Private Finance's Weekly Mortgage Memo - 27th July 2020
This is our summary of news in the mortgage market over the last week that we thought was particularly interesting. 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.
At a glance:
- Looking to purchase a property soon? Get your financing arrangements in place ASAP
- For those who have… even more shall be given - further cuts to rates at lower LTVs
- Increase in expat mortgage enquiries since changes to stamp duty threshold
Looking to purchase a property soon? Get your financing arrangements in place ASAP
In the last couple of weeks, we have seen huge variations in offer and processing times among lenders, ranging from 2 days to over a month. This includes high street lenders as well as more specialist providers. Underwriters are incredibly busy at the moment, dealing with both the backlog of mortgage applications and increased demand following the relaxation of lockdown restrictions and the government’s decision to raise the stamp duty threshold. Also feeding into this is the growing delays in valuation undertakings, which can take multiple weeks due to valuation officers having to follow new health guidelines to reduce the spread of coronavirus.
- If you are looking to purchase a property soon, we recommend getting your financing in order ASAP to ensure you do not miss out on your dream home.
- We believe we will continue to see delays for a long while yet, especially as lenders change their criteria. For example, lenders returning to the market with high LTVs are likely to be inundated with new enquiries due to the scarcity of providers offering loans at or above 90% LTV. This will lead to even further delays in processing times. It isn’t just 90% lenders though, everyone is busy!
For those who have… even more shall be given - further cuts to rates at lower LTVs
We are seeing continued cuts to rates at lower LTVs from mainstream lenders, the latest being Halifax. The lender cut its rates by 0.1% for 2, 3 and 5-year fixed rate products at 60 and 75% LTV. On the flip side, they are increasing rates at higher LTVs of 80% and 85% by 0.2%.
- It has never been a better time to take out a mortgage for those who have a large deposit or are looking to remortgage with significant equity.
- Although these rate increases or decreases are small, they can leave borrowers either hundreds or thousands of pounds better or worse off depending on their mortgage amount over the course of a year.
- Lenders are keen to attract lower risk borrowers due to high levels of uncertainty in the housing market. We believe we will see further cuts among the mainstream lenders at lower LTVs and further rate increases at higher LTVs – factoring in the added risk involved in higher LTV lending at present.
Increase in expat mortgage enquiries since changes to stamp duty threshold
While expats still have to pay an additional 3% in stamp duty if they own a property abroad, changes to when the levy applies makes the cost more palatable. Expats who may have been considering purchasing a UK property – either with the intention of using it as their main home in the long-run, as a holiday home or as an investment – may be encouraged to push ahead with purchases as a result of declining house prices and changes to the stamp duty threshold.
- We believe we will see more overseas buyers and expats looking to purchase UK property in the coming months to take advantage of low rates in the mortgage market and declining house prices
- We have also seen a particular increase in mortgage enquiries from Hong Kong residents since the implementation of the new national security law. This sudden rise in demand is likely to continue to increase as the situation develops.