We may not be quite out of the Covid-19 woods yet but the easing of the related lockdown rules across the UK has brought a smile to the faces of many. There is much to celebrate in the property market too – with positive sales figures reflecting the ongoing trend for strong market conditions. According to Rightmove, the current market is now the fastest-selling market it has measured since its records began.

Government led initiatives such as the stamp duty tax break, and the re-introduction of 95% mortgage products supported by the government mortgage guarantee scheme , has meant that despite challenging conditions due to the Coronavirus pandemic, buyers are still purchasing, moving and climbing the property ladder.

Stamp Duty Holiday

The scheme has been extended throughout the Spring to the end of June with a staged withdrawal to follow. From 1 July 2021 to 30 September 2021 the nil band rate will apply to properties valued at £250,000 or under. From 1 October 2021 the figure will revert to £125,000 – the pre-Covid valuation.

Following Chancellor Rishi Sunak’s Budget speech at the beginning of March which detailed the extension of the stamp duty holiday to June 30th, buyer demand spiked by 24%.

95% Guarantee Scheme

Introduced on the 19^th April, the Government will guarantee all mortgage products on residential properties valued at £600,000 or under where the loan is worth 91% – 95% of the total.

This has been introduced to bolster the lower rungs of the housing market by allowing first time purchasers to enter the market without the need for prohibitive deposits. Existing mortgage owners will also be eligible for the mortgage deal enabling them to take the next step in their property journey, or for example make home improvements.

A good time to move

Henry Knight, Managing Director of mortgage brokers Springtide Capital, said the market was looking good going into spring.

“There is a real air of positivity about the marketplace as we enter the spring months. There’s no doubt that the Government’s extension of the stamp duty holiday, combined with the newly introduced 95% loan-to-value guarantee scheme, have given buyers increased confidence.

“Combined with those people who have chosen to make a lifestyle change on the back of living at home for most of the last year, and those who are looking for more space in more rural locations, we have seen increasing numbers making enquiries in the market and taking up mortgage offers.

Spring Market

 A recent Rightmove survey found that March 2021 saw the greatest excess of demand outstripping supply over the past ten years. The number of potential buyers enquiring about available properties is at a record high, and 34% higher than the same period in 2020.

In April 2021, Rightmove have reported in their house price index that prices hit a record high and that properties are selling at the fastest pace ever recorded. The number of sales agreed up by 55% on same period two years ago, reducing the stock of properties that are available to buy to the lowest proportion ever recorded with two- and three-bedroom semi-detached homes selling fastest.

Zoopla’s research and insight team reported that while the impact of coronavirus will continue to be felt for some time to come the property market remains strong. It also predicted other Government strategies are to be expected that will continue to support the housing market, a positive for buyers and sellers alike.

To discuss your mortgage requirements today contact Springtide Capital on 020 8154 7280.

Sources:

https://www.financialreporter.co.uk/finance-news/house-prices-hit-new-high-as-properties-sell-at-fastest-pace-ever-recorded-rightmove.html?SRC=MC

https://www.gov.uk/stamp-duty-land-tax/residential-property-rates

https://www.gov.uk/government/publications/the-mortgage-guarantee-scheme

Buyer demand soars as stamp duty holiday is extended – Zoopla

House Price Index | Property blog (rightmove.co.uk)

7 factors that will shape the housing market in 2021 – Zoopla

A new raft of 95% loan-to-value mortgage products are being introduced to the market that are backed by the Government’s new mortgage guarantee scheme. Prospective homeowners – particularly those looking to take their first step on the home ownership ladder, will be able to access 95% loan-to-value mortgage products guaranteed by the government.

Chancellor Rishi Sunak unveiled the new 95% scheme last month (early March) in his Budget speech. It is intended to boost the property market in the aftermath of the Covid pandemic by reducing the amount of deposit needed to secure a property. It will also increase competition among lenders. By taking on the financial risk of the higher loan-to-value mortgages, the Government want to give lenders confidence to relaunch their 95% deals which were mainly scrapped last year at the onset of the global Corona pandemic.

