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As we see many world leaders, delegates and famous faces jet in and jet out, stay awake and fall asleep at the COP26 summit in Glasgow, this continues to generate a huge amount of column inches and debate.

The question of whether any real solutions will emerge is anyone’s guess but, if nothing else, it’s encouraging to see such widespread coverage of this event and the awareness being raised around the huge climate-related challenges which impact us all.

The environmental fallout is certainly not lost on the buy-to-let sector as a raft of lenders have entered the green space in recent times and/or reshaped their product ranges accordingly. In recent weeks, we’ve seen Paragon Bank reintroduce its green buy-to-let product range. The lender has also extended its green offering to all property types, including single self-contained properties (SSC), houses in multiple occupation (HMO) and multi-unit blocks (MUBs), having previously been restricted to SSCs.

Foundation Home Loans also launched ‘Green ABC+’ fixed-rate products for both buy-to-let and owner-occupied mortgages, with rates and cashback based on the property’s energy performance rating. In addition, LendInvest has released a green mortgage range that is designed to incentivise landlords to bring up their properties to an energy performance rating of C and above.

The aim of such mortgages is to reward landlords and investors who have made a conscious choice to buy energy-efficient properties or improve those which they currently own. As outlined many times by various lenders operating across the mortgage market, whilst energy efficiency levels for a variety of properties have improved in recent times, there is still a huge amount of progress to be made before the UK can get anywhere near its carbon zero target.

The push for greater energy efficiency in the UK’s housing stock is only likely to continue and whilst it’s great to see so many lenders providing a green offering, greater education is required amongst consumers around this product type. This was evident in a new poll conducted by Countrywide Surveying Services, which suggested that an overwhelming 94% of brokers are yet to ‘sell’ a green mortgage product. In addition, 92% of surveyors reported that they are still yet to value a property with an EPC rating of A.

With mortgage brokers heavily involved in the vast majority of property purchases, this is a statistic that really hits home just how far we still have to go for the green mortgage revolution to have any major influence. That’s not to say that demand and appetite for increased energy efficiency are not out there, it is.

However, for any real impact to be made, we need volumes of green mortgages to dramatically improve from a residential and BTL perspective and for real competition to emerge within this product type. I am optimistic that green mortgages will play a vital role in our property-related future but, as with the general combatting of carbon emissions and greenhouses gases, change needs to come sooner rather than later.

Source: Property Reporter, 9^th November 2021

From Greta to Glasgow, all eyes are on environmental issues. Currently underway, COP26 is expected to produce a string of commitments relating to reducing emissions, with 200 countries laying out their plans to do so by 2030.

The UK has already committed to a wide range of targets designed to cut its greenhouse-gas emissions to net-zero by 2050. But organisations such as Extinction Rebellion say this isn’t enough, demanding the immediate cessation of the use of fossil fuels rather than a plan that spans decades. Insulate Britain, meanwhile, has resorted to headline-grabbing tactics over the last few weeks to flag up the direct impact that housing in the UK is having on emissions.

According to the Committee on Climate Change, housing is responsible for 14% of the country’s greenhouse-gas emissions. Poor insulation and gas-boiler heating systems are the main culprits – hence Insulate Britain’s demands for the government to insulate all social housing by 2025 and retrofit all homes in Britain to be low-energy and low-carbon by 2030.

So, what does all this mean for housing trends in 2022?

Clearly, heating will be a major issue. The government’s long-awaited Heat and Buildings Strategy presented heat pumps as a key feature as they heat homes with warmth from the air, water or ground rather than using fossil fuels. The government has pledged to install 600,000 heat pumps per year by 2028. In 2019, a total of 35,000 were installed (versus around 1.7 million gas boilers). In 2020, around 36,000 were installed – just 6% of the target.

