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Private Finance's Weekly Mortgage Memo - 19th April 2021

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.

  • Lack of supply slowing down the housing market
  • Second SDLT deadline looms and same issues the market faced in March emerge
  • First sub-1% mortgage post-Covid comes to the market

Lack of supply slowing down the housing market

We are seeing many examples of properties coming to market and being snapped up at over asking price within days at the minute and some clients are stuck in limbo in a chain having sold their properties but being able to find something that ticks their boxes or are finding the properties that do are overpriced. This lack of supply is consequently leading to prices remaining high but also causing delays to the purchase process and buyers in chains are often being held back by one party unable to find a property that they like.

  • The reason for this situation is two-fold, we have recently been in a long lockdown and over the winter months when Covid was rife, although you were technically allowed to sell your home, lots of people would have not been keen on the idea of multiple strangers wondering through their properties. On the demand side, the SDLT holiday deadline meant a lot of the best stock has been snapped up by those looking to save and changes in priorities, houses with gardens and more space internally also are more desirable than those where supply is usually very buoyant such as flats in city centres.
  • We suspect as lockdown eases and properties look more attractive in the Spring sunshine, supply should return to the market in the coming weeks and months and demand shows no signs of abating so we believe prices will continue to remain high as buyers seek to squeeze in purchases before the next SDLT deadline…

Second SDLT deadline looms and same issues the market faced in March emerge

The stamp duty extension was a beacon of hope for many who had started the property buying process and experienced delays or dropouts and has been a great success, however now we are hearing the same old stories from clients including extreme concerns over solicitor capacity and chains being able to complete on time before the 30th of June deadline, following which the savings on a £500k property fall significantly to only £2,500 from £15,000.

  • We believe the extension has simply kicked the can down the road and while there is a tapering element to its removal, the change in the first instance is significant. For instance, in a straightforward second stepper scenario, you would now pay £0 on a £500k purchase, from 1st July 2021 to 30th September 2021 you would pay £12,500 and after this it will revert to £15,000.
  • While price rises have eroded the potential savings from SDLT, this is extra cash you need to find on top of your purchase and thus made a significant impact to buyers and borrowers.
  • There will inevitably be a slowdown in the market once the SDLT holiday is removed and some people will not proceed with purchases and chains may collapse, however if Covid is kept in check the housing market is likely to simply return to a more normal state of affairs following this.

First sub-1% mortgage post-Covid comes to the market

Hinckley and Rugby Building Society have just launched the first sub-1% mortgage in a long time, launching a competitive 0.99% 60% LTV 2 Year Discount product. While this is only available to remortgage customers at this point, we are intrigued to see if any lenders will follow suit, and if anyone would be offering this on a fixed rate rather than a discount variable, we are not far off with market leading 2-year fixed rates at 1.06% after gradually reducing over the last few months. The last time we saw rates like this (except for brief periods here and there) was when the base rate was 0.25%, so with it now at 0.1% this is a fantastic step in the right direction.

  • We see this as Hinckley and Rugby having real faith in the market and pitching for that competitive high quality low LTV clientele that lenders like to have on their books to lower the overall risk of their lending proposition.

Private Finance's Weekly Mortgage Memo - 19th April 2021

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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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