The UK property market has experienced some interesting developments in recent months that potential investors should be aware of. In this article, we will delve into the reasons behind the rise in searches for interest-only mortgages, the growing interest in non-traditional construction properties and energy-efficient homes, and changes in mortgage criteria for borrowers with visas. We will also provide insights into the implications of these trends for potential investors.
Interest-Only Mortgages: A Surging Demand
The announcement of the Mortgage Charter by Chancellor Jeremy Hunt in late June has sparked a notable increase in searches for interest-only mortgages. Figures from Legal & General Ignite show that from May to June, searches soared by 53%, followed by an additional 11% rise from June to July. The Mortgage Charter aims to provide support to borrowers struggling with mortgage repayments by allowing them to explore alternative options without affecting their credit score. It also enables borrowers to switch rates up to six months in advance and opt for interest-only payments for a six-month period.
Non-Traditional Construction Properties Gain Popularity
In July, there was a significant 9% surge in searches for non-traditional construction properties. This growing interest is likely attributable to changes in buyer preferences and the availability of unique and innovative housing options. Non-traditional construction can include modular homes, prefabricated houses, or those built with unconventional materials. These properties often offer cost-effective and environmentally friendly solutions, appealing to savvy investors who seek unconventional investment opportunities.
Green Considerations: Rising Interest in Energy-Efficient Homes
Parallel to the interest in non-traditional housing, there has been a substantial increase in searches for mortgage products that consider a property’s Energy Performance Certificate (EPC) ratings. In June, searches in this category rose by 15%, followed by an impressive 38% surge in July. This trend indicates growing awareness and implementation of the green agenda within the property market. Investors increasingly recognize that energy-efficient homes not only reduce carbon footprints but also offer long-term cost savings on utility bills. Consequently, investing in properties with good EPC ratings may provide an appealing opportunity for potential investors.
Minimum Loan Amounts: The Search for Affordable First-Time Properties
The ongoing rise in interest rates is leading borrowers to consider cheaper “first-stepper” properties. Searches for mortgage products with the lowest minimum loan amount have witnessed an impressive 35% increase. Rising interest rates make affordability a key concern for potential buyers, particularly those taking their first steps onto the property ladder. By targeting properties that meet low minimum loan amounts, investors can potentially secure more manageable mortgage terms and increase their chances of profit in the long run.
Changes in Mortgage Criteria for Borrowers with Visas
Another significant trend is the continued popularity of ‘visa’ as the top criteria used by advisers when searching for mortgage products on behalf of clients. In July, searches concerning borrowers with visas experienced a marginal decline of 3.89%, following a 15% drop in June and a notable 28% increase in May. Simultaneously, searches from expatriates residing outside the UK fell by 9% in July. The changing landscape surrounding visa requirements, particularly in light of Brexit, may have influenced these fluctuations. It is essential for potential investors to remain aware of the evolving criteria for borrowers with visas, as it may impact investment opportunities, especially in areas with significant expatriate populations.
Conclusion
These recent trends in the UK property market present potential opportunities for investors seeking lucrative investment prospects. The surge in interest-only mortgage searches indicates a desire for flexibility in mortgage repayment options, while the growing interest in non-traditional construction and energy-efficient homes reflects changing buyer preferences.
Additionally, the search for affordable first-time properties highlights the importance of considering minimum loan amounts amidst rising interest rates. Finally, investors should stay informed about mortgage criteria changes for borrowers with visas, which may affect investment decisions, particularly in areas with a high number of expatriate residents