It’s all about mortgages, mortgages, mortgages as Abba once famously sang…oh hold on, anyway you get the point.
This week the Bank of England Money and Credit Report (March) showed that “UK homeowners borrowed a record £11.8bn more on mortgages than they repaid in March”.
As I commented to BBC News, “The strongest level of mortgage borrowing since records began shows the insane effect of the Stamp Duty holiday on the property market.
“This mad March mortgage data highlights the frenzied rush of people to buy in the second half of last year and save thousands of pounds on Stamp Duty.
“But the celebrations surrounding the Stamp Duty holiday may soon ring hollow if the market cools and people find their savings have been wiped out by the premium they have paid for the property.
“When data is as extreme as this, it never tends to end well.”
Not just about stamp duty
But it isn’t just about Stamp Duty now. Even when the Stamp Duty holiday finally comes to an end, we expect the mortgage guarantee scheme to continue to support demand among first-time buyers, which will ripple up through the market and maintain a certain level of transactions.
Structural forces will also support transaction levels in the short to medium-term, as the pandemic has triggered a deep rethink among homeowners about what they want from a property.
The rules of the game have changed fundamentally, and more people are finding themselves in properties that no longer suit their work lives. Only last week a Government report showed more people are working from home and that means more people will want a different home.
95% Loan-to-Value Lending
The new crop of Government-backed 95% LTV rates are all out now with pricing available between 3.73% to 4.29% which is where we expected it to be. Applicants cannot borrow more than 4.49 times their income and must have a very good credit record to pass the lender’s scoring system.
With 14 lenders now offering products, there is at least choice available and this will only improve.
Improvements continue from lenders generally with Nationwide the latest lender to return to accepting bonus, overtime, and commission as part of their mortgage affordability calculation.
The biggest issue continues to be the conveyancing process as we approach the latest Stamp Duty cliff edge and we are working with all our partners to ensure that every deadline possible is hit.
The sheer volume of applications going through is great for all brokers at the moment, but as such we are working hard to prioritise those serious buyers. Once the stamp duty first wave is over the tense rush will calm, but I suspect the level of applications from those wanting to move or buy their first home will stay at a high level, especially as mortgage lending will continue to improve as lenders become more confident.
A healthy housing market, with a good level of consistent transactions, is what we all want.
Best Mortgage Rates
In terms of mortgage rates, for standard residential mortgages, borrowers can obtain 2-year fixes at 1.06%, (3.90% APRC) and 5-year fixes from 1.24%, (2.50% APRC) whilst variable tracker rates are around from 1.29%, (3.20% APRC).
Those looking at Buy-To-Let can now obtain products from 1.19%, (4.40% APRC) for 2-year fixed or 5-year fixes are available from 1.69% (3.70% APRC).
To take advantage of these low rates on offer now, or if you simply have a mortgage or property-related question – contact us here or call one of our friendly advisers on 020 7220 5110.