The scheme launched on 19^th April is aimed at both first-time buyers and current homeowners who wish to purchase properties valued at up to £600,000 – with just a 5% deposit. Many of the UK’s largest banks including HSBC, NatWest, Barclays, Lloyds and Santander are offering the new mortgages – guaranteed by the Government – with other lenders expected to offer their own products in the following weeks.

Chancellor Sunak said the Government intends to fully support the housing market on the back of the Covid crisis and by guaranteeing the new 5% deposit mortgages, it is hoped more people will be able to take their first step on the housing ladder and become homeowners.

Boost for homeowners

Mortgage products delivered under the new 95% scheme will:

• Be as simple as possible for lenders to administer
• Be introduced as rapidly as possible
• Focus on helping borrowers
• Ensure lending remains affordable and will not incentivise irresponsible lending

Henry Knight, Managing Director of Springtide Capital, said the move was a fabulous initiative to allow people to access mortgages who may not have been able to do so before.

“The Government’s guarantee scheme will enable lenders to offer higher loan-to-value rate mortgage products. This will allow new homeowners to access the market which is vital to ensure the British housing market remains robust – especially following on from the impact of the Covid pandemic.

“Existing homeowners who are struggling to remortgage or move due to low levels of equity in their property will be able to access more competitive offers. The scheme will generate far more movement in the marketplace which is brilliant news.”

95% loan-to-value mortgage criteria

A mortgage being offered under the scheme must meet certain criteria:

• Only residential mortgages are applicable – not second homes or buy-to-lets
• The mortgage must be taken out by individuals, not an incorporated company
• The property must be in the UK and have a purchase value of £600,000 or less
• It can only be a repayment mortgage, not interest only
• The mortgage can have a loan-to-value ratio of between 91% and 95%
• Any lender taking part in the Government’s scheme must offer a five year fixed rate product to give borrowers the security of making predictable repayments.

Commitment to the housing market

The new scheme has been hailed as the next step in the Government’s pledge to support homeownership. Other initiatives introduced include:

• A temporary cut to the Stamp Duty Land Tax to encourage confidence in the property market. Properties valued at under £500,000 are exempt from stamp duty until June 30^th.
• First time buyers are eligible to access the Lifetime ISA (LISA), a long-term savings product intended to support younger people saving for their first home, or for later life.

With new mortgage products becoming available all the time, speak to one of our advisers today to discover the right option for you.

To discuss your mortgage requirements today contact Springtide Capital on 020 8154 7280.

Sources:

https://www.gov.uk/government/publications/the-mortgage-guarantee-scheme

https://www.which.co.uk/news/2021/03/first-time-buyers-can-now-get-95-mortgages-again-should-you-apply/

Budget: Sunak confirms 95% LTV mortgage guarantee scheme | Financial Reporter

Rishi Sunak tries to support the housing market – FTAdviser.com

https://www.gov.uk/government/publications/the-mortgage-guarantee-scheme

Stamp Duty Land Tax: Residential property rates – GOV.UK (www.gov.uk)

https://www.gov.uk/lifetime-isa

The Government’s pledge in February 2021 of an additional £3.5billion to help rectify unsafe cladding on high-rise buildings has been welcomed. Supporting people who find themselves living in a situation impacted by unsafe cladding could not be more important. There is understandably much keenness to implement the initiative quickly.

In the wake of the Grenfell tragedy on the 14th June 2017, the combustible cladding used on Grenfell and on buildings across England was identified as a major fire-safety concern which needed to be rectified.

