All parts of the property transaction pipeline have understandably come under strain as both England and Wales have adapted their restrictive measures in a bid to tackle the first and second waves of coronavirus infections.
Mortgage applications have naturally seen a surge, as people have wanted to bite the bullet and move, whilst taking advantage of the stamp duty holiday, which is set to finish on 31 March 2021. Now mortgage lenders are raising interest rates, in a bid to slow down the number of applications they’re receiving.
An executive at one of the UK’s largest mortgage lenders said on some days recently it had been receiving more than double the number of mortgage applications it would normally be able to process.
The executive said:
“This is as busy as I’ve seen the market since 2008, just before the credit crunch.
“Post-lockdown, in late May to June, we were busy, heading back towards [normal] numbers, but the stamp duty change, when that dropped, put a massive urgency into buying a home.”
With many lenders still working from home and adapting their processes due to having reduced staff, we saw them removing some products from the market. These products, in the beginning, hindered first-time buyers as 95-90% LTV products were put on ice.
Now, in a bid to curb the popularity in mortgage offerings, lenders are now increasing their interest rates on products in a bid to price themselves out of the market.
Bearing in mind the Bank of England base rate has remained at its record low of 0.1%. Halifax, Santander, TSB, Nationwide, NatWest, Virgin Money Barclays, and Yorkshire and Chelsea building societies are among the lenders to have raised interest rates over recent weeks.
This move many brokers believe was an attempt to ensure lenders weren’t at the “top of the tree”, stemming the amount of applications they would receive.
Hina Bhudia, partner at Knight Frank Finance, said:
“What was a significant problem for first time buyers will now start affecting buyers at every level of the property ladder.”
Andrew Montlake, Managing Director of mortgage broker Coreco, has outlined that lenders service times have slipped as a result in the surge in demand. He said:
“They’re not looking at things for two weeks at least. There’s concern that as we start to get to the end of the stamp duty holiday a lot of people are not going to get their deals through in time.”
Have you had any issues with lenders during the housing transaction pipeline?
