With many holidays cancelled as flights are grounded and quarantine imposed, stay-cations are on the rise. In this newsletter, AWS Financial Services takes a look at holiday let mortgages, as well as our usual take on the lending market more generally.
Do get in touch if we can help with any of your mortgage requirements.
Mortgage enquiries surge on back of pent-up demand
While lock-down resulted in the housing market grinding to a halt, its reopening has brought a surge in activity and property values. Both Halifax and Nationwide confirmed that property prices surged in July, with Nationwide pointing to a 1.7 per cent rise during the month compared with a 1.5 per cent fall in June. Halifax agreed, suggesting the mini-boom had pushed average values to the highest seen since it started recording the data, with a 1.6 per cent uplift in July compared with June.
The stamp duty holiday has played a part in boosting the housing market and increasing all-important transaction levels. With all buyers – investors, second home buyers, first-time buyers and home movers – saving up to £15,000 on the purchase price on property bought before 31 March 2021, the market has been given much-needed stimulus. This, coupled with pent-up demand from the years when Brexit indecision prevented people from making a move, coupled with lock-down making many realise that they need more space, both inside and out, has resulted in an uptick in enquiries to estate agents.
On the lending front, we are starting to see banks look to improve their margins a little, particularly on high loan-to-value (LTV) deals, with some raising rates. Plenty has been written about how it is getting harder to get a high LTV mortgage, with Nationwide introducing a new rule, insisting first-time buyers must prove that at least three-quarters of their deposit has come from their own savings, rather than the Bank of Mum and Dad. The idea is that the lender wishes to see a commitment from first-time buyers in the form of saving for their down payment but with many paying high rents and living costs, trying to save can feel impossible.
While those with significant equity in their homes or similar level of deposit can still access extremely competitive mortgage rates, some lenders are tweaking these upwards slightly too. We don’t expect mortgage pricing to rise significantly, particularly as the Bank of England’s Monetary Policy Committee voted unanimously to keep interest rates at 0.1 per cent this month, but we are starting to see some upwards movement. However, with one member of the Committee suggesting that negative interest rates have not been ruled out, if required to boost the economy, it looks as though on the whole mortgage rates will stay fairly low for the foreseeable future.
As always, it is important that borrowers seek advice when applying for a mortgage for a new purchase or refinance. It makes sense to ask a whole-of-market broker for advice – at AWS Financial Services, we can guide you through the process from start to finish and ensure you get the right funding for your particular circumstances. Please get in touch for more information.