Firstly, I would like to take this opportunity to wish you, and your families a happy, healthy and prosperous new year.
I wanted to provide you with a brief update on the mortgage market and my views around where we are likely to be within the next 3 to 6 months.
In 2020 the mortgage market opened in robust fashion. The demand for property continued to outstrip demand leading to steady appreciation in values. Lenders had large pots of money to dedicate to supporting home movers and remortgage customers. Investment in the buy to let market also continued to grow with property investors now in tune with the tax changes of recent years.
The pandemic shifted the scene significantly, triggeringsteep increases in mortgage rates and withdrawal of a number of high loan to value options as lenders grappled with their own risk appetite and the understanding of what effects furlough, BBILS & CBILS (government support schemes) would have on individuals and businesses.
We saw lender confidence start to slowly return to the market in Q4 2020. A number of lenders have reintroduced some of the higher loan to value (85%/90%) deals that were withdrawn in Q2 2020. Lenders have pots of money that have remained unutilised in 2020 that they are releasing to support the additional demand in 2021. Many home movers are taking advantage of the stamp duty relief scheme. If you are unaware of the scheme, then you will pay no basic stamp duty on a property purchase upto the value of £500,000 until 31st of March 2021.
We now have a focussed vaccination programme being rolled out nationwide. This, coupled with many individuals and families putting their plans on hold during lockdown 1, should continue to see a buoyant market in 2021. There may be a minor correction in and around the withdrawal of the stamp duty incentive in March, however I would expect the market to rebound fairly soon after with demand continuing to outstrip supply.
What we now have in a number of sectors is light at the end of the tunnel. There will be some bumps along the road to recovery but there is still much room for optimism, especially if you are thinking of purchasing your new home, re-mortgaging or investing in buy to let.
If you wish to discuss a mortgage proposal with us, please feel free to get in touch on 0161 969 1703, 07379 285 601 or email me at [email protected]
Ben Horsfield, CeMap
Head of Mortgage Services