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More mortgage products are available but rates continue to rise

Mortgage products

The number of mortgage products on the market has increased for the first time since June, as lenders look to meet growing demand, but average borrowing rates have increased further, the latest research from Moneyfacts shows.

There are currently 2,404 mortgage products available on the market, up from 2,259 a month earlier.

According to Moneyfacts, the strongest growth in mortgage products over the past month has been seen in the 75% and 80% loan-to-value (LTV) sectors where product numbers have increased by 43 and 49 respectively.

There has been a significant increase in demand for mortgages, as buyers rush to acquire property before stamp duty goes back to its normal rate.

The latest data and analysis from NAEA Propertymark shows that in September the number of prospective buyers registered per estate agent hit a 16-year high.

Eleanor Williams, finance expert at Moneyfacts, said: “Some positive news for those would-be borrowers comes from our latest data, which shows that at 2,404, the number of available mortgage products has risen for the first month since June 2020, following the re-opening of the property market after the first UK lockdown, when 2,810 deals were on offer.”

She added: “It is notable that 63% of the 145 additional products made available this month are offered in the 75% and 80% LTV sectors, where product numbers increased by 43 and 49 respectively.

“Indeed, availability increased across all the LTV tiers this month, with the exception of the limited 95% and 100% tiers where there was no change, and the smallest fluctuation was seen in the next highest LTV bracket at 90%. This could be indicative of the fact that lenders are focusing their offerings towards traditionally lower-risk borrowers with a larger equity or deposit.”

According to the research, there are less than half the number of products available to consumers now than were on offer 12 months ago, while borrowing rates are rising.

Average Mortgages Rates
March 2020July 2020October 2020November 2020
90% LTVAverage 2 year fixed rate2.57%2.90%3.64%3.76%
90% LTVAverage 5 year fixed rate2.91%3.16%3.89%3.98%
85% LTVAverage 2 year fixed rate2.49%2.11%2.93%3.12%
85% LTVAverage 5 year fixed rate2.81%2.34%3.07%3.25%
80% LTVAverage 2 year fixed rate2.41%2.13%2.58%2.67%
80% LTVAverage 5 year fixed rate2.71%2.38%2.82%2.96%
75% LTVAverage 2 year fixed rate2.29%1.92%2.23%2.27%
75% LTVAverage 5 year fixed rate2.56%2.15%2.47%2.51%

Williams continued: “The steepest monthly increase was seen in the 85% LTV tier, which remains the maximum offered by many providers. Here, the average two-year fixed rate jumped up by 0.19% to 3.12%, while the five-year equivalent experienced a similar 0.18% rise to 3.25%.

“This means that today’s borrowers with a 15% deposit or equity will be facing rates that are 0.65% and 0.45% higher than they would have a year ago and is perhaps reflective of how uncertain and changeable the economic outlook remains.

“Also demonstrating how fluid the mortgage market remains is the fact that the average shelf life for a mortgage product has reduced to 28 days, which is the lowest on Moneyfacts’ records since providers reacted to the Bank of England base rate increasing from 0.50% to 0.75% in August 2018.”

Original Article from Property Industry Eye 10/11/2020

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New instructions and sales agreed remain positive


New properties coming to market last week saw a comparative decrease on the previous week, with 5,142 fewer properties being registered, according to the latest Property Index.

The research, which analysed the combined on-market activity from Rightmove and Zoopla, shows that properties changing status to SSTC saw a comparative decrease on the previous week, with 2,948 fewer properties being updated as SSTC.

Withdrawals saw a comparative increase on the previous week, with 730 additional properties being withdrawn.

Fall-throughs saw a comparative decrease on the previous week, with 760 fewer properties changing status from SSTC back to For Sale.

The top ten most impacted postcode areas for fall throughs in this period were: BN1, BH23, WN7, CR0, SL6, DA15, LU7, BH25, BN22 and CO15.

Commenting on the period 31.10.2020 – 06.11.2020,’s chief commercial officer, Richard Combellack, said: “The UK property market continues to be full of contradictions. On the one hand, there is great news: houses prices have risen at their fastest annual rate in more than four years at time when the British economy has fallen into the gravest recession on record.

