The confidence in the UK housing market is at a four-year high, according to surveyors and estate agents. Nationwide reports that UK house prices saw their biggest annual rise last month since 2016. On average, values rose by 5% this September compared to September 2019.
There has been a huge surge in mortgage applications at a time when lenders face considerable challenges in getting their offerings out to borrowers. Be patient, lenders are lending. If your application is taking a long time it is not necessarily that there is an issue.
In the current market lenders have had to withdraw some 90% deals in order to have the capacity to keep processing applications. In trying to support buyers, lenders have been inundated, and removing some deals serves to stem the flow of business so that they make the overall volume more manageable.
The current delays have come about due to a number of factors. Staff across the mortgage industry, like other sectors are still working from home and subject to changing regulations and local lockdowns. Where staff are still working in an office, if several members of one team need to self-isolate at one time in accordance with the Government legislation, this can make a significant difference to how long items take to progress.
Existing customers have been contacting lenders about mortgage holidays therefore they have had more calls to contend with causing delays. Just as with Mortgage Payment Holidays, the admin associated with the Bounce Back Loan scheme has added to the workload of lenders with staff previously employed in mortgage departments being moved to teams dealing with these types of emergency loans.
The property market is busier than ever and demand for mortgages is high. More people have decided to move since lockdown. With home working increasing, many people have decided they need a home with space for an office, while others have decided they simply need more space. Also, some people living in flats or in smaller homes with limited land have decided they need a garden. There has also been pent-up demand in the market created from 23rd March until 13th May when restrictions were in place.
The Stamp Duty holiday announced by Chancellor Rishi Sunak on the 8th July has boosted the property market. Buyers can save money on their house purchases as Stamp Duty has been cut on properties up to £500,000, whereas previously it was only at zero on properties up to a value of £125,000. Many buyers are keen to take advantage of this cut.
Volumes are consistently high across England and are higher than any of us expected. This increased pressure on the system also highlight issues inherent in the systems themselves. For example almost a third of English councils are taking 20 days or more to return local authority searches. Changes have been required across the industry in processes to accommodate new COVID related practices too.
Henry Knight from Springtide Capital commented:
“Everyone across the industry is inundated but do be patient. Banks are not quite back to the pre -COVID normal and the government stimulus of the stamp duty cut will continue to hold up transaction numbers for the next few months. Mortgage availability is healthy. We are all working together to process all parts of applications as quickly as possible”
Take a look at our tips to help your mortgage application run as smoothly and quickly as possible.