The residential property market and mortgage lending have been two areas of focus in the global financial sector, particularly in light of the recent economic uncertainties brought about by the COVID-19 pandemic. In this article, we will take a look at the current state of play in the residential property market and mortgage lending, drawing insights from Kenneth Farrugia, the CEO of Malta-based Bank of Valletta, and Gordon Cordina, a professor of economics at the University of Malta.
Residential Property Market
The residential property market has remained relatively resilient during the COVID-19 pandemic, with many countries seeing an increase in demand for homes. This has been driven, in part, by low-interest rates and changing consumer preferences. With many people now working from home, there has been an increased demand for larger properties with outdoor space.
However, the pandemic has also had an impact on supply, with construction projects being delayed or canceled, and a shortage of available properties in some areas. This has resulted in increased competition for available properties, leading to rising prices in some markets.
According to Kenneth Farrugia, the residential property market in Malta has seen a strong recovery following a brief slowdown during the initial stages of the pandemic. He attributes this to the government’s support for the construction sector and the introduction of various incentives to encourage property purchases, such as reduced stamp duty rates.
Mortgage Lending
Mortgage lending has also been affected by the COVID-19 pandemic, with lenders being more cautious about lending due to increased economic uncertainty. However, interest rates remain low, and many lenders are offering favorable terms to attract borrowers.
Gordon Cordina notes that mortgage lending in Malta has remained strong, with many people taking advantage of low-interest rates to purchase property. He suggests that this has been supported by the government’s measures to support the economy, which have helped to maintain consumer confidence.
In terms of lending criteria, there has been an increased focus on affordability and risk management. Lenders are scrutinizing borrowers’ income and credit history more closely, and some are requiring larger deposits to mitigate risk. This has made it more difficult for some borrowers to obtain mortgages, particularly those with lower incomes or weaker credit profiles.
Future Outlook
Looking ahead, the residential property market and mortgage lending are expected to continue to be affected by the ongoing COVID-19 pandemic. While demand for homes is likely to remain strong, supply may be limited due to construction delays and other factors.
Interest rates are expected to remain low, which should continue to support mortgage lending. However, lenders may continue to be cautious and focus on risk management, which could make it more difficult for some borrowers to obtain loans.
Kenneth Farrugia suggests that technology will play an increasingly important role in the residential property market and mortgage lending. He notes that digital platforms have made it easier for buyers to search for properties and for lenders to evaluate loan applications. He also suggests that the use of blockchain technology could help to streamline the mortgage lending process and improve transparency.
Gordon Cordina emphasizes the importance of government policy in supporting the residential property market and mortgage lending. He suggests that governments should continue to provide incentives for property purchases and support for the construction sector, which can help to boost supply and maintain consumer confidence.
In conclusion, the residential property market and mortgage lending have been impacted by the COVID-19 pandemic, but both have shown resilience in the face of economic uncertainties. Demand for homes remains strong, and interest rates are low, which should support continued growth in the market. However, lenders may remain cautious, and the availability of properties may be limited, which could impact prices and affordability for some buyers. Governments will play a crucial role in supporting the market through policy measures and incentives.