Government commitments:

Five-point plan to bring an end to unsafe cladding

• Government will pay for the removal of unsafe cladding for leaseholders in all residential buildings 18 metres and over (6 storeys) in England
• Finance scheme to provide reassurance for leaseholders in buildings between 11 and 18 metres (4 to 6 storeys), ensuring they never pay more than £50 a month for cladding removal
• An industry levy and tax to ensure developers play their part
• A world-class new safety regime to ensure a tragedy like Grenfell never happens again
• Providing confidence to this part of the housing market including lenders and surveyors

Housing Secretary Rt Hon Robert Jenrick MP said:

“This is a comprehensive plan to remove unsafe cladding, support leaseholders, restore confidence to this part of the housing market and ensure this situation never arises again. Our unprecedented intervention means the hundreds of thousands of leaseholders who live in higher-rise buildings will now pay nothing towards the cost of removing unsafe cladding.”

It is encouraging to see the government taking the lead as the right place for debating this kind of vital legislation is at a senior government level.  The plan will mean also that surveyors can accurately value properties and that leads to banks being able to support homeowners with the mortgage solutions they need.

Henry Knight, Managing Director of Springtide Capital commented: ‘The measures announced last month will mean people living in homes which they have been prevented from selling, or re-mortgaging, through no fault of their own, will finally be able to push forward. What happened at Grenfell Tower is an absolute tragedy and rectifying the problem with poor cladding on other buildings must be a national priority lead by the government, outlining a clear way forward.’

The government will work closely with industry on the next steps and further details on the scheme will be provided in the coming weeks. There is a huge challenge to be met by the government to bring about the biggest changes to building safety in a generation. The Government is expected to agree the Building Safety Bill this spring.

Sources:

Government to bring an end to unsafe cladding with multi-billion pound intervention – GOV.UK (www.gov.uk)

Chancellor Rishi Sunak has extended the current stamp duty holiday in his budget announcement on March 3^rd 2021, giving a further opportunity for buyers to capitalise on the temporary reduction in rates.

Since 8th July 2020, reduced rates of Stamp Duty Land Tax (SDLT) have applied to residential properties, a measure that was introduced in response to the outbreak of the Coronavirus Pandemic last year. A residential property purchased between 8 July 2020 and 31 March 2021 that was valued at up to £500,000 became subject to a zero charge in SDLT.

This first stage of the initiative was due to expire at the end of March, but the extension represents a staged withdrawal which means:

• extending to the 30 June 2021 the nil rate band of £500,000.
• introducing a nil rate band of £250,000 for the period 1 July 2021 to 30 September 2021

After that the standard zero rate band for stamp duty will revert to its pre-holiday level of £125,000.

Henry Knight, Managing Director of Springtide Capital, said the whole initiative has given a lifeline to the nation’s property market. There are currently around 234,000 house sales that have already been agreed during the Stamp Duty Holiday that have not yet been finalised. Extending the period of a reduction in rates will ensure those sales can go through without the buyers being penalised.

“The reduction in Stamp Duty Land Tax has undoubtedly been instrumental in keeping the property market afloat during this challenging time. We are pleased that the Chancellor has revised the offering, and trust it continues to have a positive impact on mortgages and our clients” he added.

Before the reduction in rates, SDLT was due on any residential property valued at £125,000 or above. Raising the threshold has encouraged both those looking to upsize and downsize, as well as boosting housebuilding. First time buyers previously were given relief on SDLT up to £300,000 and then 5% on the portion from £300,001 to £500,000. The Stamp Duty Holiday has been hailed as a particular success for first time buyers, allowing them to take their first steps on the property ladder. Regionally, the extension on the 3^rd March is set to benefit those living and buying in London and the South-East most, where property prices on average are higher than across the rest of the country.

However, despite the extension, there is an expectation that there could be a sudden increase in new activity, with buyers likely to hit a “cliff edge” further down the line. A second wave of intensive activity may not dissipate the problem of getting all the transactions completed in time and only return the market to the same position it is now, with many buyers waiting to complete.

Henry Knight comments: “I hope the more tapered approach to the end of the holiday will help many avoid the cliff-edge scenario they were facing in the run up to the deadline. The tight deadline was highly stressful for buyers and put a huge amount of pressure on all the individuals involved in getting a house sale completed. Only time will tell if this move will be advantageous, as it will depend on how much new activity will be seen over the next two quarters. I very much hope the problem has not simply been deferred for a few months.”

