Paul Janes is director of Beals Wealth Management, an AR of Quilter Financial Planning
This year has been defined by the pandemic and unfortunately it’s impossible to discuss the mortgage market without reflecting on COVID-19 and its knock-on impacts.
The start of lockdown saw an effective halt on the entire market and most of the business was product transfers and remortgage applications.
As ever the market adapted and we saw people doing video viewings of property, but it wasn’t until the summer when the government announced the stamp duty relief that the market really got going again.
And it has been frantic since.
The backlog of people who had put their move or first-time purchase on hold were coupled with those that had contemplated moving, but we’re finally spurred by the tax saving.
There was some notable difference when the market restarted, high loan-to-value mortgages, which had been rapidly growing in popularity, started to be withdrawn from lenders.
High LTVs were critical for first-time buyers who were doing their best to clamber onto the first rung of the housing ladder.
We saw a dramatic need for holistic advice as people started trying to figure out how their housing wealth played a role in their overall finances.
Many people have seen their finances shift during this period.
For some they’ve managed to squirrel away more money and questioned what is the best use – would it be pay off their mortgage, invest it, place it in a pension etc?
And for others they saw their income dip or indeed disappear and needed to evaluate how their mortgage fitted within their current financial situation and what options were available to them including so called mortgage holidays.
A vital part of all this was protection.
Within Quilter Financial Planning the network provided extra support material designed to help us discuss with clients with a mortgage but no protection, a suitable solution to provide peace of mind in very uncertain times.
Now into 2021 there remains a huge question mark over the future of the market.
Housing prices have been rising thanks to the demand created by the stamp duty cut, but that looks highly unlikely to remain.
So, we may see a drop and that could play into the hands of first-time buyers, particularly as some lenders have started supporting high LTVs again.
However, it will be challenging for many borrowers in the new year as we know some lenders are being strict on what income they accept, and if a worker was placed into furlough or is deemed to be in a high risk sector they may struggle to get a good deal.
We also know the challenges that mortgage prisoners face and the new rules concerning cladding on flats in particular has grown this population substantially.
So in the new year it will be more important than ever for mortgage brokers to look closely at a client’s entire situation to help them figure out not only what is the most appropriate solution to their housing needs, but also how that interacts with the market and lending policy.