently seeing higher rates than standard variable rate mortgages, talking through the options available to clients is now more important than ever.”

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Indeed, Harris at SPF Private Clients says many clients are seeking variable or tracker rates with no early repayment charges to remortgage. “These are comparatively so much cheaper, at least initially than a fixed rate.

“[Clients] plan to move onto a fixed rate, once pricing of these falls. Meanwhile, if interest rates don’t rise as fast or as far as previously predicted, a variable rate mortgage may turn out to be a good option.”

When it comes to house prices meanwhile, Howes at Paradigm Mortgage Services cites expectations of price growth to slow, rather than prices to fall. “With the recent surge in prices since Covid, most homeowners will have equity they can utilise.

“Indeed, the average LTV of the top five lenders is 60 per cent and they cover around 72 per cent of all lending in the UK, so the average person looking to remortgage should be okay.

“What is of concern though is that remortgage affordability could be an issue, and of course the conveyancing market with its delays and current timescales makes it less attractive than perhaps doing a further advance and product transfer.

“This area could be an issue for advisers, where the DIY product transfer could come into play, at a time when advisers are needed more than ever.”

Parker at Just Mortgages agrees that the need for mortgage advice is at its peak. “The daily fluctuation in mortgage rates has made the role of brokers absolutely vital to help borrowers assess their affordability against changing criteria, and navigate options in this mortgage landscape.

“It is also essential that brokers make the time to reach out to existing clients, to see what help and advice they need, and help to put their minds at rest during this changing interest rate environment.”

By Chloe Cheung

Source: FT Adviser

Self-employed mortgages
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What’s The Future For UK Mortgage Rates?

The Bank of England raised interest rates in September from 1.75% to 2.25%. The 0.5 percentage point increase marks the seventh rise since December 2021 when Bank rate stood at just 0.1%. It also puts Bank rate at its highest level for 14 years.

Concerns are mounting around further, and steeper, interest rate rises in the face of sterling volatility and increasing market uncertainty. Some mortgage lenders, including Halifax, Virgin Money and Skipton Building Society are pulling mortgage deals for new applicants.

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Interest rates, mortgages…
So what do climbing interest rates mean for mortgages? The two million homeowners on variable rate deals, such as base rate trackers, will see an almost immediate rise in their monthly repayments following the recent Bank rate rise to 2.25%. As an example, a tracker rate rising from 3.5% to 4% will cost almost an extra £60 a month on a £200,000 loan.

Remortgagers and first-time buyers will also be faced with higher mortgage costs when they come to source a deal, with the cost of new fixed rates having already factored the latest rise into the price.

… house prices and Stamp Duty
As well as more expensive mortgages, those looking to buy or move home are grappling with relentlessly rising property prices. The average cost of a property coming to the market increased by 0.7% in September (£2,587) to £367,760, according to Rightmove. Annually, average asking prices are 8.7% higher in September than a year ago.

However, Stamp Duty cuts announced in Friday’s Mini Budget – which raised the nil-rate band on the purchase of a property from £125,000 to £250,000 – means that with a third (33%) of all homes listed on Rightmove are now exempt from the tax.

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Fixed rate mortgages
More and more homeowners are now opting for longer-term fixed mortgages in a bid for stability in the face of continued rising interest rates. But while, historically, borrowers would pay more to fix in for longer, the price gap is closing.

According to mortgage broker Trussle, the top interest rate on a no-fee 75% loan-to-value fixed rate mortgage is now 3.25% over two years, 3.35% over five years, or 3.99% over 10 years. Refer to our mortgage tables below for what deals are available today for your deposit level and circumstances.

Why are interest rates rising?
The Bank of England’s Monetary Policy Committee (MPC) uses interest hikes as a means of cooling the economy and taming rising inflation. The Consumer Prices Index (CPI) measure of inflation already stands at a heady 9.9% in the 12 months to August against a government target of 2%.

And with the pound falling dramatically on the international currency markets this week, there are fears that inflation could continue to balloon, prompting the Bank of England to hike rates to as high as 6% from their current 2.25% by next year.

