Month: November 2020

Borrower choice for 90% mortgages doubles as lenders return to the market

By: Lana Clements of Mortgage Solutions 27/11/2020

 

Borrowers looking to access 90 per cent loan to value (LTV) mortgages now have almost double the choice compared to September, as lenders have started stepping back into the market, analysis for Mortgage Solutions has shown.

 

There are 80 mortgage products available to borrowers today with a deposit or equity of 10 per cent required, according to Moneyfacts. At the start of September, there were only 44 deals available on the same basis.

 

In the past week alone, the number has jumped from 65 to 80, the data revealed. Atom Bank, TSB and Platform are among the lenders to have added 90 per cent LTV mortgages to the market this week and Nationwide announced they would expand lending at this level beyond first-time buyers.

 

The market for high LTV lending collapsed as the pandemic struck earlier this year, leaving many borrowers who could not scrape together bigger deposits with no option but to delay transactions. In recent months, some lenders returned to 90 per cent LTV lending for short stints of just a couple of days or, in some cases, only hours in an effort to manage volumes.

As more lenders filter back into the space, the pressure appears to be easing. However, lending at 95 per cent LTV remains very limited with still only eight products currently on the market.

 

Eleanor Williams, spokeswoman at Moneyfacts, said: “It is really encouraging that we are beginning to see more lenders relaunch products in the 90 per cent LTV bracket, especially for those borrowers with lower levels of deposit or equity who may have felt they had little to no options to move forwards with of late. We have seen a few lenders put their toe into the water of high LTV lending with short-term, limited edition products which were only on offer for a day or so, therefore seeing further providers enter this arena could be demonstrating that mortgage providers are managing their operational demands and are keen to cater to these borrowers.”

 

Borrowers who are keen to take advantage of one of these 90 per cent LTV deals are recommended to secure the support and guidance of a qualified, independent adviser who will be aware of the most up to date products available and be on hand to help borrowers navigate the mortgage maze.

Could the stamp duty holiday be extended?

Industry groups push for six-month extension as buyers and sellers face delays

By Stephen Maunder for Which

Estate agents, surveyors and solicitors are pleading with the government to extend the current stamp duty holiday by a further six months, as homebuyers face a race against time to get their moves over the line.

Mortgage approvals and legal work are progressing slowly as lenders and lawyers struggle to keep up with demand from movers looking to benefit from savings of up to £15,000.

Here, we explain how the stamp duty cut has energised the property market and discuss whether the government could extend the deadline beyond 31 March 2021.

Stamp duty holiday brings demand and delays

In July, the government temporarily introduced higher stamp duty thresholds as it sought to encourage home moves after the COVID-19 lockdown. This means movers can save as much as £15,000 if they buy a home before 31 March 2021.

The cut has certainly reignited the market, but the rush to buy before the deadline has resulted in delays. Estate agents, lenders, surveyors and conveyancers are all facing huge pressure on resources, resulting in everything from mortgage valuations to legal formalities taking longer than before.

Zoopla says that around 140,000 property sales are currently in the pipeline – double the number usually seen at this time of year. The property portal says 92% of sales agreed in November and 81% of sales agreed in December are completed before the end of the following March in a normal year – but this year is anything but normal.

So those waiting until after Christmas to make an offer may face disappointment, with only half of sales agreed in January normally getting over the line before the end of March.

Industry calls for stamp duty extension

Earlier this week, a group of property professionals united to write to the Chancellor to request that the stamp duty deadline be extended. The joint letter is signed by 14 trade bodies, including estate agency, surveying, conveyancing and removals associations. The group is requesting that the government extends the stamp duty holiday by at least six months, and has asked for an announcement to be made before Christmas.

Mark Hayward of the estate agency group NAEA Propertymark says: ‘The stamp duty cliff edge on 31 March could cause thousands of sales to fall at the final hurdle and have a drastic effect on the housing market. We are calling for a rethink of these timings, so pressure on the system can be released to allow transactions to complete and avoid a disorderly and distressing period for movers and businesses.’

Will the stamp duty cut be extended?

So far, the government has maintained that the 31 March deadline won’t be extended. Last week, in response to a question in the House of Commons, housing minister Christopher Pincher told MPs: ‘The government does not plan to extend stamp duty relief, and will continue to monitor the property market.’

It remains to be seen whether the pleas from the industry will prompt the government into a rethink.

What can you do to speed up your move?

Last month, the Home Buying and Selling Group, which is made up of professionals from across the property industry, published a pledge to help moves progress more quickly. It also provided advice for buyers and sellers on some simple steps they can take to speed up their transactions.

For buyers, it recommends appointing your conveyancer and getting a mortgage agreement in principle before making an offer, and arranging a house survey soon after the offer has been accepted.

For sellers, it advises instructing conveyancers at the same time as putting the property on the market (rather than after an offer is accepted), and completing the property information form ahead of time so any issues can be raised at the earliest opportunity.

Stamp duty holiday: how it works

In July, the government announced that it would raise the threshold for paying stamp duty on property purchases from £125,000 to £500,000 in England and Northern Ireland.

With first-time buyers already benefiting from a £300,000 allowance, home movers purchasing more expensive properties stand to make the biggest savings. These buyers can save £10,000 on a £400,000 property, or £15,000 on a £500,000 property.

In Scotland and Wales, the savings are less significant, with the stamp duty thresholds having only been increased to £250,000.

What’s happening to house prices?

House prices have been increasing as buyers flood to the market, especially at price-points where the tax savings are the greatest. Overall, values have remained robust, with the latest data from the Land Registry showing that prices increased by 0.7% month-on-month and 2.5% year-on-year in August.

The property portal Rightmove has reported asking prices rising to record levels, but it’s important to remember that the prices sellers are requesting don’t necessarily reflect those that buyers are paying.