The Property Financing Trends to Watch in 2022

Bigger mortgages

While there have been reports that the UK’s property boom is cooling as we enter the new year, we expect one part of the market to continue to see exponential demand: prime and super-prime residences in central London.

Exact numbers are still unknown, but it’s thought that around six homes in London will hit the market in 2022 with price tags at about £100 million.

While the emergence of the Omicron variant late last year sparked fears of lockdowns and travel restrictions, there is hope that we won’t need these in the UK or across much of Europe into 2022. International investors tend to be some of the most interested buyers for UK properties at the top of the market. London remaining ‘open’ for business is needed to support prime and super-prime sales in the capital.

Big-ticket property purchases are only ever a possibility for those with a significant overall net worth. However, these days very few individuals – no matter how wealthy – are keen to go ‘all in’ and buy a property outright when doing so depletes their overall liquidity. Prime and super-prime mortgages are here to stay in 2022.

Rising interest rates 

Interest rates will continue to rise this year. Lenders have been raising their rates for some time in anticipation of this, and the lowest rates of 2020 and 2021 are now hard to come by.

Unsurprisingly, this means that anyone thinking of buying a property is now eager to move ahead and get a deal locked in at current rates rather than risk getting a more expensive mortgage later.

That said, there are still good deals to be had. The number of lenders (particularly in the UK, but in other key markets, too) means that there is still significant room for negotiating when it comes to securing the most competitive mortgage rates.

More appetite for second and third properties

The lockdowns of 2020 continued to shape buying trends well into 2021, and we expect the same this year, too.

Lockdowns and the overall reflection that came from the pandemic made more people appreciate properties with more space and spend more time in a home that’s not their primary residence. Rather than spending a vacation at their holiday home for a couple of weeks in the summer, owners view second and third properties as beloved bolt holes where they can spend more time.

Individuals have tended not to finance international property in the past, but today there’s far more understanding of a mortgage's financial and fiscal benefits on foreign real estate. As a result, more people will consider a mortgage for foreign properties in 2022, and as we saw last year, many will be pleasantly surprised by how easy they are to arrange with a finance broker. There’s also more understanding of the choices available to international property buyers, which include using local or international lenders, foreign currency mortgages and so on.

Property as a safe haven asset

 The UK saw record-breaking rises in property values last year, but property generally increased in value worldwide. Simultaneously, the ongoing pandemic, some geopolitical unrest, and moments of uncertainty in global markets saw more individuals assess their investments, asset classes and their risk exposure.

Overall, this led to a shift in how people view property in direct relation to their overall net worth. Today, more of the market – rightly – understands just how important property can be as an investment and an appreciating asset.

This understanding also spiked demand for first time property purchases, investment properties and maximising the value of primary residential property through renovation and redevelopment. In property finance terms, this meant that more people were considering getting on the property ladder and buy-to-let mortgages. There was also more uptake in equity release finance as people opted to improve their current home, especially as demand for property meant that it was hard to buy a new home.

We expect these trends to continue into 2022, and property will remain something of a safe haven investment. The allure of physical property is sometimes only underlined by the rise of digital assets and talk of the metaverse - for many people, property remains the ultimate tangible and enduring investment.