The mortgage market is set for more twists and turns this year, with two significant changes coming at the end of the first quarter according to Mike Brown, director of Crystal Clear Financial Services.
The stamp duty holiday and the equity loan scheme are set to conclude at the end of March.
While the equity loan scheme does have a replacement in place, this will only be available for first-time buyers and it will include regional price caps, which Brown believes will have an impact on the market.
He said: “Both of these changes at the same time could see a number of first time buyers and home movers in a vulnerable situation if they cannot complete by 31 March 2021.”
Sarah Tucker, founder and managing director of The Mortgage Mum concurs with Brown, and outlined that the replacement equity loan scheme being available exclusively to first-time buyers will impact the market.
Tucker said: “I also think the property caps will put some potential first time buyers off.
“I hope the builders do not build too many! I think that is a hard area of the market to predict, so it will be interesting to watch that unfold.”
Brown said: “House builders are going to need to be flexible in helping clients meet additional charges, particularly if the delays are as a result of the build not being completed in time.”
Focussing on the conclusion of the tax break, Tucker believes that once the stamp duty holiday ends, the government will confirmed the rumoured 95% LTV scheme for first-time buyers.
Looking forward, Tucker believes that the biggest unknown in 2021 for brokers will be the impact of self-employed clients with their businesses submitting their latest year of accounts.
She said: “This is bound to affect our ability to place mortgages from an affordability perspective, and sadly we are not past this virus yet.
“So although the end is in sight, and the support is there, I think there is bound to be a period of strain.”
Brown is also anticipating a transition period in the market due to the impact of COVID-19.
He pointed to property prices being on a knife edge, the fallout from COVID-19 on unemployment and individuals approaching their remortgage window.
Brown said: “For professional advisers, we need to get closer to our clients, be the custodian of our clients more so than ever to add value, provide confidence and peace of mind at a time when the economy and industry is volatile and vulnerable.”