All hands to the pump in the mortgage market
Dale Jannels is managing director at Impact Specialist Finance
It’s currently all hands to the pumps across the mortgage market – or hands on all the pumps, as an old colleague used to say. To this day, I’m not sure if he said it like that on purpose or not, anyway I digress. All links in the housing and mortgage chain are feeling the pressure as we race towards the stamp duty (SDLT) deadline. In all honesty, I’m getting a little tired of talking and reading about SDLT but there’s no getting away from its importance in the current market. And the awareness around this does help ensure consumers realise that the housing and mortgage markets are open, despite the current lockdown restrictions.
These are obviously not quite as open as we would like and we continue to operate in some strange times, meaning there’s an extra level of safety and security everywhere. For example, valuers can only visit empty properties and there are also certain limitations when viewing properties. Which means that buyers and sellers need to be fully aware of what is and isn’t possible in today’s market, and who better to advise them than the intermediary community.
A huge part of an adviser’s role at any time is managing expectations, and this is more evident than ever. Whether it’s advising on and when an offer is likely to be issued or the likelihood that an individual transaction will complete before the 31st March deadline. This extends into managing expectations around various lending scenarios through to dealing with any recent or historic credit blips, mortgage payment holidays, furlough and self-employment – to name but a few influencing factors.
One particular area of expectation has long revolved around the amount people can borrow and the level of deposit required. Recent years have seen lower lending volumes at higher LTV bands as lenders have significantly reduced their appetite and risk profiles. Last Summer I remember writing an article around an LTV hokey cokey throughout the mortgage market. Once the housing market ‘reopened’ we saw a number of lenders dip their toes into the 90% LTV market, only to see them swiftly yank them back out after being swamped with business whilst still having to deal with logistic and operational issues.
Since then, the mortgage market ship has steadied somewhat at the mid to higher LTV bands and further good news recently emerged via data from Moneyfacts. This outlined that the availability of all mortgages reached its highest level since April while the number of 90% LTV deals has escalated to June 2020 heights. The UK Mortgage Trends Treasury Report showed that the number of residential mortgage products rose for the third consecutive month to 2,893. This was the highest total availability Moneyfacts had recorded since April 2020 (3,192) when the pandemic’s effects began to take hold. However, the data for January 2021 showed the greatest increase in availability was at 90% LTV where product numbers almost doubled from 72 to 160 – the highest level recorded since June 2020. The report also highlighted that borrowers with higher levels of equity or deposits had seen an improvement. Availability at 75% LTV rose to 629 deals, the highest level seen since July 2020.
This is all positive news for borrowers and intermediaries as increased activity and competition across the 90% LTV landscape will help encourage greater numbers of first-time buyers onto the property ladder well beyond the stamp duty deadline. And long may this continue, in a responsible manner of course.