The Bank’s MPC is scheduled to next meet on 3 November to decide on interest rates. However, depending on what happens in the markets and wider economy, there is a possibility that an ’emergency rate rise’ could happen sooner, although the Bank has suggested this is unlikely.

One of the main longer-term drivers behind rising inflation is the cost of energy. The government has intervened by replacing the energy price cap – which had been due to send energy prices soaring to over £3,500 a year from 1 October – with a cheaper Energy Price Guarantee.

This will limit the cost of typical-use household bills to £2,500 a year for two years, with an additional £400 automatic discount applied to electricity bills for every household between October 2022 and March 2023.

By Laura Howard

Source: Forbes

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Union urges contractors to follow Kier lead on sick pay

Campaigning by Unite has secured sick pay of up to £100-a-day for Kier workers.

Union bosses are now calling on other contractors to follow suit and boost their terms beyond the statutory rate which can be as little as £16 per day.

Unite regional officer for the construction sector Malcolm Bonnett said: “Unite has been campaigning hard to end the discrimination on sick pay for construction workers so we’re delighted by this victory.

“Statutory sick pay in the UK is the lowest in Europe so it was vital we persuaded the employer, a wealthy business, that they had a duty to pay when workers are ill.

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“From here, we build further. Unite is determined that other construction employers act to end sick pay discrimination, too.”

A Kier spokesperson said: “At Kier, we recognise that our people are our greatest asset and our teams have been working hard to provide industry-leading policies and measures to support our people.

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“In the last 12 months, we have launched improved family-friendly policies, our new and enhanced standard for sick pay for all and we have become signatories of the Real Living Wage.

“All of these actions reflect the plans we put in place as a result of our strategic review. They form part of our Performance Excellence culture and underline our focus and commitment on doing the right thing.”

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By Grant Prior

Source: Construction Enquirer

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Mortgage affordability test scrapped by Bank of England

Mortgage borrowing rules have been eased after the Bank of England scrapped an affordability test.

The “stress test” forced lenders to calculate whether potential borrowers would be able to cope if interest rates climbed by up to 3%.

Removing the test may help some potential borrowers get loans, such as the self-employed or freelance workers.

But other rules such as strict loan-to-income limits will not make it easier for most people to get a mortgage.

The withdrawal of the affordability test was announced in June but has come into effect on Monday.

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“Scrapping the affordability test is not as reckless as it may sound,” said Mark Harris, chief executive of mortgage broker SPF Private Clients.

“The loan-to-income framework remains so there will still be some restrictions in place; it is not turning into a free-for-all on the lending front.

“Lenders will also still use some form of testing but to their own choosing according to their risk appetite.”

In other words there will not be an immediate impact for borrowers as lenders will not need to change the way they assess loans.

However, some may well change their own rules in the future.

Mark Yallop, chairman of the Financial Markets Standards Board, said although the change would make it “slightly easier” for some borrowers to get a mortgage, he did not think with would have a significant impact.

“The biggest constraint on new mortgages is the ability of borrowers to afford a deposit,” he added.

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What was the scrapped test?
The mortgage affordability test was introduced in 2014 as part of a widescale tightening up of the mortgage market to ensure there were no repeats of the mis-selling scandal that partially contributed to the 2008 financial crisis.

The rule was put in place to ensure that borrowers did not become a threat to the financial stability of lenders by taking on debt they subsequently might not be able to repay.

Lenders had to not only work out if borrowers could afford a mortgage at the rate they were being offered, but also work out how they would be affected if interest rates soared by 3%.

Borrowers who could not prove they could cope with such an eventuality might have been turned down for a loan on that basis, even if they could easily afford a mortgage at the existing rate.

For that reason the test was seen by some as a barrier for some borrowers.

“The rule change could have a positive effect on borrowers who have been disadvantaged when it comes to getting on the property ladder,” said Mr Harris.

For example, some potential first-time buyers who have been comfortably affording rents far higher than potential mortgage payments have failed affordability assessments.

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What checks remain for borrowers?
There are some key protections in place to help ensure that borrowers don’t take on loans they may not be able to afford.

The main one is a loan-to-income “flow limit” which limits the number of mortgages that lenders can grant to borrowers at ratios at or greater than 4.5 the borrowers’ salary.

