Outlook is still uncertain but there are signs of optimism in mortgage market
A RANGE of adjectives have been used to describe 2020, and when it comes to the residential property market it could be pretty well summarised as tumultuous.
From a positive start to the year, to a three-month lockdown, no-one could have anticipated the level of demand that then followed during the summer months. It was, quite frankly, astonishing.
This volume of activity occurred despite a dramatic shrinking in the number of mortgage deals, especially when it came to the very popular 90% and 95% markets. In fact, these products became all but extinct as lenders sought to mitigate the potential economic risks of the pandemic.
The Scottish Government endeavoured to help kick-start the market and the temporary Land and Buildings Transaction Tax (LBTT ) changes alongside the First Home Fund certainly provided some impetus, albeit we have probably experienced a peak, with activity beginning to level off as we entered the winter months.
The Covid-19 health crisis is still with us and the full economic effects are probably still to be realised – this, together with the significant uncertainty around Brexit, has created additional drag in the market, with public confidence still a tad fragile.
However, there are reasons for some cheer and positivity, not least the good news around a Covid vaccine. At last we can see some light at the end of the tunnel and there is some evidence that lending institutions have also recognised this and are beginning to look to the future.
November saw the first signs of optimism from lenders as we saw Accord have really seen these since the national lockdown in March. The deals are available for first-time buyers, home movers and people looking to remortgage.
This feel-good factor was further bolstered when Halifax, one of the UK’S biggest mortgage lenders, resumed lending up to
90% for first-time buyers.
It should be said that this is not a full-scale launch of 90% products by Halifax and certain conditions are attached that might not normally have applied. The maximum loan-to-value (LTV) ratio is set at a multiple of 4.49 and enhanced credit score requirements will be applied. Furthermore, if an applicant needs to increase the LTV above 85% on an application that has
already been submitted, they will then be subject to the new criteria.
It is to be expected, generally speaking, we will see higher rates for these types of mortgages, with many lenders looking for an arrangement fee, as such it is still worth considering if an extra 5% deposit can be obtained.
On top of the new deals, of which hopefully we should see more in the coming months, the LBTT (or stamp duty) exemption is still
available until March 2021, and the
Scottish Government’s First Home Fund should again open to applications in the first quarter next year.
It is, of course, extremely difficult to try to predict what next year will hold and, whilst we should see fewer lockdowns, it will take some time for life to return to something close to normal.
Given the current uncertain environment, it may not seem the right time to be exploring the property market but, with prices remaining at relatively low levels, it could be a good time to dip your toe in the water.
The past year has certainly been one to forget but securing your dream home in 2021 could well make next year one to remember.
Economic effects of the crisis are still to be realised