The current housing and mortgage market

I thought I would start with giving you all a quick insight into what the housing market and mortgage market is looking like since the pandemic kicked in last year.

House Prices

First fact that hits me is that, despite the pandemic and the lockdowns of 2020, the average house price has now got to £250,000 (in the 12 months to November 2020) – that is the first time this figure has hit the quarter million mark.

Headlines within this stat show London’s average figure hit the £500K mark and property value in the North East have passed their pre- financial crisis peak of July 2007, more than 13 years later! And according to the National Statistics, house prices rose 7.6%

Mortgage market

Similarly, mortgage approvals for purchases, last year, were the highest since 2007. However overall approvals were down on the last 4 years when building in re-mortgages. The momentum being that Lenders have had the confidence to increase interest rates by the end of last year, climbing to rates not seen since October 2019.

Other headlines show that some 17% of first-time buyers used either Help to Buy or shared ownership to purchase homes last year with demand for each initiative, reaching its peak.

Even harder to get onto the property ladder?

In light of the continued rising of house prices over time this seemingly gives first time buyers a bigger headache in trying to get onto the property ladder. Whilst there are the above schemes available via the Government with the Help to Buy Schemes, it can only be for “New Houses”. But now, there is an offering out in the market that offers a similar scheme to that of the Government’s Help to Buy Scheme. That is, offering an equity loan of 20% of the property on an interest only basis but rather than a 5 year interest free equity loan, that the government scheme offers, this scheme charges the interest from day one. The big difference being that anyone can take advantage of this opportunity and also it doesn’t have to be a “New Build” property.

Tax Changes

There’s no doubt that the temporary cut to Stamp Duty kick started the market as it was designed to but we are now in a position where there are too many deals going through to beat this deadline and the Chancellor needing to give dispensation to some deals that will fail to meet that deadline. Other changes that will impact the market is around the additional Stamp Duty levy for overseas investors and the potential change in Capital Gains (likely to be introduced later this year) which could see tax due on profits from Buy to Let properties or second homes increase from 28% to 40% for Higher-Rate Tax Payers.

So this is a very brief update on housing and mortgage market and I will be updating things in due course but the message is very much a case of a strong housing and mortgage market that has continued, with a little help and has not succumbed to this pandemic……… and long may it continue! For further information please contact me: Written by Chris Bishop, Vanmark Financial Services.

01865 959099

Source of information – Mortgage Solutions & Office of National Statistics

Your Home may be repossessed if you do not keep up repayments on your mortgage. Commercial and certain Buy to Let Mortgages are not regulated by the Financial Conduct Authority

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