Welcome to another week where the headlines have been stolen once more by Lockdown 2 – This Time It’s Personal!
The good news for everyone in the property industry is that unlike the first installment, the house buying and selling process can continue. Valuers and removals can carry on if the usual social distancing rules are followed, so there is no reason to do anything other than conduct business as usual.
As ever, mortgage availability from lenders is key and the current lender behavior looks like it will continue to be a feature of the market for some time yet, probably until the end of the stamp duty holiday in March next year.
The main issue is that mortgage lenders have had a continual struggle with capacity and people, given the nature of the pandemic. Being forced to work from home away from colleagues, fast internet and multiple screens has been very tricky for many lenders, especially when the market has been pumped up by the sudden closing and opening of the market and doused with petrol in the form of the Stamp Duty holiday.
As a result, lenders have felt the need to reduce not only the number of products available but to increase their rates as a method of trying to manage the number of applications they get in. This will only work up to a point, however, as other lenders also follow suit.
Unfortunately for many first-time buyers, the higher Loan-to-value products have been the first casualty of this as lenders also mull over the potential risks to the economy caused by the end of furlough and other measures.
It is concerning that several months into the pandemic, we are seeing lenders still struggling and some experiencing severe service issues that lead to culling products even for those with medium deposits.
Knowing which lenders are able to move quicker than others, especially with buyers looking to complete within the Stamp Duty time limit, is an important part of our armoury and could make the difference between a sale completing or breaking down.
As we get closer to the bottleneck that is the end of the Stamp Duty this could well get worse. We have been calling on the Government to act now to avoid a cliff-edge event, maybe by some type of taper system, to avoid the intense frustration that many may experience in March 2021.
At the moment it is time to make hay and ensure those pipelines complete.
In terms of mortgage rates, for standard residential mortgages, borrowers can obtain 2-year fixes at 1.20%, (3.30% APRC) and 5-year fixes from 1.43%, (2.90% APRC) whilst variable tracker rates are around from 1.69%, (3.40% 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).