The year is still relatively new but the first month has proved both eventful and informative. Now, therefore, seems like a good time to review the mortgage landscape. With that in mind, here are some factors which could drive the mortgage market in 2021.
COVID19
It says a lot about the pandemic that it has easily knocked Brexit off the top spot in this list. Sadly, the end of 2020 did not lead to the end of the pandemic. On the plus side, vaccination is now starting to become a reality. This means that all being well, 2021 will be the year COVID19 is finally eradicated, or, at least, brought under control.
Of course, for various reasons, vaccination roll-outs are progressing at different rates in different places. This could end up having a major economic impact around the globe. If so, then, it probably should be assumed that the UK will be impacted to some extent.
That said, in the case of the UK, the impact could end up being neutral to positive. Right now, the UK is very much ahead of the curve on vaccinations. This means that it could, potentially, reopen its economy relatively early.
Initially, its trading options might be limited due to the ongoing impact of the pandemic in other countries. On the plus side, however, the U.S. is also pushing ahead with vaccinations. If it can also reopen its economy quickly, the UK may have the chance to develop a valuable post-Brexit trading partnership.
Brexit
Technically, Brexit is now complete. In practice, it’s clearly going to take some time for everyone to adapt to it. In the meantime, some companies are pulling out of the EU/NI market. Other companies are finding ways to adapt to the practicalities of Brexit.
Mortgage lenders are facing particular challenges because the Brexit deal was much more focused on goods than services. This means that lenders need to figure out how they’re going to manage existing customers who reside in the EU/EEA. They are also going to have to figure out how, or indeed if, they can onboard future customers from the EU/EEA.
There are already reports of financial services companies withdrawing or restricting facilities to customers based in the EU. Presumably, lenders in the EU are also withdrawing or restricting facilities to customers based in the UK for exactly the same reason. Both sets of customers can apply to mortgage lenders in their country of residence for property located abroad.
In principle, the UK could regain access to the EU (and vice versa) by coming to an equivalence agreement. In practice, this could still be a delicate situation for financial services as equivalence agreements can be revoked at any time. Lenders might, therefore, be reluctant to invest heavily in EU/EEA markets knowing that they could have the rug pulled out from underneath them (and indeed vice versa in the EU/EEA).
Remote working
According to data from people solutions consultancy New Street Consulting, there were three times as many remote jobs advertised in November 2020 as there were in November 2019. This will be in addition to the existing jobs which went remote during the pandemic and will now stay that way.
It may be too soon to declare the end of the office. It does, however, seem almost inevitable that many companies will at least scale back their office space. What’s more, the fewer trips staff are making to the office, the less important it is to live close to it. In other words, any shift to remote working has clear implications for the property market and hence the mortgage market.
Your property may be repossessed if you do not keep up repayments on your mortgage.