“The stamp duty initiative has continued to further stoke an already well-established desire for buying and selling in 2020. During what’s been dubbed the ‘race for space’, there has never really been a comparable time like it; a hyper-focused period of time when so many people are collectively scrutinising their living conditions and lifestyle aspirations: property is well and truly on the brain.

“This is reflected in the record number of applicants being registered and the levels of stock and sales that have smashed records in this year. Right now, sales agreed remain extremely high; withdrawals remain steady, and fall-throughs continue to decline. Conveyancing firms and agents are working flat out, and that deserves a special mention as I am pretty sure there are a lot of long nights being worked right now.

“Last week I stated that the proof in overall market confidence would be in the number of new instructions coming to market. So, is the market slowing? Well, that depends on how you look at it, and I suppose this is what I really mean about the market being full of contradictions.

“The market is obviously reliant on a resilient economy and consumer confidence. Both of which have taken a massive hit of late. Right now, our economy is seriously facing a ‘double-dip’ recession. Businesses are being severely impacted commercially by lockdown 2.0 and the regional tiering systems. In turn, this threatens job security for millions. It is estimated that 5.5 million jobs are expected to be furloughed in November according to the Bank of England, up from 2 million in October.

“The five-month furlough extension and business support measures have undoubtedly helped to bolster the expected downturn in the housing market (especially prices). However, ever-increasing cases of Covid-19, new lockdown restrictions and the threat of unemployment would – even under ‘normal’ circumstances – ring alarm bells for many and signal that maybe now isn’t the most stable period to make a move. Yet, there can be little doubt that the stamp duty initiative has made a huge impact on the number of people deciding to press on.

“Even though new instructions have continually dropped over the past three weeks, you’ve got to consider that 52,824 new instructions coming to the market last week is phenomenal for the time of year. It’s even better when you compare it to a seven-day period back in February when the average number of new instructions per-week during the now infamous ‘Boris Bounce’ was around 47,500. In fact, new instructions have remained well above 50,000 per week for the last 23 weeks.

“Some industry commentators believe that the government need to act to avoid creating a ‘cliff edge’. When we reach March 2021 and – as it stands right now – both the furlough and stamp duty scheme end, it could be a very bleak time for agents. A recent survey conducted by MoneySuperMarket has suggested that nearly two thirds of prospective buyers are in the market as a result of the holiday, with around 60 percent of those surveyed stating that they would intentionally change their buying plans if the government doesn’t extend the scheme beyond March 2021.

“Stimulus is the key takeaway for me this this week, both in the short and long term. In the short term – with the stamp duty deadline fast approaching – these next few weeks are crucial to get as many potential buyers and sellers engaged in the process as possible. Long term, if the industry does find itself staring over the precipice in Q2 of next year, it’s wise to start implementing a stay-in-touch policy with all the clients that you’ve registered during this period as they will be a leading income factor for your business in what could well be a period of ‘slim pickings’ for agents without further financial incentives to buy or sell.”

Original Article from Property Industry Eye 10/11/2020

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Government confirms no extension to Help to Buy

Help to buy

The government has said changes to the Help to Buy due on 1 April 2021 will go ahead as planned and run until March 2023.

This new scheme will be for first-time buyers only and there will be regional caps in place for the value of homes.

Because of delays in the housing market caused by Covid-19, the government announced on 31 July there would be a two-month extension to the building completion deadline from 31 December 2020 to 28 February 2021. The legal completion deadline for the purchase remains 31 March 2021.

An extra measure was also introduced to protect existing customers who have experienced severe delays as a result of coronavirus.

Homes England, which administers Help to Buy, will work with those who had a reservation in place before 30 June to assess their situation and may provide an extension where necessary. In which case, they will have until 31 May 2021 to legally complete.

Secretary of state for housing, communities and local government Christopher Pincher MP says: “We believe these measures provide sufficient time for developers to build out homes delayed by Covid-19 and protect customers whose purchases have been significantly delayed. There are no plans to extend the current scheme further.”

Pincher confirmed this in response to a question from Andrea Leadsom MP who asked whether the Help to Buy scheme in its current format will be extended until April 2022.

Original Article from Mortgage Strategy 03/11/20