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Private Finance's Weekly Mortgage Memo - 30th November 2020

This is our take on recent news 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.

At a glance:

  • The return of the 90% mortgage and rate cuts expected
  • Huge number of completions this December
  • Buyers need to act now to beat the SDLT deadline...

The return of the 90% mortgages and rate cuts expected

Following Accord returning 90% products to its core range as we predicted the large mainstream lenders would follow and this last week has seen TSB return to this space. This is great news for borrowers with low deposits and first-time buyers, who are beginning to have options again, however, not at the cheapest rates…

  • The cost of borrowing at this level remains high at 3.69% for a 2-year fixed or 3.79% for 5-year fixed from Accord and 3.79% from TSB, the reason for this is two-fold, firstly it prices in the risk of a large fall in prices and secondly and quite simply there is huge demand in this space and people are willing to pay for it…
  • This change in the market is indicative of the fact lenders believe the housing market has weathered the Covid storm to some extent, however they remain cautious and the fact that often these 90% rates are only being offered on 5-year fixed terms highlights that they do not think the market is totally out of the woods yet and would rather higher LTV borrowers took longer-terms due to the risks in the market present in the short and medium term…
  • With Christmas approaching and a natural slowdown in the mortgage and housing market, lenders will have more capacity and are able to look at these cases again, as opposed to focusing on lower risk business – we suspect they will be under greater scrutiny for the time being.
  • We expect other mainstream lenders to follow suit in the coming weeks and it is likely that the additional competition will drive down rates.

Huge number of completions this December

The frantic purchase bonanza of the summer months is now resulting in record completions and Zoopla estimates that there will be circa 140k completions next month – the highest figure for December since 2006. It usually takes approximately 2 to 3 months from mortgage offer to completion and we are seeing a large number of our new clients complete following offers in September which was our busiest month on record for applications.

  • We expect house prices will remain high in the short term and we are braced for a huge number of new enquiries in the new year with buyers clamouring to beat the SDLT holiday deadline.
  • New mortgage enquires have slowed down in the last 2/3 weeks, with the fresh lockdown and uncertainty surrounding the tier system, but we expect it to pick up again in December – going against the usual trends, as seems to be the way in 2020…

Buyers need to act now to beat the SDLT deadline...

As outlined above we are bracing ourselves for a post-Christmas rush of buyers looking to beat the end of the SDLT holiday, and we recommend buyers get the process started as soon as possible and get their finances in order to avoid disappointment and up to an extra £15k to add on to the bill…

  • It usually takes 2-3 months from mortgage offer to reach completion and with lender timescales still not being ideal, as well as local searches still taking longer than usual the window is narrowing day by day… Moreover, certain applicants, such as those who are self-employed, are coming under even greater scrutiny at present potentially further extending the timescales…
  • Solicitors are also reporting being almost overwhelmingly busy, and we have heard of a number of them either not taking on new clients or raising prices.
  • It is imperative at present that buyers ensure they are in the best possible position to proceed if they want to beat this deadline… ensure all the requisite documentation is to hand such as payslips and the like to make your mortgage application and start the process as soon as is possible…

Private Finance's Weekly Mortgage Memo - 30th November 2020

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© Private Finance Limited, 2021. Private Finance provides independent mortgage advice and arranges individual mortgage solutions for clients. Private Finance is a trading style of Private Finance Ltd, 29 Lincolns Inn Fields, London, WC2A 3EG, registered in England no. 3855776 and its Appointed Representatives. Private Finance Limited is authorised and regulated by the Financial Conduct Authority (FCA registration number 310566).

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