Insulation, too, will be high up on the housing sector’s priority list. The Committee on Climate Change points out that insulation rates are currently around a third of what they need to be to cut energy consumption. The Green Homes Grant scheme launched in September 2020 to help people insulate their homes and introduce other energy-efficiency measures. However, it was scrapped in March 2021 after reaching just 6,000 of the 600,000 homes for which it was intended, with the National Audit Office accusing the government of botching its delivery. Apparently, a new scheme is to be launched. No details are available yet.

Of course, property isn’t just about residential houses. The Heat and Buildings Strategy applies to business premises too, and we can expect sectors such as Build to Rent and Purpose Built Student Accommodation to play their part as well, though many of these newer properties already perform better than older houses in terms of their energy-efficiency credentials. Homeowners, though, will be at its core, with legal commitments likely to be imposed to ensure that they make their homes more energy-efficient.

What will homeowners be expected to do? Essentially, they are likely to need to insulate their homes and introduce low-carbon heating systems (heat pumps are one such example, as are biomass boilers). We’ve already seen a move towards this with the Energy Performance Certificate (EPC) regulation changes.

Currently, if you rent out a property, you need an EPC with a rating of ‘E’ or above. That is expected to change to ‘C’ or above for new tenancies from 2025 and to all tenancies from 2028. Any landlord found to be in breach of the requirement could be fined £30,000 per property. The change means that landlords of lower-rated properties will need to make changes such as insulating them, installing double-glazed or triple-glazed windows and installing more energy-efficient boilers, heat pumps or solar panels. At present, there are no plans to make financial support available to help landlords cover the cost of the required changes.

For newly built properties, the horizon is looking a little brighter. Major lenders are backing the green agenda, with momentum for this among both borrowers and lenders building, according to JLL. Aviva Investors, for example, is making £1 billion available over the next four years to lend for sustainable real estate. Globally, more than $700 billion of sustainable and green debt was issued in 2020.

All of this points to green thinking needing to be at the core of the property sector in 2022. Sustainable homes aren’t a ‘nice to have’ anymore. They are a key priority for homeowners, investors, developers and lenders alike.

Thankfully, technology is opening up the industry in terms of finding new solutions and innovative new ways to address property owners’ green needs. For example, houzen’s sustainability reports collect data about how properties across the country perform on 27 key issues impacting our climate. Homeowners can quickly and easily see how their properties compare before receiving an action-focused report that helps them move towards enhanced sustainability.

Source: Property Reporter, 8^th November 2021

Insurers are relaxing tough pandemic rules, but you still may not get cover if you have not had both jabs

Older people and those at most risk of serious illness if they catch Covid may be denied life insurance cover if they do not get the vaccine. This could affect some 3.7 million people in England who are classed by the government as vulnerable when it comes to the coronavirus.

Since the start of the pandemic, insurers have been less willing to provide life insurance, income protection and critical illness products to anyone with health conditions that put them at higher risk.

Three insurers have said that they are now more willing to offer them cover if they are double-vaccinated.

Legal & General (L&G), Scottish Widows and Guardian 1821 say that anyone who is double-vaccinated now has the same chance of getting cover as they did before the pandemic. Those considered vulnerable to Covid, according to the NHS, are those with severe asthma, emphysema, a serious heart condition or kidney failure. Insurers are also taking into account age, with people over 70 considered more likely to suffer serious complications from Covid.

The fact that some insurers are asking about vaccinations reflects the difficulties they are having in assessing risk after a public health emergency It is likely that other caveats will be added to make it harder to get cover.

Insurers do not ask applicants about any other form of vaccine. When seeking life or income cover you will not be asked about flu shots, the MMR vaccine or the HPV vaccine, and even at-risk customers are not asked about the hepatitis B or chickenpox vaccines.

With the boom in the property market, there has been a surge in applications for life cover to protect bigger mortgages. The pandemic has also caused many people to realise how fragile their earnings are, so interest in income protection has increased.

The Association of British Insurers said: “Vaccinations should not affect existing policies, but for new applications a couple of insurers have introduced questions that would help those who might have previously struggled to get cover.”

