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23 August 2016updated 29 Jul 2021 11:30am

The Housing Market in the UK Post-Brexit

UK citizens may have a few questions pertaining to the housing market, post the outcome of the EU referendum, hoping that these may be answered by those with greater knowledge of the property market and its movements. Daniel Hegarty, CEO and Founder of habito, the UK’s online mortgage broker, shares his views on the housing market after the recent ‘leave’ vote.

By Habito

“The mortgage industry needs reinventing. It’s one of the last few markets that’s been untouched by technology, but with a renewed focus on the customer, technology, speed and frictionless experiences it can really grow. It is hard to have confidence in a housing market buoyed by such a lack of innovation, fresh ideas and thinking. Perhaps, if we made mortgages approachable and understandable that might help offset some economic issues that are, frankly, out of most of our hands.”

The London property bubble

Since the conservative vote won at the last general election, much has been said about correcting the housing market and tackling the rising property price dilemma which is leaving millions at the bottom of the property ladder, barely able to purchase. While property value has reportedly decreased over the last few months, the number of new domestic homeowners has not necessarily increased. Foreign investment in London properties has been the more prevalent actuality, potentially making up for the lack of domestic activity post the referendum vote.

Despite the uncertain conditions, some companies have been seeing exceptional month-on-month growth, a promising sign, surely, that activity is likely to continue in this market and that present uncertainties may not yield too much of a negative impact on the economy. Habito, for example, saw half a billion pounds’ worth of applications go through its system since April 2016 and the company believes it will see even more aggressive numbers once it automates more of its services. Hegarty argues, “It would seem that the biggest issues within the mortgage industry are not political or socio economic issues; it is about the ability to be in control, to understand the mortgage process and to trust a brand to do the right thing for you. The mortgage industry is chaotic and not designed for customers at all, so our hypothesis is that, if we fix that, it should have a direct economic benefit for the customers and the economy.” So, as anyone can see, the main feature of habito is its customer-centric approach to mortgage broking. The company wants to reduce the chaos of the current system and create a better, more streamlined version for the future.

Upcoming inflation concerns

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In light of the Bank of England’s decision around inflation, interest rates on mortgage loans are lower than they were at this time in 2015. However, the referendum result produces a unique economic situation and rates will continue to fluctuate over the next few years. Changes will affect homeowners differently – first time buyers will see little difference but, for those looking to remortgage, switching to a new lender could save them as much as £4,000.

What domestic homeowners need to know is that, if they’ve had the same mortgage for years, a switch is advised. For a while now, the habito team have suspected “that the majority of people are in the dark about their mortgages—not because they’re lazy, not because they’re stupid, but because the process of getting a mortgage is so traumatic that, as soon as it’s over, no-one wants to think about it again”.

Habito and YouGov commissioned some research over the last few weeks to try and get to the bottom of some of these thoughts. Here are some of the headlines from the research:

  • One in eight (that’s over 900k) mortgage holders don’t know if they have an interest-only mortgage or not
  • Nearly one in ten (nearly 700k) mortgage holders don’t know if they have a fixed or variable-rate mortgage
  • Nearly one in ten (nearly 700k) mortgage holders don’t know how long their mortgage term is
  • One in every 20 mortgage holders (380k people) cannot even name their lender

Preliminary findings from the commissioned research demonstrated that a rather concerning amount of uncertainty exists around mortgages for the average mortgage borrower in the UK. The good news for now is that, with the recent cut in interest rates, mortgage borrowers might benefit in as far as their repayments are concerned, but only if their lenders apply the change.

The main takeaway for mortgage borrowers moving forward, bearing the unpredictable nature of inflation in mind, would be to consider switching to a low, fixed rate mortgage. It might not only be a smart move to safeguard your financial stability in the future, but could also pay for a holiday. 

Useful tips for those that are looking to buy and require a mortgage:

No matter where you are in your home buying journey, here are a few key tips to keep in mind when acquiring a mortgage:

1.If you’re self-employed and/or a first-time buyer, you can get a mortgage, and one that you can afford. Other mortgage brokers may shy away from these applications, especially from self-employed people – but habito’s technology will scour the market of over 100 lenders and find the best deal out there, giving you simple, totally impartial and honest advice. All of this comes at no fee to the customer.

2.Stay away from Standard Variable Rates (SVR). Paying your lender’s SVR is almost always a very bad idea. If you are on such a rate and in a position to re-mortgage, you absolutely should without delay.

3.A fixed rate mortgage is a hedge against future uncertainty. That doesn’t mean you are optimising your repayments to their absolute lowest, but you are protecting yourself from downside risk should interest rates rise.

4.House prices in a given area rise or fall together. So even if your home is worth less today than it was yesterday, it’s likely your next home is also worth less, so don’t panic.

Habito is a new kind of broker – it uses technology to bring the mortgage application process into the 21st century. The service is online, available 24/7 and no initial appointments are necessary. Unlike traditional mortgage brokers, habito is the only way that people can be sure they are getting the best mortgage deal. Why? There is no incentive for habito to favour one lender over another. The service is free and the only thing that matters is finding the best deal for their customers.

The company’s mission is to take the pain out of mortgages and put an end to mortgage mismatch for good. After you get a mortgage, the company will continue to monitor the market; if there’s ever a better deal out there, habito will let you know and help you switch smoothly. You never need (to) worry about your mortgage ever again.

The good news is that the Bank of England has just announced it has cut interest rates to 0.25%. While there’s no guarantee every lender will pass that saving(s) on to the customer, some major banks like Santander, Barclays and NatWest  have already agreed to do so. It’s a positive sign that might mean the rest of the industry follows suit.

About Habito

Habito is using technology to bring the mortgage application process into the 21st century. Using habito, home buyers can for the first time be sure they’re getting the best mortgage for them. We have developed a simple, honest and transparent way to help people find and apply for the best mortgage. No jargon, no fees and no misinformation.

Our technology allows us to access and analyse every mortgage from over 100 lenders in seconds. We’ll find the best match for you and help you make your application online in about 30 minutes. You can apply on your phone or tablet, 24/7. No appointment necessary.

We’re a group of designers, engineers, mathematicians and mortgage experts with a really big idea. We hold ourselves to highest standards and are committed to transforming the mortgage market.

Habito has raised £1.55m in seed funding, the round was led by Mosaic Ventures, with participation from angels including Taavet Hinrikus, Samir Desai, Yuri Milner, Tom Stafford and Paul Forster.  

Important information about our services

Hey Habito Ltd are authorised and regulated by the Financial Conduct Authority. Our Financial Services Register number is 714187. Our main business is arranging and advising on regulated mortgage products.

Are there any limitations on your product range? habito offers an extensive range of mortgage products from more than 75 lenders on the market, but we are unable to offer products from some lenders, such as HSBC Bank plc and TSB Bank plc. Please ask us if you would like a list of all of the mortgage lenders whose products we offer.

How are you remunerated? When you use our service to buy a mortgage product, the lender pays a commission to us. This means that we do not charge you a fee for our services.

Although this communication is based on sources of information that habito believes to be reliable, no guarantee is given as to its accuracy or completeness.