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This is our take on what is currently happening in the mortgage market. Our views are often cited in several national publications, including; BBC News, The Times, Telegraph, City AM, FT Adviser and Daily Mail, as well as a number of key trade publications, so this should keep you ahead of the curve. If you have any questions on any of these stories, or would like further information, please do not hesitate to get in touch.
Don’t miss out on historic low rates, the rises have begun…
The base rate being at 0.1% and incredibly cheap debt for borrowers could not last forever and has to some degree fueled the pandemic property boom along with homeowners changing tastes and requirements and the SDLT holiday. In response to the murmurs from the Bank of England of an upcoming rate rise to combat inflation, potentially now before Christmas, we have seen lenders respond and have already begun to increase rates. For example, Halifax have just increased rates on all their 5-year products at all LTV levels by 0.25%, NatWest also recently increased their rates on both purchase and remortgages in 2 and 5-fixed by 0.05% and the best available rates are creeping up too.
Is SDLT limiting housing supply?
It has been widely reported in the press, from estate agents and anecdotally from our clients that supply is low, and we have had some borrowers still looking for a property for many months now. We think that this is partly due to the disincentive effect of SDLT on purchases for second steppers and those looking to downsize and this in turn leads to stock not being freed up. As house prices have increased to record levels since the pandemic, this means that many second steppers will struggle to get the cash together for their next move up the ladder, despite potentially being able to sell at a profit and borrow enough for their next house and thus in turn they are taking up housing stock, perfect for first time buyers. At the other end of the market in terms of demographics, older people with houses that are now bigger than they require are put off moving as if they were buying a smaller house at say £450k, that would incur £12,500 worth of SDLT, 1.5% of fees to sell so £6,750 and legal fees on top of that – so more than £20k and while this generation may be asset rich, they may be cash poor.
High-value enquiry levels remain strong
While there has been a degree of stabilisation in the market following the end of the SDLT holiday, limited supply, and the end of lockdown restrictions, we have noticed that higher value enquiries, those over £1m of borrowing have remained strong and we have seen an increase of late. The reason for this is partly due to the large increase in property prices and borrowers looking to maximise their affordability while rates are low and this links to the refinancing of larger debts where remortgaging currently could lead to significant savings both on residential and investment terms.