It is likely that other insurers will follow suit, but only asking about Covid vaccines and not for ever, said Alan Knowles from the insurance adviser Cura. Brokers say that while the insurance industry is beginning to open up for those with underlying health conditions, older customers are still struggling to get cover.

Before the pandemic most 70-year-olds with diabetes would be able to get insurance, although they would pay much higher premiums than younger people with the same health conditions. During the pandemic everyone would have struggled to find cover, but older people are still unlikely to get insurance now. “Insurers are now much more nervous about older clients,” Knowles said.

Most insurers are not back to their pre-pandemic attitudes to risk, although Aviva and LV= are the most flexible. “It shows the importance of shopping around or speaking to a broker,” said Kevin Carr, a former broker who now runs his own consultancy. “Different insurers take a different view, and it is changing all the time. If you can’t get cover from one, don’t take it to mean you are uninsurable.”

When the pandemic began, all insurers added questions about coronavirus to their application forms, but they are becoming more relaxed about your answers.

If you have Covid, it is likely that the insurer will postpone an application while it considers whether there are any long-term implications for your health and seeks further information. AIG Life is to reduce the postponement from 30 days to two weeks, and to apply it only to those who are more vulnerable to coronavirus. Zurich too is cutting its postponement period.

When it comes to long Covid, insurers are focusing on the symptoms rather than a diagnosis. If you are struggling with fatigue relating to long Covid, insurers will view this in the same way as chronic fatigue syndrome — if you are covered for that, you will be covered for long Covid.

Brokers say that income protection applications are more likely to be affected if you have had coronavirus because insurers are mostly concerned about how the virus affects your ability to work, particularly with the increase in people suffering from long Covid. All insurers recognise Covid as a valid reason for a claim, and they paid a total of £6.2 billion, or £17 million a day, in claims last year.

L&G said: “The decision around what cover will be available will be based on why the individual has been classed as vulnerable, for instance the underlying health conditions. Not having had the vaccine does not in itself rule someone out of cover and will only affect 1 per cent of customers.”

Scottish Widows, part of Lloyds Banking Group, has a “higher risk appetite” for those who are fully vaccinated.

Caroline Froude from Guardian 1821 said: “We always look to provide cover where it’s possible. In light of the virus, we may ask applicants for their vaccination status. For most it has no impact on our decision to offer cover.”

The Times, Saturday October 16 2021

Nationwide became the first major lender signed up to Deposit Unlock – a mortgage indemnity scheme which supports 95% loan to value lending on newbuild properties for both first-time buyers and ‘second steppers’ up to the value of £750,000.

Deposit Unlock, which was developed by Gallagher Re in partnership with the Home Builders’ Federation (HBF) and house builders, will help open up the newbuild market to more borrowers with a small deposit as – unlike the Help to Buy scheme – it is available to second steppers as well as first-time buyers.

The scheme is designed to provide a ‘much-needed’ alternative for the newbuild market after the Help to Buy Equity Loan scheme for first-time buyers comes to an end in March 2023, and will be available on more than 1,000 new build sites across England, Scotland and Wales.

The scheme is available through mortgage brokers on standard new build loans of between £25,000 and £750,000. Borrowers using Deposit Unlock will have access to the Society’s range of 95% LTV mortgages, currently starting from 2.89%, which they can use to buy a house or flat.

Henry Jordan, Director of Mortgages at Nationwide Building Society, said: 

“The need for more new homes has never been more apparent and we are keen to support the Deposit Unlock scheme – giving those with smaller deposits further hope that they can get a home of their own. The scheme will be a long-term alternative to the Help to Buy Equity Loan scheme, which is due to end in around 18 months’ time.”

