Mortgage brokers have had a busy couple of months as they’re enjoying an increase in mortgage searches thanks to the stamp duty land tax (SDLT) cut, which is boosting the property market.
According to information from Twenty7Tec, the 60 busiest days of the year for mortgage searches and applications were in July and August. Due to holidays, August is usually the quietest month of the year, but this year saw an increase of 2.22 times on the five-year average.
Search volumes and the volume of ESIS documents prepared over July and August surpassed the year’s pre-Covid peaks in February and March: the 60 busiest days of the year for ESIS documents were all in July and August.
The SDLT holiday is a key driver behind the unprecedented surge as there has been an increase in UK house buyers undertaking mortgage searches for £250k-£499k properties.
The Twenty7Tec Mortgage Supply & Demand Report also discovered first time buyers out in force, with Aug 14 the busiest day of the year for FTB’s seeking mortgages.
James Tucker, CEO at Twenty7Tec, said:
“August’s unusually high mortgage activity shows there is still much to be hopeful about in the market, and the govt’s stamp duty cut has clearly ignited demand among first time buyers. August saw the single busiest day for first time buyer searches this year. Demand is there.
“But, the Government needs to stay vigilant to support the entire market, and do their bit to stimulate the supply side as well as demand, so lenders can adjust their risk profiles and lend confidently to these first time buyers.
“Without addressing the supply side issue, we’ll continue to have a mismatch between buyer demand and lenders who want to de-risk their lending.
“Simply put, without a functioning first time buyer element, the rest of the housing market doesn’t function.”
Phil Bailey, Sales Director at Twenty7Tec, commented:
“Search volumes for all price brackets were down slightly on July’s performance, but August has massively outperformed expectations for demand. It’s been very interesting to see quite how positive the stamp duty effect has been on the volumes of ESIS documents that are being created.
“One statistic that stands out is that almost two out of every five mortgage products available now is for Buy To Let. That’s well ahead of long-term averages and means that first time buyers and remortgagers are having to access a smaller pool of available products, especially in the 90%+ LTV brackets. Lender capacity is front of mind for the whole market now.”
Similarly, Mortgage Brain have seen similar trends regarding mortgage applications and searches. However, analysis run by them demonstrates that actual product number are reducing.,
Their data shows that product numbers have seen marginal drops for five straight weeks and now stand at 8,560.
However, product numbers have now been above 8,500 for 13 of the last 14 weeks, and are 15.3% above the Covid-19 low point, suggesting this may be the new normal for the weeks and months ahead.
Mark Lofthouse, CEO of Mortgage Brain, commented:
“The summer months are traditionally a quieter time for the mortgage market, but that isn’t the case this year. The volumes of ESIS being generated show that brokers are enjoying a healthy workload, with demand still strong from homebuyers who put their moves on hold as a result of Covid-19.
“This growth in demand is not being matched by the product numbers however, which appear to have stabilised at around 8,500. Understandably lenders are taking a cautious approach towards their product propositions now, but this does mean that brokers and their clients are having to get by with limited choice compared to the broader range of products they could access at the start of the year.”
