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Expert Overview of Today’s Mortgage Market and What The Future Holds

Posted 11 April 2018 by Keith Osborne

This week's exclusive interview tackles the topic of mortgages and finance with industry expert Michelle Niziol of IMS Property Group...

We speak to award-winning mortgage and property expert Michelle Niziol about how the new homes market looks right now, the options available to different types of buyer, and how things may change over the coming year.

Please tell us a little about yourself and IMS Property Group.

I am the CEO of IMS Property Group, a Bicester-based property and mortgage broker firm, and have worked in the finance and property industry for more than a decade. I also manage a very successful property portfolio.

After qualifying as a mortgage broker in 2005, I established my own business, IMS Independent Mortgage Solutions, for which I have won several awards including Best Independent Mortgage Broker for the South East at the Real Estate & Property Awards 2015.

Due to high demand from existing clients to provide them with a comprehensive and complete service for all their property needs, I went on to launch IMS Property Solutions and IMS Letting Solutions in 2015. A year later, we added property buying and refurbishment to our service range, and I was a candidate on BBC’s The Apprentice. In 2017, I became vice-president of ARLA Propertymark (formally Association of Residential Letting Agents).

Is new build a significant part of the Bicester/Oxfordshire property market and what are the current 'hotspots'?

New build housing plays a significant role in Bicester and Oxfordshire. The housing minister recently signed the first housing deal in the UK at Heyford Park, just outside Bicester. The housing deal will see the government provide £215m for new homes, affordable housing and infrastructure. This is a key milestone for housing in the region.

In 2014, the government awarded Bicester ‘Garden Town’ status. Since then there has been significant investment in the development of new housing and amenities. Thousands of new homes have been built or are in the pipeline for the town and surrounding areas. Large new home developments in the area include Dorchester Living’s Heyford Park in Upper Heyford and Kingsmere in Bicester, where a range of developers are building.

Is there a wide range of mortgage finance available to new homes buyers? Are schemes such as Help to Buy and Part Exchange used a lot, and do they have an effect on finance options?

Government schemes such as Help to Buy and Shared Ownership are enabling more people to buy a new build home. These schemes enable eligible purchasers to buy a home with just a 5% deposit.

High Street lenders typically require buyers to have at least a 15% deposit to purchase a new build flat with a mortgage on a repayment basis. So, the government schemes are attractive to purchasers who don’t have the ability to save for that type of deposit. The Help to Buy Isa and other saving engines are also helpful for those who are saving to purchase their first home.

Part Exchange is where the housebuilder/developer buys your existing property so that you can purchase one of their new build homes.  It is typically used by people who want to do the selling and buying process under one roof, and want to move quickly without a chain. It works well for many people, but you must be mindful that the price achieved for your existing home may not necessarily be as high as it may be if you sold it on the open market.

Do customers generally come to you with a good knowledge of what mortgage they want and qualify for?

It is a real mix. First-time buyers typically don’t have as much knowledge as those who have bought and sold a home before. The implementation of the Mortgage Market Review in 2014 and the requirement for lenders to have more stringent stress tests in place, has changed the mortgage application process.

Customers typically come to us understanding that they will need to provide an array of information about their personal finances, their employment status, spending habits, types of credit they use, for example, at their first mortgage appointment, which is great. Also, some customers do come to us understanding how much they can afford to borrow or need to borrow. However, upon a review and consultation with them, they often find that they can borrow more than they thought. I’d always suggest speaking to a mortgage broker about what options are available to you.

Do you think the 'Bank of Mum and Dad' is vital to the property market right now?

Yes. It plays a big part in helping young people get on to the housing ladder – more than a third of first-time buyers have help from their parents, and the average parental contribution is £21,600. If Bank of Mum and Dad was a lender, it would be the ninth biggest lender in the UK. With house prices and rents continuing to increase in most parts of the country, and wages unable to catch up; it is very difficult for people to save enough money at the end of the month to put towards a deposit. And, it is unlikely that this will change in the foreseeable future.

With all the changes in tax over the past few years, do you still find there is interest in buy-to-let/property investment?

There is still an interest in buy-to-let and property investment. However, what we are seeing is a slight drop in the number of first-time landlords/accidental landlords entering the market. Seasoned landlords and those with larger portfolios (5+ properties) are less put off by the tax changes and regulation. Some are even looking to add to their portfolio.

Bicester and Oxfordshire are growing at a considerable pace and becoming an increasingly popular place to live for people of all ages. The demand for rental accommodation is high and the stock is low, so there are opportunities for landlords.  

Are people 'missing a trick' by avoiding buy-to-let?

Not necessarily. Buy-to-let isn’t for everyone. It is still seen by many as a quick and easy way of making a lot of money. As the capital appreciation of the property increases over many years, what you are left with is a nest egg for life, a source of income into retirement. But, it isn’t that straightforward and easy. The rules and regulations around buy-to-let/rental accommodation is vast. There is much a landlord needs to know about and keep on top of when letting out a property, which is why it can pay to use a letting agent to manage the process and manage the property.

There are still plenty of opportunities for those looking to buy-to-let but you must go into it with your eyes open and aware of your obligations as a landlord. 

How do you see the property and mortgage markets going over the rest of 2018?

Despite a range of macro-economic factors in play, such as Brexit, we are optimistic for the year ahead. We expect there to be an interest rate rise in the next couple of months and potentially another towards the end of 2018. The number of people looking to re-mortgage will grow as will the number of first-time buyers entering the housing. 

House prices will continue to increase across much of the country. Housing market activity will remain flat, as people decide to stay put rather than move during this time of uncertainty.

The buy to let market will remain stable but we expect there to be an increase in buy-to-let landlords re-mortgaging.

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