The scale of the mini-boom is made clear by the latest report from the Bank of England. According to them, in May there were just 9,300 mortgage approvals. In June, that number had risen to 39,900, then 66,000 in July and 85,000 in August. As a result of such high levels of demand, there are long delays in the processing of applications, a situation that has been further exacerbated by many lenders’ staff working from home. It has now become so serious that two lenders, Marsden and the Nottingham, have temporarily withdrawn from the market while they deal with their backlogs.
Rates remain relatively steady for anyone with a deposit of 20% or more. However, it’s proving to be a challenging time for first time buyers. Many lenders are taking a very cautious view of the longer-term prospects for the housing market and are trying to limit their exposure to any downturn by avoiding taking on borrowers with smaller deposits. Their worst case scenarios predict that as a result of the Covid crisis, house prices could dip by as much as 15% and that’s why many lenders have withdrawn their 90% and 95% LTV deals. Just before the onset of the pandemic there were 386 mortgage products available to those with a 5% deposit. Now, there’s 1. There were 751 at 90% LTV. Now there are just 57. And, for those with a 15% deposit, rates have risen substantially over the last few months.
There is some light at the end of the tunnel. Boris Johnson, in his drive to convert ‘Generation Rent’ into ‘Generation Buy’, has recently asked ministers to look into the possibility of a government backed 5% deposit scheme. However, as it’s still in the idea stage, we’ll just have to wait and see how it all pans out.
Below is a guide to this month’s best buys (source:Moneyfacts.co.uk).
Two year fixed rates: 1.24% from Virgin Money. Product fee £1,495. 65% LTV.
1.29% from Natwest. Product fee £995. 60% LTV.
Three year fixed rates: 1.72% from Barclays. Product fee £999. 75% LTV.
1.79% from Coventry BS. Product fee £999. 65% LTV.
Five year fixed rates: 1.44% from NatWest. Product fee £995. 60% LTV.
1.44% from RBS. Product fee £995. 60% LTV.
Discounted variable: 1.41% For 2 years. From The Cumberland. Product fee £999. 60% LTV
1.45% For 2 years. From Progressive BS. Product fee £0. 75% LTV
Two year fixed rate: 1.35% from NatWest. Booking £995. 60% LTV.
Five year fixed rate: 2.03% from Virgin Money. Arrangement £1995. 60% LTV.
Two year variable rate: 1.95% for 2 years. from the Principality BS. Product fee £0. 75% LTV.
If you are considering buying or selling a property in Mayfair, Marylebone, Regent’s Park or Hyde Park, please call us at Manors and we can talk you through your options.