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Mortgage Mayhem

Like most markets in 2020, the housing market is in a constant state of change and this is particularly noticeable at the moment. Mortgage deals are being withdrawn, property prices are increasing, mortgage rates are rising, property chains are facing massive delays. It’s hard for buyers and sellers to know what to do for the best at the moment.

The recent property market boom
The end of the national lockdown and the announcement of the Stamp Duty holiday created a big demand for property. Moving plans were taken off hold by thousands of buyers, resulting in a highly competitive market with buyers able to charge a premium and properties being sold in days rather than weeks. Lockdown also caused people to re-evaluate their lifestyles and many decided to seek more space or a move to the countryside, creating an additional surge of property sales. 

Delays in the market
The downside of the surge in sales is the creation of a massive backlog, made worse by staff being on furlough and working from home. Banks, building societies, surveyors and solicitors have been unable to cope with the demand which has caused long delays to property chains.

Mortgage market changes
While August was the busiest month for lenders in 13 years, lenders are now trying to curb demand, so they are generally raising mortgage rates, tightening their lending criteria, and taking many mortgage deals off the market. This is most likely to negatively impact the self-employed, people who rely on bonuses, or those returning from furlough leave.

90% mortgages are now few and far between. While April typically had 16 widely available 90% mortgage deals, October saw only one. Those with a deposit of 10% or less are only like to get a mortgage in the following ways:

  • A couple of lenders offer 1-2 day sales of 90% mortgages
  • Some regional building societies offer 90% mortgages to local postcode areas
  • Specific professions, such as teachers, NHS staff, police and postal workers can qualify with certain lenders
  • If parents use their savings or have a have a mortgage-like charge on their own property 

Mortgage rates
The Bank of England base rate has reached a record low of 0.1% and there is still a possibility this will drop further to 0% or below – although mortgage rates might not follow. In light of this it might not be worth going for a fixed-rate mortgage at the moment, although some people will prefer the certainty of a fixed deal.

As of October, Monmouthshire Building Society were offering the best 2-year fixed rate at 1.6% for those with a 25% deposit, while those with a 40% deposit could qualify for Halifax’s 2-year fixed rate of 1.28% or HSBC’s 5-year fixed rate at 1.44%.

If you need any advice on mortgages, buying or selling, please get in touch with us on 0121 744 4144.

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