In short, it is very rare that a lender will consider a higher loan-to-income ratio because of the restriction.

After a review of the rules in 2021 the Bank of England’s Financial Policy Committee judged that “the LTI flow limit is likely to play a stronger role than the affordability test in guarding against an increase in aggregate household indebtedness and the number of highly indebted households in a scenario of rapidly rising house prices”.

“The change in the affordability rules may not be as significant as it sounds as the loan-to-income ‘flow limit’ will not be withdrawn, which has much greater impact on people’s ability to borrow,” said Gemma Harle, managing director at Quilter Financial Planning.

The FCA’s Mortgage Conduct of Business responsible lending rules also require a wide assessment of affordability.

By Simon Read

Source: BBC

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Barclays makes major lending push with £2.3bn deal for Kensington Mortgage Company

In a major push to broaden its lending offering, banking giant Barclays said this morning it has agreed a deal worth around £2.3bn to buy specialist lender Kensington Mortgage Company.

Barclays said the acquisition will allow it to offer more mortgage options to the self-employed and people who have multiple or variable incomes.

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The bank will also take ownership of a portfolio of mortgages offered by Kensington Mortgage Company, worth £1.2bn, in efforts to lend to a greater variety of customers.

The deal comes after the pandemic has led to an increase in the number of self-employed borrowers and those with complex incomes due to the impact of the Government’s furlough scheme and the wider effect on job volatility.

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The Maidenhead-based specialist lender has around 600 staff and offers buy-to-let residential mortgage options as well as owner-occupied lending.

The transaction is expected to complete towards the end of 2022 or early 2023.

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Matt Hammerstein, chief executive of Barclays, said: “The transaction reinforces our commitment to the UK residential mortgage market and presents an exciting opportunity to broaden our product range and capabilities.

“KMC is a best-in-class specialist mortgage lender with an established track record in the UK market, strong broker and customer relationships and data analytics capabilities.

“KMC complements our existing UK mortgage business and broker relationships through the addition of a specialist prime mortgage originator and the utilisation of our strong UK funding base,” Hammerstein concluded.

By Michiel Willems

Source: City A.M.

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Just Mortgages launches marketing service for brokers

Just Mortgages has launched a white-labelled digital marketing package for self-employed brokers.

The service is aimed at brokers who want to promote their own trading style and brand.

Carl Parker, national director of the self-employed division of Just Mortgages, described the offering as a full-service marketing solution, with the group aiming to match the level of service provided by a dedicated marketing agency.

Get in touch with UK Contractor Mortgages today to discuss your Buy to Let & Residential Mortgage requirements.

Self-employed brokers will have access to in-house marketing professionals, who are also experts on the subject of mortgages, and will be offered branding and logo development, content creation and social media support.

An initial consultation between the broker and the marketing team is followed by a brand set up with logo and brand guidelines to establish the look and feel of the business, as well as website and social media content in line with financial promotion regulations.

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On-going support is then provided to the broker to help raise their business profile and attract new clients, according to Parker.

“Our aim is to provide the best possible showcase for the brokers’ business while they get on with the important job of helping clients with their mortgage and insurance needs,” he said.

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Figures from IBISworld show there are 5,580 mortgage broker businesses in the UK in 2022, an increase of 2.6 per cent from 2021.

Last week, Just Mortgages also announced a new training initiative for those wanting to become mortgage and protection advisers.

By Jane Matthews

Source: FT Adviser

Contractor mortgage broker Contractors IR35 rules
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High inflation boosted IT contractor jobs market in May 2022

High inflation appears to have boosted the less quickly growing IT contractor jobs market, as the slowdown in growth in temporary technology billings paused in May.

In Report on Jobs, the REC suggests that rising costs made employers scrutinising the bottom line turn to temps rather than add members of staff to the payroll on a full-time basis.

REC chief executive Neil Carberry gave this assessment in the report on Friday, potentially part explaining how demand for IT contractors shot up in May to 66.1 from 63.7 in April.

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‘Inflation-induced caution’
Mr Carberry said: “The market for temporary work is stabilising faster than for permanent staff, which could suggest a little caution creeping into employers’ thinking in the face of high inflation.”