Neil Jefferson, Managing Director at the Home Builders Federation, said:

“We’re delighted to be working with Nationwide to make Deposit Unlock available to homebuyers all over the country. Home builders have stepped up and developed a privately-funded product in Deposit Unlock which will provide buyers with a route to home ownership, including for first-time buyers without vast deposits. Nationwide’s involvement demonstrates a very welcome commitment not only to their customers but also to the new homes market, helping us to tackle our long-term housing affordability crisis.

“With the new Help to Buy scheme reducing access to high loan-to-value mortgages in some regions and with the scheme winding down from the middle of next year, Deposit Unlock will help households onto the housing ladder and give developers confidence to invest in new land and labour to build on the massive housing supply increases of recent years.”

Source: Amy Loddington of Financial Reporter

4^th October 2021

The number of buy-to-let (BTL) products on the market is higher today than the number available in March 2020, Moneyfacts says. There are now 2,968 BTL products available, compared to 2,897 pre-pandemic. This is the greatest number recorded since October 2007, when there were 3,305 options for landlords to choose from, Moneyfacts adds.

 

The data also shows, however, that lenders are less eager to extend funds to landlords with smaller equity: in March 2020 there were 32 products at 85% loan to value, while there are just 19 today. And at 85% loan to value, the average two-year fixed rate has increased from 4.70% to 5.61% over the same time frame and the average five-year fixed rate has gone up from 5.34% to 5.83%.

 

At all loan to value’s, price increases are less severe – here, the average two-year fixed rate has risen from 2.77% to 2.94% from Mach 2020 to today, and the average five-year fixed rate across all loan to value’s has moved from 3.24% to 3.25%.

 

Moneyfacts finance expert Eleanor Williams adds: “As it stands, compared to a pre-pandemic September 2019, both the average two- and five-year fixed buy to let rates are lower by 0.03% and 0.19% respectively, indicating rate pricing competition for those looking for new finance for an investment property.”

 

By Gary Adams (Moneyfacts)

27^th September 2021

Income protection insurance refers to a group of insurance products that help you out financially, if you lose your income due to injury or illness. 

Income protection insurance refers to a group of insurance products that help you out financially, if you lose your income due to injury or illness. 

The COVID-19 pandemic has greatly increased awareness of the importance of having a safety net to fall back on in times of financial hardship. Despite this, one of the best ways of strengthening your financial resilience – income protection insurance – remains poorly understood. Research¹ suggests that nearly half of the UK’s working population (46%) have heard of income protection insurance, but don’t know what it covers or how it works.

How does it work?

In a nutshell, income protection is a type of insurance policy that ensures you receive a regular income if you’re unable to work due to illness or injury. It will usually pay out a percentage of your normal monthly income to help you pay your bills, rent/mortgage or essential living costs, taking the pressure off until you can return to work. Some types of income protection are designed to cover specific types of payments, for example your mortgage or credit card payments.

There are two main types of income protection: long-term and short-term. The former will supply you with a regular income until you return to work, retire or die, whichever occurs sooner. The latter will pay out for a specified time period, usually six months to a year.

Most income protection policies will have what is called a ‘deferral’ period, lasting some weeks or months before payments begin. The longer the deferral period, the lower your premiums are likely to be.

What does it cover?

 In contrast to a critical illness policy, which only covers a strict list of specified illnesses, an income protection insurance policy will cover most illnesses or injuries that leave you unable to work (this will depend on the policy, however).

Another advantage is that it can be claimed as many times as you need it for the duration of the policy term. Some policies will also cover redundancy or unemployment on a short-term basis, although it is currently more difficult to find suitable cover due to the coronavirus pandemic.

Do I need it?

In order to work out whether income protection may be suitable for your circumstances, it can be useful to ask yourself the following questions:

– Could I survive for more than a couple of months without my income?
– Could I get by on my employer’s sick pay/Statutory Sick Pay?
– Could I rely on support from my partner or family?

If the answer to any of these questions is ‘no’, then taking out income protection cover is likely to be a wise choice.

But which type do I need?

