Uncertainty continues into 2021
Bob Hunt is the chief executive of Paradigm Mortgage Services
No sooner had the new year begun, than any thoughts of 2021 representing some kind of break from 2020 were dispelled pretty quickly by the decision to introduce lockdowns in England and Scotland, as well as a ramping up of measures in Wales and Northern Ireland.
It is clearly not the news that any of us would have wanted, but it seems absolutely necessary in light of what is happening in the country.
When you have one in every 50 people in this country with COVID-19 then all bets are off, and it’s little wonder that the NHS is struggling to cope with the devastation this new, more virulent, strain of the virus is bringing.
When you look at the numbers of cases and deaths, then it almost seems somewhat flippant to be looking for rays of sunshine amidst the gloom, but given the economic damage the pandemic continues to bring, there are some that we must cling onto.
Uppermost in most property market stakeholders‘ minds, on hearing the news of the national lockdown, will have been whether we were being pushed back into a March-May 2020 situation, with the housing sector effectively closed down.
Thankfully, that is not the case, and – perhaps with some added protections for those visiting homes, etc – we effectively have ‘business as usual‘ for most firms.
Let’s not forget that, for the vast majority of us, working from home or remotely never really stopped last year, and I suspect that we will all have learnt much from those initial experiences allowing us to be just as productive throughout this period.
Of course much depends on continued demand – there is good news here in terms of the remortgage and product transfer market with billions of pounds worth of potential business available as loans mature each month.
Estimates for product transfer maturities alone during 2021 are c-£250bn, higher than the majority of commentators estimate for the total gross lending market, which this year is set for c-£240bn
But, this further lockdown might even give a further boost to purchase activity. We may have individuals during this period who continue to recognise their current working/living arrangements do not work for them in such circumstances, and I suspect the property portals are likely to see a big increase in traffic over the next couple of months.
Homemovers represented a significant proportion of the increased H2 2020 volumes, and I really can’t see a reason why that would slow up.
And, as we move towards the end of March, the advisory sector should be benefitting from a significant uptick in completions, which will hopefully provide firm income foundations for the year ahead.
Early indications from lenders suggest December completions will be extremely high.
The pressure which is being brought to bear on the Government to extend the stamp duty holiday past its end of March ‘end date‘ is only likely to grow, however, while I don’t hold out great hope for its success, I suspect the early March Budget announcement is more likely to be the obvious point for the chancellor to allow those cases already in the pipeline to benefit from the incentive even if they can’t complete by the end of that month.
Lockdown three certainly doesn’t make it any easier for conveyancers, for example, with staff working away from their offices, although I think we’ll see many of the large volume operators being able to complete significant volumes of purchase cases over the next few months.
It has risen to the challenge before – notably the additional property stamp duty deadline of 2016 – and it can do so again, albeit not in these incredibly difficult circumstances.
In terms of how 2021 might therefore look, I think there is real cause for continued optimism in the mortgage market.
This new lockdown is clearly not ideal, but as mentioned, it might give existing homeowners and indeed tenants further food for thought about their arrangements, and we could see increased activity because of this.
The further good news surrounds the availability of mortgage finances – this remains very far from a credit crunch situation – and lender appetite appears to be growing.
Just this week we have had lenders increasing their sales team resources, also returning to more high LTV product spaces and we anticipate a large degree of repricing across the mortgage market in the weeks ahead, in order to access the demand that exists.
Clearly, this is a positive for advisers and their clients – greater levels of choice and increased lender targets are only likely to be satisfied via the intermediary community, which is increasingly in demand as consumers seek help understanding their choices and options in an ever-changing market….and Paradigm is certainly working with our lender and provider partners to support intermediaries and
their customer‘s ambitions here.
Overall therefore, I think we have to be incredibly grateful for what we currently have. There is plenty of support to help advisers through this period, if required, and the outlook – while clearly not positive from a COVID-19 point of view – does seem relatively optimistic for the housing/mortgage markets.
Let’s hold onto that thought and make the most of every opportunity that presents itself – who knows what may or may not be coming over the horizon in the future.