Kate Shoesmith, the Recruitment & Employment Confederation’s deputy CEO returned last week from a hiring expo in Brussels, only to similarly acknowledge inflation’s tight grip.

“We have been through tough times [chiefly due the coronavirus pandemic], followed by record-breaking successes. But the economic headwinds are [still] there,” she said.

‘Rethinking growth plans’
As to inflation’s effects, Claire Warnes of KPMG spoke of employers “starting to rethink their growth plan” as — like candidates — they face ‘the greatest costs in recent years.’

“And these are expected to increase, at least in the short term,” said Ms Warnes, KPMG’s head of education, skills and productivity.

As well as “rising business costs” for both candidates and end-users alike, she sounded more sympathetic to the latter, by pointing out organisations also face “supply chain disruption.”

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‘IT Operations and Helpdesk keeping pace with inflation’
But only last week, Indeed said that as “the economy starts to weaken,” the phenomenon of “soaring inflation” was eroding the pay gains of “most” workers.

The jobsite found exceptions though – seven occupations in total, including IT Operations and Helpdesk where pay has climbed by a healthy 7.1% in the 12 months to April 2022.

“A handful of occupational categories are seeing wage growth keep pace with inflation, largely the ones facing the most acute hiring challenges”, said Indeed’s Jack Kennedy.

The jobsite’s economist, he added: “Employers in these sectors are having to raise pay to deal with the combination of high vacancies and falling relative jobseeker interest.”

‘Hot market for the sector-qualified’
Compounding the situation, candidate availability is falling too, the REC found in May, and one consequence is “it remains a hot market for those well-qualified in their sectors.”

But another consequence of lower candidate availability is frustrated recruiters.

“Jobs that are paying well for super companies = no applicants. No amount of hunting is getting responses. Very, very few if any candidates,” posted recruiter Roseanne Stockton.

Boss at Nu-Recruit, she added: “Candidates….are excellent. But in the main, up to that point [of meeting them], I cannot find many. [There are just] two candidates per job [opening] at the moment!”

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‘None of their clients would touch a career-breaker’
However some recruiters aren’t helping themselves by excluding professionals who have CV gaps due to taking a career break.

The disregard of individuals with lives beyond just work disappoints agents like Kieran Boyle, owner of CKB Recruitment, who took to LinkedIn.

“Spoke to a candidate this morning [with] bags of experience, [but] taken nine years out to have children.

“The [candidate] was told by a rather well-known insurance recruiter that they didn’t want to work with her, and none of their clients would touch someone whose had a career break”.

“What a load of poppycock,” Mr Boyle continued online, reflecting in his own post. “The industry faces an unprecedented skills shortage, so why would you not try and help someone back into this amazing industry, and help one of your clients fill a role at the same time?”

‘Flexibility trumps pay’
The shortage in the IT sector in May was severe for Developers, Software Engineers, and IT and Technology generalists, as these four were scarce on both a permanent and contract basis.

No other IT contractor skills were “in short supply” in May according to REC’s member agencies, which struggled to find full-time applicants for Analysis, CAD, Data, Digital, Software and Technical Sales positions.

But the confederation has repeated its advice to employers that cash is no longer king.

“Flexibility [now] trumps pay, “ said the REC’s Ms Shoesmith. “[And that’s] closely followed by [company] culture in [terms of] candidate job search [preferences] right now.”

By Simon Moore

Source: Contractor UK

IR35
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Contractor sector sceptical of potential tax cuts from an under pressure Boris Johnson

Contractors being potentially among the one in three adults who can afford basics but not always luxuries isn’t making the contractor sector into Boris Johnson’s whispered tax cuts.

Reportedly recommended to the prime minister as a way to heal rifts after he narrowly survived a confidence vote, any tax cuts would usually be embraced by contractors.

After all, contractors are “up against IR35 reform, dividend tax rises and [potentially] an incoming hike to corporation tax,” Qdos’s Nicole Slowey pointed out yesterday.

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‘Token gesture’
But another specialist in contractor taxation, Graham Webber of WTT Consulting, says he expects any tax cut from Mr Johnson to be only a “token gesture”.