To discuss your mortgage requirements today contact Springtide Capital on 020 8154 7280.

Sources:

https://www.gov.uk/stamp-duty-land-tax

https://www.gov.uk/government/publications/extension-of-the-temporary-increase-to-the-stamp-duty-land-tax-nil-rate-band-for-residential-properties/extension-of-the-temporary-increase-to-the-stamp-duty-land-tax-nil-rate-band-for-residential-properties

Stamp duty holiday ‘to be extended until June in Sunak budget’ (msn.com)

https://www.gov.uk/stamp-duty-land-tax/residential-property-rates

Stamp duty: Holiday extension will benefit buyers ‘most’ in London and South East | Express.co.uk

With HSBC announcing their return to the 90% Loan-to-value arena on the 12th January 2021, it highlights a positive trend. The bank is one in a string of larger lenders to return, opening the market up to 1st time buyers again and potentially encouraging more smaller lenders to follow suit.

What is Loan to value?

Loan-to-value, or LTV is all about how much your mortgage borrowing is in relation to how much your property is worth. It’s a percentage figure that reflects the proportion of your property that is mortgaged, and the amount that is yours.

The number of 90% LTV products on the market has nearly doubled since last July, analysis from Moneyfacts shows. The data, which is due to be published in the Moneyfacts UK Mortgage Trends Treasury Report, found that the number of mortgage deals at a 90% LTV (which requires a 10% deposit) has increased from 88 on 1 December 2020 to 160 on 1 January 2021.  In addition to this, the average rates on both two and five year fixed rate deals at a 90% LTV have fallen month-on-month. The average two year fixed rate at 90% LTV has fallen by 0.14%, down from 3.79% on 1 December 2020 to 3.65% 1 January 2021, and the average five year fixed rate at 90% LTV has fallen by 0.13%, from 3.92% to 3.79% month-on-month during the same time period.

While choice has improved, rates are higher than in July 2020.

Moneyfacts finance expert Eleanor Williams says: “Not only is the increase in product choice a positive for borrowers, but it seems that a measure of competition may have started to return to some sectors as well.”

In recent months, lenders have been dipping in and out of the market, offering 90% LTV deals for only short periods. To now have products that will be available for longer periods will help meet the demand for these 90% LTV products and will provide more choice and certainty.

Henry Knight, Managing Director from Springtide Capital commented:

“With a variety of lenders and products returning to the higher LTV space, hopefully it brings a little bit of welcome normality and brings opportunities for those borrowers with a low deposit. Availability of high LTV mortgages, which typically only require a 10% deposit or less, help first time buyers become the next generation of homeowners.”

Those hoping to buy a property with a 10% deposit face limited choice and higher costs than they did before the pandemic, but with vaccines now available, everybody is hoping for a return to pre pandemic figures soon.

Major lenders such as Nationwide are also beginning to make rate cuts, and others are following creating a more competitive market. Now there is a Brexit deal agreed, house price rises and the roll out of the COVID-19 vaccines has begun, this should continue to give lenders more confidence to bring wider ranges of products to the market.

Borrowers requiring a mortgage to cover 95% of the purchase price have faced an even more challenging 2020, and they may have to wait a while for things to improve, with lenders only recently returning to 10% deposits and the current economic climate remaining uncertain.

With new products becoming available all the time, speak to one of our advisers today to discover the right option for you.

To discuss your mortgage requirements today contact Springtide Capital on 020 8154 7280.

Sources:

https://www.mortgageintroducer.com/hsbc-launches-90-ltv-products/

What is LTV? | moneyfacts.co.uk

https://moneyfacts.co.uk/news/mortgages/first-time-buyer-deals-almost-double-month-on-month/

High-LTV lending back on the menu: Moneyfacts | Mortgage Strategy

Nationwide chops rates by up to 0.45% | Mortgage Strategy

It is business as usual in the mortgage market, despite the third national lockdown. With the current global pandemic, like everybody, the whole property market has found itself in a complicated situation, quickly having to learn how to adapt to the changing environment. It is vital to the UK economy that the property market remains open to facilitate the unprecedented demand seen in the market in recent months.

