There was a record jump for UK mortgage lending in March. It reached £11.8 billion; the highest figure since records began.
At Continuum we are looking at the reasons why home buying has become so popular, why that popularity could mean problems – and how getting a better deal on your mortgage could help solve them.
Prices are high – but so is demand
Britain’s housing market rebounded strongly after the first coronavirus lockdown in the spring of 2020 forced it to a complete standstill. The fear of a collapse in the sector, which could have had a catastrophic effect on the entire UK economy prompted the Chancellor to take drastic measures.
His stamp duty land tax holiday has been one of the drivers of recovery in the market. It was originally scheduled to cease at the end of March, and the extension to the end of June seemed to give a second boost to the market.
A combination of low mortgage rates and a desperate need to beat the stamp duty holiday deadline has led to the house market having an energy that it has not seen for many years, if ever.
Homes are going for above asking price and going fast. Property portal Rightmove has said sales are being agreed faster than they can be completed.
By the middle of June 704,000 homes on its website were marked as ‘sold subject to contract’, which means the sale has been agreed, but contracts are not yet exchanged. This is the highest figure Rightmove has seen in a decade.
Time to get a move on?
If you are planning a step up the property ladder, rising prices can make it look like the ideal time to get moving. But there could be some problems. The easing of restrictions, extended stamp duty holiday, better mortgage availability for first-time buyers, race for space and relocation to the country have all combined to create a conveyancing logjam.
Under the current rules, no stamp duty will be paid on the first £500,000 of a property purchase until 30 June – saving buyers up to £15,000 compared to normal tax rates. After that, there will be no stamp duty charged on the first £250,000 of a property purchase until the end of September – saving up to £5,000.
Agents are having multiple viewings followed by multiple offers within days of a property first appearing on Rightmove, and people are even making offers without viewing, such is the level of demand.
But although the market frenzy means that homes are being sold fast, neither mortgage lenders nor solicitors can keep up with the paperwork. With the average time from sale agreed to completion currently running at around four months, thousands are at risk of missing out on the stamp duty holiday.
It looks as though many people will miss out on the stamp duty holiday. Some may need to reconsider their offer if the return of the tax affects their overall affordability.
What can you do if you miss the deadline?
The stamp duty deadline is certainly one of the factors driving the market, but what can you do if your purchase is being delayed?
There may be very little you can do if your conveyancer is inundated, other than find another solicitor or a specialist conveyancer who can help. But it might be possible to find a lender who can make a faster offer or reduce costs, if you have an expert on your side.
At Continuum we can search the entire market to find the mortgage product that is right for you. Not only can we compare all the offers from the major lenders and from specialists, we have access to products that are never advertised, and are only available to advisors
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable mortgage products, you should seek independent financial advice before embarking on any course of action.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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