The Growth Series

Podcast #66 - What Happened in the Mortgage Market in 2021 and What Lies Ahead? (Part One)


In episode 66 of the Growth Series podcast, Jeremy Duncombe, Managing Director of Accord Mortgages, is joined by Charles Roe, Director of Mortgages at UK Finance and Rob Thomas, Principle Researcher at the Intermediary Mortgage Lenders Association (IMLA)

Charles and Rob are asked to review the predictions they made for 2021 in one of our most popular podcasts last year and whether or not they were correct.

Jeremy begins by reminding Rob that last year, he predicted that gross lending would reach its highest levels in more than a decade in 2021 - around £283 billion. Rob talks about how many circumstances led to him being proved right, such as mortgage rates being lower than before, the stamp duty holiday and extension, people holding onto unused cash and the pent-up demand that had built up over lockdown.

Charles had been less confident about 2021 than Rob, but explains he was being cautious rather than pessimistic. He notes that the continuing low base rate helped drive the market in 2021 as lenders fought for market share, while the stamp duty holiday extension also helped.

Jeremy then asks Rob what unknowns affected the market last year that couldn’t have been foreseen when the predictions were made. Rob cites the stamp duty holiday extension as the big surprise last year, as the government was more generous than expected. This, he believes, led to a bigger than anticipated increase in people taking advantage of the stamp duty holiday, many of whom might not have been previously planning to buy.

Charles is asked what difference government support made during 2021. Charles comments that  the level of support, in terms of furlough and bounceback loans for businesses, was unprecedented. This, he says, gave consumers the confidence to think about moving house.

Jeremy moves on to the issue of house prices, asking Rob if they reacted as he expected in 2021. Rob replies that house prices were stronger than expected last year, partly because of a lack of supply.

Next, Charles discusses how lenders managed during 2021, and says he believes they coped extremely well, particularly as they had Covid-related staff shortages throughout the year.

He is full of praise for the sector, as every house buyer got the mortgage deal they needed to complete on or ahead of the due date. Lenders also had to deal with consumers who applied for payment deferrals and process new mortgage applications.

The conversation then moves on to the impact of Brexit, as Rob had expected changes in immigration numbers to have an impact on housing supply and demand in 2021.

Rob points out that the effects of Brexit were largely drowned out by Covid in 2021, and that the impact of changing immigration numbers on the mortgage market will be a much longer-term issue, with fewer homes being needed decades down the line.

Jeremy ends the discussion by asking Rob and Charles about the impact of affordability stress tests on buyer behaviour in 2021.

Rob says the Bank of England have sought to downplay the impact of their rules on buyer affordability, when in fact they’ve had a quite significant impact on the affordability of property, especially for first-time buyers.

Charles agrees, stating that the removal of affordability stress tests will benefit buyers, in particular first-time buyers, going forwards. He adds that the biggest challenge in the coming months will be the rising cost of living, with first-time buyers again being badly affected as many will have stretched their income to get onto the housing ladder.

Come back soon for the second part of this discussion, in which Jeremy, Charles and Rob discuss their predictions for 2022.

The Growth Series is a dedicated resource that aims to help mortgage brokers grow their business using digital and communications marketing techniques. For more hints and tips on how to grow your business, you can sign up to the Growth Series for free, here.

1:40 to 15:41

  • Introduction
  • Mortgage lending in 2021
  • How government support made a difference last year
  • House prices
  • How did lenders cope in 2021?
  • The impact of Brexit
  • Affordability stress tests

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