Many property transactions are currently waiting to complete before the Stamp Duty holiday deadline ends on 31^st March 2021. The whole industry is working towards making sure that all the aspirational homebuyers get their transactions over the line before the deadline.

The government continues to work closely with all parties to make sure there is a safe and robust system in place for everybody involved in the buying and selling process.

As we reported in June, many new regulations have been embraced and practices modified to make the home buying process safe and secure. The changes made to accommodate the COVID-19 pandemic continue to take extra time to facilitate and the industry has proven to be resilient and flexible.

RICS continues to revise guidelines for the property sector that outlines safe practices relevant to property agents, lenders, mortgage advisers, property lawyers/conveyancers, surveyors, energy assessors, property managers, home removal and associated professionals such as contractors involved in the property development, management and the home moving processes.

The whole market has been able to adapt and evolve to a more digitally enabled way of working, helping us operate above and beyond the government guidelines as the safety of our clients and staff is paramount. Understandably, physical viewings pose a concern although the industry remains well-positioned to carry out all elements of the transaction process in a safe and appropriate manner.

The impact on mortgages from the furlough scheme and the mortgage holiday scheme from 2020 are still not fully evident, but the industry is working hard to keep up to date with the changing landscape and act accordingly.

Henry Knight, Managing Director of Springtide Capital comments:

“Our key priority is to make sure we deliver positive customer outcomes, safely and comprehensively. We feel we have the right mix of experienced and knowledgeable colleagues to be able to meet the high expectations that the current situation demands. It serves no one’s interests if a borrower takes on an unaffordable mortgage and an understanding of all implications in the changing market is very important”

It has been reported that 81% of buyers and sellers are undeterred by a third lockdown.

We know the appetite to buy and sell or make home improvements is still strong and with the market remaining open for business, we can offer our customers the most comprehensive service possible by keeping up to date with all market aspects.

To discuss your mortgage requirements today contact Springtide Capital on 020 8154 7280.

Sources:

https://springtidecapital.com/2020/06/positive-steps/

Guidance for professionals (rics.org)

81% of buyers and sellers undeterred by third lockdown | Financial Reporter

Q3 2020 equity release market statistics released by the Equity Release Council show a positive upturn. The number of new equity release plans agreed (10,351) increased by 41% from the previous quarter as national lockdown restrictions were eased across the UK.

Equity release allows individuals aged 55 and over to release money from the property they live in without having to make monthly payments.

There was a steady increase in new customer activity during Q3 also: July saw 3,147 new plans agreed, followed by 3,228 in August and 3,976 in September.

£963m of property wealth was unlocked in total during Q3 2020 by new or returning customers, up by 38% from Q2, but down 3% from Q3 2019. In addition, this activity would have been influenced by an extended pipeline and delayed cases from earlier in 2020.

David Burrowes, Chairman of the Equity Release Council, comments:

“Despite the uncertain climate, the market has adjusted well to the challenges of operating safely in a pandemic. Desktop property valuations have been used selectively, solicitors have taken extra steps to maintain consumer protections when advising remotely, and product pricing has remained competitive.”

During uncertain times, people are investigating how they are going to keep up their standard of living, pay for potential increases in care costs and plan ahead. Recent research found that 48 per cent of women and 41% of men are concerned about exhausting their retirement savings too soon.

Why equity release?

Your home could hold the key to improving your quality of life or breaking down financial barriers facing you or your family members. Equity release could help if you are looking to increase your available funds for a dream holiday, home improvements or to help a family member with their school or university fees.
If finances are tighter, it could be the ideal solution to help you with your regular monthly or quarterly bills.

