Private Finance's Weekly Mortgage Memo - 4th January 2021
Happy New Year and please find our first Mortgage Memo of 2021 below…
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:
- Brexit deal leads to a surge in enquiries from overseas buyers
- Big rush expected as buyers look to beat the SDLT deadline… but will they make it through?
- With Bitcoin at a record high will more lenders start accepting it as a form of deposit capital?
Brexit deal leads to a surge in enquiries from overseas buyers
After what feels like an eternity a Brexit deal was finally agreed and is now in action. Whether the deal was good or bad is not particularly relevant in this context, what it does bring is certainty and this has seemingly led to a surge in enquiries overseas buyers, both expats and foreign nationals looking to purchase UK property and thus requiring finance.
- From the 1st April 2021 overseas buyers will be subject to an additional 2% SDLT on top of the 3% additional homes surcharge and thus purchasers will want to complete to make savings in this regard.
- Whilst certainty is a driver in any economy, the economic repercussions of Brexit alongside the Covid pandemic are likely to hit the housing market which has remained entirely unscathed of late.
Big rush expected as buyers look to beat the SDLT deadline… but will they make it through?
The Treasury had stated that there will not be any extension to the SLDT holiday, and thus those buyers looking to make savings need to get their skates on. As we have discussed before all parts of the property purchase and sales process are under pressure, from solicitors to lenders and thus the process is taking far longer than usual. We suspect there will be a huge demand in the coming weeks, depending on whether a more stringent lockdown is brought in or not, and we will likely see many buyers missing the deadline.
- With the deadline approaching, it is likely many people will miss it and thus if they cannot find or borrow the extra money for the Stamp Duty the transaction is at risk of falling through. With prices already inflated and expected to fall following the end of this holiday could we see buyers hold out in the first quarter of this year to see how the market responds? We suspect now, Tier 4 and the potential for a third even stricter lockdown will likely further entrench the trend for people looking to upsize and benefit from more space.
- Despite the Treasury’s statement, given this government penchant for U-turns that could very much mean the opposite and the SDLT holiday is extended until the summer at the least.
With Bitcoin at a record high will more lenders start accepting it as a form of deposit capital?
Bitcoin has recently surpassed the $30,000 mark and appears to continue to climb as investor seek to diversify and institutional investors look to capitalise on the potential gains in the crypto markets. So, what does this mean for those who hold enough Bitcoin to use as a deposit for a house? Part of Bitcoin’s appeal is that it exists outside of the mainstream, but this is precisely why it is also difficult to use with purchases that require scrutiny such as property transactions. It has historically been linked to nefarious activities due to its difficulty in tracking transactions and the fact you do not need a bank account with the usual verifications to hold the currency and thus lenders are wary of it, and thus there are only a handful that will accept Bitcoin (once sold to pounds of course) as a means of a deposit, but this does include some mainstream names.
- We suspect more lenders will begin to accept Bitcoin and potentially other crypto assets as they become increasingly mainstream and given the upward trend in the price may even develop products that utilise this capital growth.
- Some investors also expect to be able to use profits from these investments as income, however this is not possible either like with many other investments.