As our plans for the Christmas period come into question, the mortgage market is on the move… but the property market could be slowing
Criteria changes which lenders made due to the economic ripples brought on by COVID-19 and the various lockdowns are now being relaxed. Highstreet lenders are entering back into the market at 90% en masse. Much of this is geared towards the purchase market and first-time buyers in particular.
Credit conditions easing
Service issues brought on by lenders being short staffed and adapting to new working environments are starting to improve and this allows them scope for accepting applications for higher loan to value lending at 90%.
Most high-street lenders are now back in the 90% market. HSBC, Bank of Ireland, Nationwide, Accord, Halifax, Barclays, TSB, Digital Mortgages, Virgin, Metro Bank, NatWest, and Coventry to name a few.
Professional mortgages are back. We have access to lenders who can lend up to 5.5 X income for professionals and lend at a high loan-to-value if needed. Larger loan underwriting is also easing. In fact, we can look at loans of up to £1.5 million at 90% loan-to-value.
Variable income such as bonus, commission, and self-employed income can still be a sticking point with much of the high street. We look to use all forms of income and help build a picture for an underwriter so they understand the income source, how this may have been affected by COVID-19, and look at plans for the future.
Fears of a no-deal Brexit have initiated further drops in the money markets. As I have already mentioned we have seen rates come back in at 90% and lenders have been repricing downwards on certain products between 60% and 85% by anything up to 0.40%.
- 3 Month Sterling Libor = down by 0.001% to 0.038%
- 2 Year SWAP = up by 0.044% to 0.046%
- 5 Year SWAP = up by 0.073% to 0.198%
- Bank of England Base Rate = Held at 0.10%
For residential mortgages at a low loan to value, 2 year rates are still incredibly low at just above 1% and good value for money. 5-year rates are priced in around 0.30% higher.
Housing market still robust but signs that growth is moderating
According to the latest RICS UK residential market survey, the headline house price balance edged down from a 21-year peak of +67 in October, to +66 in November (consensus: +63). The individual activity measures pointed to an easing in growth momentum. The new buyer enquiries balance dropped to +27 in November from +42 in October – it has now moderated for 4 consecutive months, from a high of +75 in July. Similarly, both new selling instructions (from +30 to +16) and agreed sales (+41 to +25) fell back in November but remained positive
This moderation of the housing market can be seasonal as the market does tend to slow over the Christmas period. It could also however be an easing off of the manic situation we had over the summer when lockdown ended and the housing market became swamped with people looking to move to a more suitable property for their needs.
Stamp duty holiday
There are no indications that the stamp duty holiday will be extended past 31st March 2021. Lenders still have relatively slow service standards and solicitors are currently swamped with business. Local searches are taking over 2 months to carry out in some areas. Therefore anyone agreeing a purchase now needs to ensure they have the money for stamp duty available in case they do not complete by 31st March 2021.