Interest rate changes have limited effect on niche lending

Interest rate changes have had a limited effect on niche areas of lending, and the outlook for next year is for continued increases in house prices, according to research undertaken last month among 1,300 mortgage intermediaries.

Conducted by UCB Home Loans, the specialist lender of Nationwide, the research shows that 85% of brokers expect house prices to be higher at the end of next year, whilst just 10% think that they will remain static.

However, the rate of price increases is expected to fall. Of those questioned, 43% thought that prices would increase at a slower rate, whilst 38% thought the rate of increase would be about the same as this year. Faster price rises were expected by 17% of brokers.

Only 15% of brokers thought that recent increases in interest rates had affected the self-cert sector, with the remaining 85% saying they had not. Almost a third (30%) said that self-cert business had increased over the past four months, and a further 58% said it had stayed the same.

In the buy-to-let sector, a higher figure of 40% of brokers thought that interest rate changes had affected the market, whilst 60% said they had not. A third (33%) said that buy-to-let business had increased over the past four months and 42% said it had stayed the same.

“Brokers are expecting house prices rises to slow down next year, which is a pretty reasonable assumption,” said Keith Astill, managing director at UCB Home Loans.

“Latest figures from Nationwide show that average house prices increased by 9.6% in the year to the end of November – somewhat higher than many people imagined would be the case, particularly when we consider the fact that the base rate has now risen to 5%,” he said.

“However, despite the fact that rate rises have had some effect on the self-certification and buy-to-let sectors, the majority of brokers are still reporting that business has been growing.”