As the full impact of the coronavirus pandemic began to be felt in the spring, activity in the mortgage market rapidly declined and predictions of economic disaster, rising unemployment and a deep property market slump were rife.


However, as lockdown restrictions eased and the UK adapted to a ‘new normal’, the outlook for the mortgage market was looking more positive. Data from mortgage technology provider Twenty7Tec shows that July was the busiest month of 2020 for mortgage searches, beating all pre-lockdown figures. 

 

Stamp Duty holiday buoys housing market

Mortgage approvals soared to 84,700 in August, up from 66,300 in July and the highest level in 13 years, according to figures from the Bank of England.

Pent-up demand helped to drive the boom, but the nine-month Stamp Duty Land Tax (SDLT) cut also added to the momentum.

The tax break, which came into force on 8 July and runs until 31 March 2021, has raised the threshold at which Stamp Duty becomes payable on property purchases in England from £125,000 to £500,000.

Mortgage searches for properties within the £500k to £1m bracket have jumped significantly, having suddenly become more affordable to many buyers due to the thousands of pounds that can be saved on Stamp Duty.

 

House price growth exceeds expectations

On another positive note, house prices rose by 1.6% from August to September, the third consecutive month of substantial gains, according to data from Halifax. It also reported receiving more mortgage applications from both first-time buyers and home movers across the last three months than any time since 2008. 

As well as being incentivised by the Stamp Duty holiday to move as soon as possible, increased home working is driving demand for more space and larger properties, particularly in rural areas. Confidence also appears to be returning for first-time buyers who were undoubtably the hardest hit by the coronavirus pandemic, after lenders withdrew hundreds of mortgages designed for buyers with low deposits. 

However, Halifax also warned that the housing market is unlikely to remain immune to the economic impact of the pandemic. As the furlough scheme ends and unemployment figures are expected to rise, downward pressure on house prices is likely in the months ahead. Local lockdowns are also expected to slow activity in certain areas. 

 

We can help with your mortgage search 

If you’re planning to take advantage of the Stamp Duty holiday, don’t delay in getting your mortgage search underway. Finding a suitable mortgage can be challenging, particularly in the current climate, but we can help you.

We can assess a wide range of mortgage products and advise on which best suits your circumstances, so please get in touch. 

Your home may be repossessed if you do not keep up repayments on your mortgage

Catch up on our other blog posts:

Stamp Duty – Just a Reminder!

Stamp Duty – Just a Reminder!

The temporary raising of the nil-rate Stamp Duty band threshold to £500,000 ended on 30 June. The measure was introduced in July 2020 to maintain confidence in the housing market during the pandemic. Don’t despair if you missed the deadline, as there's now a tapered...

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A Record Summer for house prices?

A Record Summer for house prices?

House prices continue to rocket, with the Nationwide House Price Index1 revealing annual house price growth of 13.4% in June, the highest level since November 2004.  The extended Stamp Duty holiday, in addition to the new mortgage guarantee scheme and changing...

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(Your home may be repossessed if you do not keep up repayments on your mortgage)

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South Coast Mortgage Services Ltd is an Appointed Representative of Stonebridge Mortgage Solutions Ltd, which is authorised and regulated by the Financial Conduct Authority. Registered Office: 59 The Avenue, Southampton, Hampshire, SO17 1XS. Registered Company Number: 08414746 Registered in England & Wales.