What does the New Year hold for the Island’s property market? We have seen more snow than for many years, and a quick thaw - will the same be true for house sales? Late 2009 showed considerable recovery in prices and volumes and much of this improvement has been fuelled by a lack of supply of available properties. Buyers seem to feel that ‘the worst is over’ and will not wait for ever to buy their dream home. It does not take much activity to restore buyer confidence; how sound or fragile this recovery is remains closely tied to the availability of mortgage finance. Economic times are still tough but the log jam in the mortgage market is clearing - slowly, for borrowers with good-sized deposits and decent credit histories. Mortgages have also become more affordable in relation to income with figures from the Council of Mortgage Lenders (CML) showing that home movers needed just 10.6% of gross income in November to cover mortgage interest payments - down from 11.1% in October. With the exception of a brief low in 1996 this is the lowest burden since 1974. 53,000 house mortgages were advanced in November which is 66% more than the same month in 2008. Lenders are returning to compete in the market with improved criteria for clients with healthy deposits. The sustained low base rate has also been good for borrowers coming to the end of fixed rate mortgages where they can revert to a variable/tracker rate linked to Base which is more competitive than their previous fixed rate with the added benefit that they are not tied into the lender or to a specific product. Many borrowers have decided against re-mortgaging for this reason though when the base rate increases these borrowers will face increased payments. Lenders still need to lend and in a competitive market this can only benefit borrowers by offering a wider choice – but remember: shop around and seek professional advice.
