This week it is all about property prices in 2021 and stamp duty holidays at a time when most people make their annual predictions around property prices and transaction numbers.
You are either very brave or very foolish to make predictions in this environment, so with that in mind, well why not?
Property Prices in 2021
What is interesting is that despite the uncertainties in the economy, people’s desire to take advantage of the Stamp Duty holiday drove mortgage approvals to a 13-year high in November.
The closing stages of 2020 were among the busiest we’ve ever been as a broker. That looks set to continue in the first quarter, too, ahead of the looming Stamp Duty deadline.
The main House Price Indicies saw substantial gains last year with Halifax stating that property prices rose 6% and Nationwide 7.3%, but there is every expectation that this will not continue during 2021.
Although it seems things are pretty bleak as we sit in Lockdown 3, there is now light at the end of this very long tunnel; not only is a Brexit deal done, but there are now several potential vaccines. We do not know how the economy will be during the early part of this year, and there is the small question of paying back all this Government help, but once things do start to stabilise there is every chance of a spending-led recovery.
There remains, even now, pent-up demand in the property market, and together with a lack of property as ever, those expecting a large correction look set to be disappointed yet again.
The pace of growth will undoubtedly slow and it seems therefore realistic that we will see house prices settle this year somewhere between the -2% fall and the +2% growth. OK, so that’s quite a wide gap, but as ever with house prices, this will vary between regions, with some doing much better than others.
In terms of transaction numbers, obviously, the first part of the year will see big numbers as the race to beat the 31st March deadline intensifies, before dropping off, perhaps substantially. I do expect things to come back however after the summer period and all those First-Time Buyers unable to buy now will come back to the market as lenders once more welcome them back into the fold.
Therefore overall we will probably be in the region of 1 million transactions in 2021.
High Loan-To-Value Mortgages
At present, if you’ve got a deposit of 15% or more, there’s an abundance of products and it’s pretty much business as usual in the mortgage market.
In contrast, 95% loan-to-value mortgages remain a pipe dream for the vast majority of people in the current market unless you are buying a new build through the Help to Buy scheme. In most cases, you can forget it.
Even though it’s got a little bit easier to secure a mortgage at 90% loan to value, getting a mortgage with just a 10% deposit remains challenging and the underwriting can be forensic to say the least.
At least we now have a raft of lenders back in this market with HSBC returning to 90% LTV lending last week and joining the likes of Virgin Money, Coventry, Halifax, NatWest, Barclays, Platform and a couple of others.
Rates remain more expensive at this level, circa 3% plus, but remember historically speaking this is still pretty good.
Stamp Duty Deadline
Another challenge facing borrowers ahead of the Stamp Duty deadline is timescale, as lenders, valuers, and especially conveyancers are experiencing bottlenecks and delays given the sheer amount of applications going through. and the administrative upheaval caused by the latest lockdown will only serve to accentuate them.
Though the property market remains technically open, there will now be considerably more logistical issues for the simple reason that a lot of people will be working from home.
We would not be surprised if the Treasury makes an announcement in the coming weeks about extending the Stamp Duty deadline to keep demand alive and give the property industry some much-needed wiggle room, but there is no guarantee of this.
Our advice to anyone putting an offer in now is to be prepared to have that additional stamp duty payment just in case and instruct your solicitors to start their work as early as possible, especially in applying for the local searches. Vendors meanwhile, may need to prepare to do some last-minute negotiations.
Until then, we keep smiling and carry on.
Best Mortgage Rates
In terms of mortgage rates, for standard residential mortgages, borrowers can obtain 2-year fixes at 1.18%, (3.00% APRC) and 5-year fixes from 1.35%, (3.30% APRC) whilst variable tracker rates are around from 1.57%, (3.10% APRC).
Those looking at Buy-To-Let can now obtain products from 1.19%, (4.40% APRC) for a 2-year fixed or 5-year fix are available from 1.64% (3.80% APRC).
For more information and to speak to one of our friendly, professional advisers call us on 020 7220 5110 or click here.