Mortgage Market Update (end of December)

In the midst of the festive and new year period, we often see the housing market slow down and become a bit more mellow before it picks up again just after the new year, however this year it is quite a different story.

Despite the surge in unemployment and an economic downturn that has resulted from the pandemic, Rishi Sunak’s stamp duty holiday cut continues to drive massive demand and create massive waves for mortgage applications and approvals. It does not seem to be slowing down as we approach Christmas and the New Year. Least of all, with so many trying to get in before the Stamp Duty Cut which ends in March.

According to data from the Bank of England, approvals for home purchases jumped to 97,500 in October which is the most since September 2007. It was never this high even before the pandemic in February 2020. Economists from Reuters also did not expect it to be this high, with their estimates for October coming in at 84,500.

Specialist buy-to-let lenders

Specialist buy-to-let lender Fleet Mortgages has relaxed their minimum landlord experience criteria for HMO and MUB Landlords. Fleet now suggests that the primary applicant must have owned a standard buy-to-let, HMO or MUB (Multi Unity Block) property for only 12 months whereby before it was 24 months.

Keystone Property Finance Chief Executive David Whittaker has spoken to Specialist Lending Solutions to say that those who were blaming brokers and conveyancers for failing to complete mortgages on time or not packaging cases properly was “preposterous.”

“You only need to look at current lender service level reports on Criteria Hub to see that blaming intermediaries for delays is unfair,” he said.

“Not only is it unjustified, it’s also unhelpful. It certainly won’t help us resolve the delays. It’s not the fault of the lawyers, either, who seem to be working at maximum capacity and aren’t taking on more work than they can handle.

“No, as an industry we are accelerating towards a major problem with the looming deadline. We’re not heading for a traffic jam or a bump in the road – this is going to be a car crash,” he added.

In other news with specialist buy-to-let lenders, Paragon Bank’s managing director Richard Rowntree optimistically revealed, “2020 has been the most extraordinary year, but it’s one which has demonstrated Paragon’s resilience, our commitment to the market and the strength of our people and processes. Within four days of lockdown, over 90 per cent of our workforce was working from home and we remained open and lending throughout the pandemic.

“Overall lending reduced naturally as a consequence of the lockdown and the restrictions imposed on the housing market, but demand bounced back strongly post May and our pipeline at the end of October was nearly 15 per cent ahead of March 2020.”

When mortgage payment holidays were first offered by the lender as a result of Covid-19, a little over 20% of the group’s buy-to-let customers took it up, but this has now fallen to less than 1% by the end of November. Their end year results also revealed to show they had exceeded their projections with £1.205bn of lending in the year to September, further demonstrating their resilience in the market despite all that has been going on.

Product availability

According to the November 2020 Moneyfacts UK Mortgage Trends Treasury Report, the number of products available on the mortgage market are still far from what they were from last year, despite lenders slowly increasing their offerings. As of 24th November 2020, there were 2404 products available in the mortgage market, but this is less than half of what was seen last November at 5077 products.

On the positive side, the number of products available on the market has been increasing month on month since June. Product availability went from 2,259 in October to 2,404 in November.

There have been increases more noticeably in the residential mortgage sector between 75%-80% threshold. Average interest rates also continued to rise over the month of November with the average 2 year fixed rate rising by 0.05% to 2.43%, and the average 5 year fixed rate rising by 0.08% to 2.70%. These increases are also again more noticeable in the higher tiers.

Product Updates

As of 5th January 2021, Coventry Building Society will be changing their residential product range and will be decreasing their 2 and 5 year fixed rates across all their LTV thresholds at 50%, 65%, 75%, 80% and 85% by 0.05% for many of them.

Foundation Homeloans have also announced 21st December 2020 that they will be refreshing their whole buy-to-let and residential product range in January.

Precise Mortgages have introduced new flat fee products for their HMO or MUBs/Limited Company range. 2 year fixed rate from 3.39% with £2995 fee or a 3.69% fixed for 5 years with a flat fee of £3995. Products which can prove beneficial for larger loan sizes.

Leeds Building Society have introduced a Right To Buy range whereas Natwest and Barclays have gone back to the 90% LTV residential market. There are 2 year fixed rates starting from 3.55% and a 5 year fixed rate from 3.60%.

All information is valid as of 30th December 2020. Views and figures expressed in this article are not likely to be remain true for future dates.