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House Prices rise as number of high LTV loans reduce

10.08.20

As the mini-boom continues, the fear is of a maxi-bust. Prices and activity are holding up well for now as the post-lockdown surge continues, but everyone knows that the Autumn is when we will see the real impact of Covid-19 on the economy.

The Government has a phenomenal task ahead to keep people in jobs, which will clearly determine the direction of house prices in the short to medium-term.

The property market is a peculiar beast right now.

House Prices Rise

We have just seen the latest figures from the Halifax House Price Index that showed prices have hit their highest level yet in July, jettisoned into orbit by pent-up demand and the Stamp Duty holiday. House prices are now 3.8% higher than this time last year, with demand continuing to be strong.

Landlords are making hay while the stamp duty sun shines and are especially active with holiday lets. We are also seeing many people looking to take advantage of the stamp duty holiday to buy second homes.

Elsewhere, those looking for outside space, a home office, or now believing they can move further out as more flexible working comes into play, adds to the traditional reasons demand is high.

For first time buyers, the picture is however trickier. The stamp duty holiday has become academic as the people who it was intended for are least likely to be able to make use of it as borrowing at higher loan-to-values is increasingly difficult. It’s a classic fiscal clanger.

The property market at present seems to be a classic case of The Haves and the Have Nots.

Mortgage Lenders Pull Products

Lenders really are not making life easy now as they continue to struggle with capacity issues and nervousness over the end of furlough. In fact, according to Moneyfacts lenders have withdrawn almost 2,700 products since March! There are now only a handful of products available to those with a 10% deposit compared to the 779 available in March.

Halifax for example even pulled all its rates for those with a 20% deposit or less – albeit temporarily.

We are also seeing rates go up as well, even though the Bank of England has kept Bank Base Rate at its’ historical low of 0.1%. As we mentioned in The Times this weekend, “Lenders are still struggling with capacity issues, and putting up rates is one way of dealing with this.”

There are also some long waiting times for applications, with some lenders working 7-10 days behind. It is important we all manage expectations accordingly which is tough in a busy market.

These changes are also being made at a rate of knots, often with little or no warning which shows just how important it is to engage with a professional broker at present in order to make sure mortgage applications have the very best chance of going through.

Best Mortgage Rates

In terms of mortgage rates, for standard residential mortgages, borrowers can obtain 2-year fixes at 1.14%, (4.40% APRC) and 5-year fixes from 1.41%, (3.30% APRC) whilst variable tracker rates are around from 1.34%, (3.30% APRC).

Those looking at Buy-To-Let can now obtain products from 1.22%, (4.80% APRC) for 2-year fixed or 5-year fixes are available from 1.62% (3.77% APRC).

If you want to speak to one of our friendly, down-to-earth advisers please feel free to contact us here.

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