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Private Finance's Weekly Mortgage Memo - 11th May 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.

  • Property purchases taking longer as solicitors and valuers remain incredibly busy
  • Despite the slowdown, demand for holiday lets and second homes remains strong
  • Further criteria changes increasing borrowers affordability

Property purchases taking longer as solicitors and valuers remain incredibly busy

Whilst there has been a slowdown in demand at the front end of the purchase market, further down the buying process solicitors and valuers remain incredibly busy. We are seeing it often taking 3 or 4 days for some solicitors to even look at the information sent to them by other sides of a chain and the time it takes for a valuation is increasing too. Moreover, on account of this huge demand, prices are high with some clients having to pay more than double pre-covid prices for legal services, we even have had a client quotes £8k plus VAT recently for a simple case…

  • The property market remains incredibly busy, as people try to beat the SDLT deadline and purchases from the last few months of extreme demand are still in progress. This means the buying process is still far slower than usual at a time everyone is wanting things done faster than usual!

Despite the slowdown, demand for holiday lets and second homes remains strong

We are continuing to see a great deal of demand for buyers looking for second homes and holiday lets. With foreign travel still looking difficult and this not looking set to change in longer term with some countries around the world really struggling and the UK set to be free of restrictions shortly, more affluent buyers are purchasing property, and this will continue to drive prices up in rural and coastal areas.

  • The pandemic has not affected everyone equally and white-collar workers, who were able to work from home have benefitted from the ability to make significant savings over this period and those with larger deposits, from incredibly low interest rates… The housing market will be more unequal as a result and we believe that prices have been driven up so significantly on account of the size of transactions, not just the volume as wealthier buyers are able to afford and borrow more than ever…
  • We suspect this is a trend that is here to stay, even as London and other cities open up, people who can want a second home and will holiday more domestically going forward.
  • This is a particularly attractive market at the moment for investors, wanting to capitalise on a busy summer ahead.

Further criteria changes increasing borrowers affordability

Barclays are the latest mainstream lender to make significant criteria changes that improves borrower’s affordability, with the proportion of bonus income that they will consider increasing from 25% to 50%. This is indicative of the confidence lenders have in the housing market currently and the majority of lenders are returning to pre-pandemic lending criteria with the expectation if a business survived the pandemic and are paying bonuses then these can be relied upon into the future.

  • At the higher end of the market especially, borrowers can significantly increase their potential borrowing with this greater increase in the percentage of bonus considered and Barclays are just the latest to increase these criteria.
  • As lenders relax their affordability and interest rates remain very low, buyers are of course able to afford more and thus afford the higher house prices at the minute further pushing these prices up, so do not think there will be a significant fall in prices on the horizon… 

Private Finance's Weekly Mortgage Memo - 11th May 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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