Private Finance's Mortgage Memo - 19th July 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.
- Demand remains high despite the end of the SDLT holiday, people just cannot find the property...
- Adverse lenders back to pre-pandemic levels
- Product innovation and criteria change we would like to see in coming months
Demand remains high despite the end of the SDLT holiday, people just cannot find the property...
The news around the stamp duty holiday ending has struck fear into many that nobody is interested in purchasing houses now due to the higher prices and the lack of the SDLT incentive, potentially leading to a market crash… However, we are seeing the opposite. We currently have many clients with either transactions that fell through pre-the SDLT holiday or were enquiries during the holiday who just cannot find the right property given the lack of supply. We continue to hear from clients that, "all the decent houses have now gone" and we have heard similar from our estate agent partners, and when a good property does come on it lasts all of a week and then is sold.
- With interest rates remaining at rock bottom, regardless of the higher prices currently now is a great time to buy, especially with the potential for inflation to put upward pressure on interest rates.
- The same driving factors, such as increased space, both indoors and out, remain incredibly relevant as people adapt to changes to their work lives in the long run.
- Another major factor driving the market is the huge demand for second homes and holiday lets. With foreign travel remaining incredibly restrictive and complicated, those that can afford it are seeking a place in the coast or in the country to spend their holidays.
Adverse lenders back to pre-pandemic levels
Adverse lender Bluestone have just increased their maximum LTV to 85% and most lenders in the adverse market are now back to pre-covid criteria. We expect to and are seeing a rise in adverse credit cases due to so many people being affected by the pandemic, and we have heard many reports of savings being wiped out and in addition to this, that some people have taken on debts that are not sustainable during this time.
- Some of those that are affected by the pandemic are also those that before it would have been considered excellent lending propositions and although there is a subprime market and lenders, it would be great to see mainstream banks pick up the gauntlet and possibly be more understanding of blips suffered specifically through the pandemic. However, we understand that from a systems stance this is difficult as cases are often considered by an algorithm with mainstream lenders and the answer is black and white, with no consideration for nuance that is possible with a more manual approach being taken.
Product innovation and criteria change we would like to see in coming months
We would love to see some greater product innovation from lenders in the coming months and believe that these would greatly benefit our clients, as well as have a positive effect on the market in general.
- Flexible products for term on a BTL would be perfect for so many landlords as refinance costs every 2-5 years can get costly.
- Flexible mortgage facilities where clients can have a total facility on a property/portfolio but only drawdown part initially - like an offset - would be great to see and again this would be beneficial on the BTL side.
- On the residential side, we would like to see lenders being more flexible with the self-employed as their 2021 accounts / tax calculations come through and be more understanding of the covid support taken as long as things are back to normal for a business.
- We would like to see 10-year rates come down and believe this would mean they gained considerably more traction as well as the addition of more 7-year fixed rates, which would greatly benefit second steppers and those on the path towards their “forever homes”.