Despite the current lockdown restrictions, the Government has made clear it's intention to keep the housing market open, with Covid safe practices being followed by all market participants.
January is usually a very busy month after the Christmas and New Year breaks and while lockdown has put a dampner on market activity, we are still seeing good levels of sales being agreed. What we have seen from the evidence of previous lockdowns, is that being 'confined to quarters' and working from home, makes many people determined to move as soon as circumstances allow. There is no reason to think this time around things will be different - especially given its winter time and we are unable to get outside as we would like.
We therefore believe that the market will be strong when lockdown is eased and we will see more currently housebound vendors and buyers enter the fray. The 'expert' predictions that house prices will fall in 2021 make no sense to us.
Whilst the current stamp duty holiday is due to end on 31st March, and has undoubtedly pepped up the market (especially at the top end), we see plenty of action ahead.
We usually see small falls in average new listing prices in December as less new properties, especially the larger, properties come to market and those that do are often 'priced to sell'.
Against this backdrop, here is a round up of the latest housing news, of which there has been plenty:
Annual house price growth rose to a six-year high of 7.3% at the end of 2020
More problems for flats with Cladding:
Fortunately this is not a major issue for Island flat owners, but is emerging as a serious national problem following the Grenfell Tower disaster.
Ltd Company Directors (owning more than 20% of company)
Partnerships or LLP
It may also impact upon an Employed Persons using Self Employed Income for a mortgage.
Due to the various means of support from the Government during the past 12 months it has made it very difficult for lenders to assess sustainable levels of income for these customers.
The support albeit superb, masks it by maintaining the cash flow. Sustainability is the major factor when deciding to lend to individuals for many years to come.
Some companies have accepted grants or bounce back loans as precautionary measures because they could, because it was “free”, and others out of necessity.
Therefore it has proved unfair for lenders to apply a broad brush approach to their lending policies. However it is agreed that Covid has had some impact on most businesses and a change in lending attitude was inevitable.
Lenders have come at this using two main methods.
Normally mortgage applications have a multiplier of around 5x income for most hungry high street lenders. This is being reduced by some of these lenders to as low as 4.2x income in some cases. Others are sat around 4.5x but we think it is almost inevitable that almost all lenders will be seriously looking to follow suit in the next few days / weeks. Interest rates have not been affected.
Over the past couple of weeks strong lenders are beginning to return to 90% lending. Thank goodness as this really helps First Time Buyers. However some of the same lenders are restricting these levels for Self Employed applications. In some cases we can see this being reduced as low as 60% LTV. Other lenders are at 75% and some are allowing 90%. Again we expect to see more lenders follow suit. Rates again are unaffected.Trigg & Co can offer you access to our mortgage services with independent specialist advice available without the need for a face to face appointment. Whether you are buying, re-mortgaging, investing or just considering your options - give us a call.