The PM’s trying political circumstances, plus the government’s tendency to legislate against contractors rather than incentivise it via tax cuts, makes his expectation creditable.

But in a thread featuring both the tax specialists, a Test Analyst said that if any of the tax cuts resemble Spring Statement’s 5p cut in fuel duty, the government can “keep it.”

‘Forced bribe’
“At this stage [from Mr Johnson], it would be a forced bribe,” said the analyst, a self-employed contractor. “It would only be announced to make Boris look better, not to help us”.

The prospect of tax cuts has prompted Mr Johnson’s most supportive national newspaper, the Daily Telegraph, to identify a fuel duty reduction as the most important of five he may make.

The right-leaning broadsheet said a close second would be for the PM to abolish the 5% VAT charge on heating fuels — as Mr Johnson has previously promised to do.

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‘Attacks on contractors’
Yet a consultant posted yesterday that it’s not ever Number 10’s decision to cut taxes – it’s Number 11’s.

“[Chancellor] Rishi [Sunak] and the Treasury are in charge of taxes, not Boris,” the consultant said.

“[Following the many] broken promises and attacks on contractors over the last few years, it will take a lot [for either Mr Sunak or Mr Johnson] to win back support — and trust.”

‘Government handling taxation badly’
A YouGov reading of June 2nd shows 69% of adults believe the government to be handling of the issue of taxation “badly.”

Income tax is the levy which people would least like to be increased by the government, followed by council tax, and then National Insurance, the pollster found in May.

Speaking since the findings, Keith Gordon QC has pinpointed what he would most like to see in relation to the contractor sector’s most notorious tax rule.

In a phone-in with LBC about the off-payroll rules, the tax barrister said: “I hope someone will go back to the drawing board and decide IR35 is not fit for purpose.”

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‘Unwelcome letters from HMRC’
A revoking of the Intermediaries legislation is even more of an outside bet than tax cuts from the prime minister, so accountants say it’s ‘business as usual’ this tax return season.

“With tax returns on the mind of many pro-active taxpayers, something often forgotten on the tax returns of those submitting early, is benefits-in-kind,” advises Adam Dove, senior client accountant at Orange Genie.

“With P11Ds not due for submission until July 6th 2022, it is important to ensure your employer has submitted your P11D and you have the details before you complete your self-assessment tax return, to avoid any unwelcome letters from HMRC with amendments, interest and, or, penalties.”

By Simon Moore

Source: Contractor UK

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Contractor mortgage broker underlines ‘get in quick’ advice, as approval times slow

A contractor mortgage broker is underlining its ‘get in quick’ advice of last week, due to a new and significant delay in how long lenders are taking to approve home loan applications.

Only on Thursday, Freelancer Financials explained that acting quickly to remortgage was key for contractors who want to mitigate the impact of future increases in the BoE base rate.

But now the broker says moving fast to lock-in a fixed rate is even more urgent, because lenders deciding to test borrowers’ resistance to the cost of living crisis is stalling approvals.

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‘Not just contractors’

“Mortgage applications are taking much longer to process due to lenders asking for much more information than before,” warns Freelancer Financials’ chief executive John Yerou.

“But this applies to everyone, not just contractors, as no matter who you are lenders want to accurately gauge people’s current and future living costs.”

An expert on contractor mortgages, Yerou says lenders are factoring such higher costs into their affordability calculations for customers, “which will make it more difficult to borrow.”

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‘Properties being down-valued’

But not all price tags are inflating — at least not in real-terms.

In a statement this morning, Freelancer Financials revealed to ContractorUK:

“In the past few weeks we’ve noticed that more of the lenders’ surveyors are down-valuing properties, because they don’t think they’re worth what buyers are prepared to pay.

“[Yet] we’re not expecting a sudden price reduction to hit the market, as right now, demand is still outstripping supply, which is likely to keep prices from dipping.”

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‘Bit more caution’

In the longer-term however, even in “the coming months,” the broker predicted that house price increases would “slow,” partly as buyers “exercise a bit more caution.”

Freelancer Financials added that the currently extended processing time to get a mortgage fully signed off means it won’t just be lenders ‘taking their time,’ but potentially buyers too.

By Simon Moore

Source: Contractor UK