Still confused? Not to worry, we are on hand to help you select the income protection policy that works for you.

As with all insurance policies, conditions and exclusions will apply. ¹The Exeter, 2021

 

 

The UK rental market is roaring ahead, with properties letting almost a week faster than in 2020, Zoopla research shows.

 Key takeaways

• UK rents, excluding London, are increasing at their highest rate for over a decade.
• Monthly rents outside London are averaging £790, up from £752 a year ago. It means renters are paying an average of £456 more a year.
• Competition for rental homes is fierce at a national level, with properties letting almost a week faster than last year.

Rents outside London are rising at their fastest rate since 2008 as people return to city centres. The typical price of renting a home in the UK, excluding the capital, now stands at £790 a month, costing tenants an additional £456 a year, according to Zoopla’s latest Rental Market Report.

The steep increase has been driven by renters returning to cities. But the surge in tenant demand has not been met by an increase in the number of homes to rent, forcing rents higher.

Gráinne Gilmore, head of research at Zoopla, said: “There has been a sharp rise in demand for rental properties in recent months, especially in central city markets, signalling the return of city life as offices and other leisure and cultural venues continue to open up more fully.”

 What’s happening to rents?

Rents across the UK, excluding London, have risen by 5% in the last year, the highest level since our index began in 2008 and more than double the 2.2% rise recorded in January.

The south-west saw the biggest hike, with the cost of being a tenant jumping by 7.6% year-on-year. It was followed closely by the East Midlands at 6.8% and the north-east at 6.5%.

Despite the rise, these places remain some of the most affordable in which to be a tenant. A single earner has to spend an average of 21% of their income on rent, compared with a UK average of 32%.

At the other end of the scale, rents in London have dropped by 3.8% year-on-year.

Even so, the rate at which rents in the capital are falling is showing signs of bottoming out, as tenants return to the city.

Across the whole of the UK, including the capital, the average rent stands at £943 a month, 2.1% more than a year earlier. But with average earnings rising faster than rents, rental affordability is holding steady for tenants who are employed.

What’s demand for rental homes like?

Tenant demand is soaring. It was nearly 80% higher in August than average levels between 2017 and 2019. It’s being driven by a resurgence in city centre life, with people being drawn back as offices, bars, restaurants and other leisure facilities reopen.

There are also seasonal factors at play, such as university students looking for accommodation ahead of the new academic year, graduates starting jobs and families moving before the school term starts.

Is there a good supply of homes available to rent?

While demand so far this year has increased by 19%, the level of rental homes available has fallen by 13%. This mismatch is not only forcing rents up, it is also leading to the rental market moving at its fastest pace since 2016.

The average time between marketing a property for rent and agreeing a tenancy is now just 15 days, compared with 20 in July last year.

What could this mean for you?

Landlords

If you are a landlord with a property to rent, the current surge in tenant demand is good news. It not only means you are likely to be able to find a tenant quickly, but you are also likely to be able to achieve the rent you want.

It is worth noting the swing back to city life, compared with the earlier stages of the pandemic when people were looking for homes in rural locations and ones with outdoor space.

Tenants

With demand rising and the level of homes to rent falling, you can expect to face significant competition from other tenants to secure a home. The imbalance is also pushing rents higher, so you may have to pay more than you did a year ago.

If you are finding it hard to find somewhere, consider looking outside of town and city centres.

 What’s the outlook?

The high number of people looking for a home to rent during August will ease off in line with seasonal trends. But demand is expected to remain high in the coming months as the return to city life continues.

Gilmore explained: “As ever, much will be dependent on the extent to which the current rules around Covid-19 continue as they are. But given no deviation from the current landscape, the demand for rental property, coupled with lower levels of supply, will continue to put upward pressure on rents.”

By Nicky Burridge for Zoopla

08 September 2021

The headline rate of inflation in the UK has recorded its biggest ever jump, leaping from 2% in July to a nine-year high of 3.2% in August. Earlier this summer the Bank of England said it expected annual price rises to hit 4% before the year was out, before dropping off slightly.

