Mortgage Market Has Felt No Immediate Impact After Stamp Duty Holiday

Despite the stamp duty holiday, the mortgage market has felt no immediate impact, online mortgage broker Trussle has reported.

With lenders reducing the number of products with high LTV rates during the pandemic, many struggled to raise the higher deposits needed to purchase a property.  Despite lenders now beginning to return products with up to 90% LTV to the market, many are finding it challenging.

Lenders are implementing stricter criteria for buyers with lower deposits and there are reports that house prices in certain areas are rising, which is making buying a home “challenging and inaccessible” according to the data. This may be the reason as to why the data by Trussle has shown very little increase in the number of new mortgage activity that may have been expected on the announcement of the stamp duty holiday.

It had been thought that the savings made by the stamp duty holiday may have been used by buyers to increase the amount spent on a property, the data has shown that many buyers are instead keeping to original budgets.  Those with larger deposits have also not significantly increased the prices of the properties they are searching for.  This suggests that buyers are being cautious in these uncertain times, many may also be worried about the upcoming end of the Job Retention Scheme and possible second pandemic wave.

Trussle has seen a 30% decrease in application times for both first time buyers and next time buyers with a deposit of more than 10% when comparing the month before and the month following the stamp duty holiday announcement.

Miles Robinson, Head of Mortgages at Trussle, comments:

“There’s been a lot of focus recently on how the stamp duty holiday could be prompting a ‘mini-boom’ in the market. While this is promising, our data suggests that actually the cut is having a minimal impact on buyers’ behaviour and we’re perhaps just seeing a level of pent up demand following the lockdown.

“We are continuing to see an increase in remortgages from existing homeowners. This may be an indication that many are choosing to stay put and remortgage on their current property, rather than move to another house, despite the stamp duty holiday.

“What is perhaps more worrying, and where we hope the industry focuses its attention, is the diminishing support for those with lower deposits, who are most likely to be first-time buyers. This is a demographic who have traditionally relied on competitive products from lenders to step onto the property ladder.”

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