Now that we are over halfway through 2020, and seemingly coming to the end of the COVID pandemic, it’s time to have a look at the housing market and see how it is holding up.
Of course, the big news is the stamp duty changes which see stamp duty removed completely on properties valued at under £500,000, and a sliding scale going forward but still meaning reduced payments on properties valued at more than that figure. It was intended as a move to get both established buyers and first-time purchasers interested in the completing, but that has been a little mired by lenders getting nervous and reducing the total amount that they are prepared to lend. Prior to COVID, first time buyers could find deals that would secure an 90% – 95% mortgage, but jittery lenders are now almost universally reducing that to an 85% ceiling, leaving borrowers needing to find a 15% deposit, and that is more than the savings that they will make on stamp duty.
Outside of the COVID-19 recovery plan, though possibly a part of the overall situation, according to Nationwide, house prices fell by -1.4% in June. This brings annual growth down into a negative state, with values around -0.1% lower than they were this time last year. This is the first fall on an annual basis – year to year – since December 2012. On a more focused level, quarterly growth has been the strongest in Scotland, up 2.5%, followed by London at 1.5%. Wales has fared the worst, by dropping as much as -2.2%. However, it should be noted that this data is based on smaller samples than at other times – due to a lower movement on the overall housing market – and this can lead to volatility in the data.
Growth in the rental market across the entire country sat at 1.5% in May, with June’s data not yet available. The market was the greatest in the South West and the East Midlands, which both grew at 2.5%, while rental growth was weakest in Scotland and the North East, with each market growing at just 0.6% and 0.8% respectively.
Over 300,000 planned new homes may remain unbuilt over the next five years, deepening the UK’s housing crisis, as a result of the coronavirus pandemic, a new study predicts. The effect of stalled construction projects along with the recession could reduce the number of new homes being built, with 85,000 predicted to be lost during 2020 alone. This is as a direct result of furloughed construction workers and instability in the overall housing market. It is suggested that housing build levels may not get back on track for up to 5 years.
The pandemic has left a higher than normal number of homeowners seeking a cash injection, and this, in turn has led to a greater number of re-mortgaging applications. In response, many lenders are offering some good deals, with notable entries from Lloyds with a two-year fixed deal on a maximum loan to value (LTV) of 60% at an initial rate of 1.09%, or Halifax offering a two-year deal of 1.223% with a 75% LTV rate.
If you want to look at making some savings on your mortgage or need to release some equity, freeing up cash by re-mortgaging could make a lot of sense. Come and chat to use at Grange Mortgages to discuss your options.