What is inflation?

It is the measure of how much prices are rising and falling and is tracked by several different indices. The main one used by economists is the consumer prices index (CPI), which records the cost of a basket of 700 items including food, transport and entertainment. The Bank is tasked with keeping inflation at 2% but it has been above that already this year and is now much higher.

Why is August’s figure so high?

The rate is a year-on-year comparison, so a monthly jump in inflation does not mean prices have risen by that much since July. The Office for National Statistics, which publishes the figures, said higher prices in transport, restaurants, hotels and for food and drink had driven the rate up in August.

It pointed out that in August 2020 the eat out to help out scheme was running – as a result, restaurant prices were artificially low, so will be much higher now in comparison, even if not in historical terms. However, staff and supply problems in the hospitality industry have also pushed up prices, while the cost of petrol at the pumps is higher than at any time since 2013.

What does this mean for me?

Moderate inflation is not a bad thing – people will be more likely to spend their cash if they think it will buy less in future. But high inflation has consequences. Most obviously, if you are on fixed pay then your money will not go as far each month.

What if you are saving?

Rising inflation at a time when interest rates are at record lows is bad news – your money will not have the same buying power when you withdraw it as it did when you put it away. Put very simply, if you put away £100 last year, it would need to be worth £103.20 to have the same value in real terms. The best one-year account currently pays 1.5%, so your savings would be worth £101.50.

Moving into higher-risk investments is a way to try to beat inflation but there is always the chance you could lose money, too. “For people to have any chance of keeping their returns real, there are few options other than to move up the risk curve,” says Simon Lister, an independent financial adviser at the financial comparison website Investing Reviews. “For the risk-averse, it’s a rout at present.”

If high levels of inflation stay for longer than anticipated, the Bank may raise interest rates, which would be good news for those with cash on deposit.

What if you are borrowing?

The opposite is true for borrowing. If you have a loan on a variable rate of interest, then a rise in the Bank base rate would push up your repayments. Fortunately, many people have opted for fixed-rate mortgages, and costs will remain the same even if the Bank does act.

And inflation reduces the size of your debt in real terms. If it leads to a pay rise, then the sum you need to repay each month will be less of your income than when you first took on the loan.

What about student loans?

The rate of interest on student loans is linked to inflation, so a high rate sounds like bad news for many of those with university debts. The rate that matters is the RPI (retail prices index), which hit 4.8% in August, and students who have started university from 2012 are supposed to pay an interest rate of RPI plus 3.

The good news for them is that the rate is calculated based on March’s figure, not September’s when inflation is still expected to be rising. Also the rate is monitored against commercial personal loan rates, and altered accordingly. It has been capped below RPI plus 3, and the government may step in if RPI is still running high.

What about pay?

Most workplaces do not have to raise pay in line with inflation but it is often used in negotiations. Employers, who in some sectors are already battling with staff shortages, may have to increase wages to attract and retain workers who need to meet higher living costs.

And pensions and other benefits?

A number of benefits are linked to inflation, including the state pension. The government suspended the pensions “triple lock” last week, but committed to raising pension payments in line with CPI if September’s figure is above 2.5%.

September’s figure determines how much elements of universal credit and other benefits will go up next April, so they should keep up with rising costs. However, before then the temporary £20-a-week universal credit uplift will have ended.

Some private pensions offer payments linked to inflation, so payouts should increase.

Hilary Osborne of the Guardian

Wed 15 Sep 2021

 

By Nicky Burridge

Zoopla, 04 August 2021

Whether you’re a first-time buyer or a homeowner looking to move up the housing ladder, here’s how the surge in popularity for houses could impact you.