Equity release plans are regulated by the Financial Conduct Authority (FCA) and offer a safe way to unlock some of the tax-free funds that may be tied up in your property.

Henry Knight Managing Director of Springtide Capital commented:

“Equity release is becoming a popular option for those looking to release money from their property whilst continuing to live in it. 2020 has been an unprecedented year in many aspects. People are investigating the many alternative options for unlocking the capital in their homes and the increase in equity release activity in Q3 is no surprise. As always, regulated financial advice will help individuals make an informed choice.”

With so many features available within equity release schemes, speak to one of our advisers today to discover if it is the right option for you.

Sources:

https://www.equityreleasecouncil.com/news/q3-2020-market-statistics/

https://www.equityreleasecouncil.com/what-is-equity-release/

Half of women approaching retirement are worried about running out of money in later life – Equity Release Council

Financial Conduct Authority | FCA

In England the stamp duty threshold sits at £500,000 until 31^st March 2020 and buyers completing on their main residence up to this amount before this date, will not pay stamp duty. This is a temporary benefit, and due to the huge surge in the property market currently, applications are taking much longer than expected.

Research by Legal & General Mortgage Club, which surveyed housing market advisers, conveyancers and estate agents gives statistics which support an early as possible mortgage application:

• The average purchase time from finding a property to completion is at least 15 weeks, (four months) as processing times for applications have doubled.
• Before the pandemic, a mortgage application for a consumer with straightforward circumstances took less than two weeks (61%) to move to mortgage offer. Yet, since the re-opening of the mortgage market, advisers have found that this process is taking much longer – 30% said it is taking three to four weeks with a further 32% saying it is taking four to eight weeks. Those with more complex backgrounds, the self employed, those with impaired credit histories or who have been on furlough, may need to allow six to eight weeks (28%) to get approved for a mortgage.
• Conveyancers indicated that the time between offer and exchange is now taking three weeks, while the period between exchange and completion stands at one to two weeks.
• Estate agents indicated that the average time between receiving an offer on a property and completion has increased by some eight weeks.

This is an unprecedented situation and policy makers may need to consider a potential graduating of the stamp duty deadline. Lenders face the challenge of ensuring that borrowers only take on what they can afford in the long term and COVID-19 has complicated the financial situations of millions of people. Making high quality decisions is of the upmost importance.

The whole mortgage industry has an absolute requirement to prove beyond a doubt that everything the borrower says is true, and this is vital to make sure borrowers do not take on more debt than they can afford. Our advice to put yourself in the best position and get your application in before the end of the year is:

1. Start your conversations early.
2. Understand what you will need to provide-some applications for example, self employed applicants may have more information to gather for an application.
3. Be clear on what information lenders require. If you are required to provide two months of bank statements, give every single page of the statement, or it can’t be checked off that all your bank statements have been received and you will go back to the bottom of the queue.
4. Get your information together in one hit and packaged up well. Provide whatever documentation you are asked for, as soon as you are asked for it, and without debating the appropriateness of the request. Hesitating to answer, that will only warrant further uncertainty and slow things down more.

Henry Knight from Springtide Capital comments: “Preparation is key. It is important to make sure you understand all the information that is required for your application and provide this in one go. This will prevent your application being sent backwards and forwards, delaying your application. Aim to be the first cleared off the to-do list at each stage of the process so your loan can move forward as smoothly as possible”

In the current environment if you are struggling with what to do next regarding a mortgage, it is important to take advice as there are certain steps which may be worth taking.

At Springtide Capital we provide high quality impartial mortgage advice. We are a specialist mortgage broking business committed to providing a personal and efficient service. We understand the complexities of finding the right loan to suit both your financial and personal circumstances.

Source:

https://www.mortgagestrategy.co.uk/news/homebuyers-have-until-1-nov-to-save-on-stamp-duty/?eea=REd4cGpwaE8vZm9FWk8vZm5qWkVsY09qNVJ2THh1YWJlWTBoV0hJV29ERT0=&n_hash=934