Key takeaways

• Interest in houses for sale has more than doubled as the pandemic drives buyers to search for more space.
• The number of people looking to snap up a family house has soared by 114% compared with levels typically seen at this time of year between 2017 and 2019.
• The average cost of a house has jumped by 7.3% during the past year, while the typical price of a flat has edged ahead by just 1.4%.

In search of a spacious new home? You’re not the only one. Demand for houses has more than doubled as buyers search for more space in the wake of successive lockdowns.

Family houses are the most sought-after type of property, with the number of buyers looking to snap one up soaring by a whopping 114% compared with levels typically seen at this time of year between 2017 and 2019.

But while demand for all types of houses, from terraced to detached, has more than doubled, the number of buyers looking to purchase a flat has risen by only 34%, according to our latest House Price Index report.

This has led to the average cost of a house jumping by 7.3% during the past year, while the typical price of a flat has edged ahead by just 1.4%.

In fact, price growth for houses has outstripped flats across all regions of the country

But the greatest disparity has been seen in Wales, where the cost of a house has risen by 10.2% year-on-year, while the price of a flat has edged up by just 0.9%.

Why is this happening?

On the one hand, demand for houses has been stoked by the stamp duty holiday, with bigger savings on offer for larger properties (typically houses).

But it also reflects a surge in buyer interest for more space, with successive lockdowns driving people to reassess their homes and lifestyles.

At the same time, the trend for working from home has prompted people to leave city centres in favour of more rural locations, which are more likely to consist of houses rather than flats.

What could it mean for you?

First-time buyers

It could be good news if you’re a first-time buyer purchasing a flat rather than a house. The cost of flats has risen much more slowly than property values across the wider housing market during the past year.

It’s worth remembering that there’s significant variation across the regions though. Price growth for flats is down 0.5% in London during the past 12 months, while it’s up 5.2% in Scotland.

If you’re a first-time buyer eyeing a house, be prepared to face stiff competition. However, with no property to sell, you have an advantage over buyers in a property chain.

And remember that there are schemes available to help make buying your first home more affordable, such as first-time buyer stamp duty relief and Help to Buy.

Home-movers

Soaring demand for houses means that if you are planning to sell a house, you could be in a good position to secure a quick sale.

You are likely to have seen its value rise during the past year too. Price growth for houses has been particularly strong in Wales and the North West, where it has jumped by 10.2% and 8.8% year-on-year respectively. It’s been weakest in London, where it has increased by 5.6%.

But if you are selling a flat, you may find the gap between the value of your current home and the house you want to purchase has widened in recent months.

Gráinne Gilmore, head of research at Zoopla, explained: “There is a continued drumbeat of demand for more space among buyers, both inside and outside, funnelling demand towards houses, resulting in stronger price growth for these properties. Sellers will need to consider this when it comes to pricing expectations.”

Regardless of the type of property you are selling, if you are looking to purchase a house, you are likely to face stiff competition from other buyers.

So it’s important to do your homework and be prepared to move quickly when you find something you like.

How can Zoopla help?

• Thinking of selling? Our My Home experience enables you to find out how much your existing property is likely to be worth, helping you to plan for your next purchase.
• Looking for a new home? With competition intense, you can get ahead by registering with us to receive alerts whenever a property that meets your criteria is listed for sale. Our advanced search tools also help you find properties in your price range and area that are already listed.
• Whether you are buying or selling, in the current fast-paced market, find a local estate agents to give you expert advice.

What’s the outlook?

While buyer demand for all property types has eased slightly, it remains up 80% compared with typical levels for this time of year.

But these high levels of demand are not being matched by the volume of homes on the market. And this means that buyer competition for houses is set to remain intense.

According to our research, house price growth for all property types is expected to hit 6% in the coming months.

But as the stamp duty holiday ends and economic conditions become more challenging, it’s set to fall back to between 4% and 5% by the end of the year.

Sub-1% FIVE year fixed mortgage deal, the lowest rate on record

• Five-year fix for 60% loan-to-value available at 0.99% with £1,499 fee 
• Available to home movers and remortgages

Britain’s biggest building society has ramped up the mortgage price war after launching a record low sub 1 per cent five-year fixed rate deal.

While rates below 1 per cent are not unusual for two-year deals, Nationwide is offering this rate to those with a 40 per cent deposit remortgaging or moving, fixed until 2026.

The 0.99 per cent rate on this five-year fixed rate deal is the lowest ever recorded for this type of home loan, according to Moneyfacts data.

However, there is a sting in the tail with a hefty £1,499 fee – although, this is soaked far more into the overall cost of the mortgage compared to a shorter-term fix.

Mark Harris, chief executive of mortgage broker SPF Private Clients said: ‘Just when it looked as though mortgage rates couldn’t possibly go any lower, they have.’

‘While there has been a flurry of sub-1 per cent two-year fixes in recent weeks, this is the first five-year fix pegged at such a low rate.’

The deal, available to both home movers and those looking to remortgage (not first-time buyers), comes with that large product fee, which can be either added to the mortgage or paid upfront.

This means that a typical borrower with a £200,000 repayment mortgage on a 25-year term will pay £758 per month, if they opted to add the fee to the mortgage.

The next best alternatives are HSBC’s 1.06 per cent rate with a £1,499 fee and Nat West’s 1.09 per cent rate with a £995 fee, according to Moneyfacts.

A £200,000 repayment mortgage on a 25-year term with HSBC’s cheapest deal would cost £765 per month were you also to add the fees to the mortgage – or £766 with Nat West.

The benefits of Nationwide’s superior interest rate will likely be felt even more by those requiring higher loan amounts.

Chris Sykes, associate director and mortgage consultant at Private Finance said: ‘This rate is almost unbelievably good for the right client with a sufficient loan amount to justify the fee.

‘It is always worth comparing costs of different loans as this may not be best on a £100,000 loan due to the £1,499 fee, but on a £500,000 loan it may be significantly better than the next best alternatives.’

Nationwide has relaunched a three-year fixed-rate mortgage range for any buyers looking for a fixed rate period in between the more common two year or five-year periods.

Those with either a 40 per cent deposit or equity can secure a rate of 0.94 per cent matching the equivalent rates on Nationwide’s two-year fixed mortgages.

The three-year fixed rate deals all come with a no fee and £999 fee option and will be available to first-time buyers, those remortgaging and home movers.

With Nationwide having stepped up the mortgage price war there is now some expectation that rates might yet faller further among other lenders.

‘Although we may have hit the bottom of where rates will go, usually where one lender goes others follow suit, so I wouldn’t be surprised if we see the likes of HSBC, Nat West and Santander following suit in the next couple of weeks,’ said Sykes.

‘It really does send a message in regards to the expectations of lenders into the long term, with inflationary risks they cannot be that worried that we will see high interest rates in the coming years or they would not be offering such rates.’

Is the mortgage market distorted?

Whilst rate drops have continued to grab the headlines, the gap between those that have large deposits and equity and those that don’t is still wide.

The average five-year fixed deal for those with 40 per cent deposits or equity is 1.81 per cent, according to Moneyfacts, whilst those with 10 per cent deposits or equity the average rate is 3.47 per cent.

Prior to the pandemic, in February 2020 there was just a 0.8 per cent difference on average between those with 40 and 10 per cent deposits or equity.

But there are positive signs that this gap might be beginning to narrow again, which could be good news for those with smaller deposits and less equity built up within their homes.

Chris Sykes adds: ‘The current gap is down to the economic environment that we are in currently in as banks feel they are taking a higher risk at the higher loan to values these days compared to the pre pandemic levels of risk.’

‘We have seen significant reductions in 90 per cent pricing over the last few months, when these products came back out during the pandemic, they were typically 3.5-4 per cent, whereas now they are much more competitive.’

By ED MAGNUS FOR THISISMONEY.CO.UK

PUBLISHED: 21 July 2021