The Mortgage market in 2021 so far

Posted by

We read a lot in the news about how the mortgage market is going and how property prices are going up or down and I thought I would put a post out there to explain what we are seeing as mortgage brokers rather than journalists.

The housing market

It is hard to deny that the housing market is very active at the moment. The demand for mortgages seems to be relentless, in 10 years as a broker, I have never seen it as busy as it currently is now and there are times we are having to turn people away due to how many customers we have going through applications.

Prior to Covid hitting in 2020 the market was already busy. There was a lull during lockdown 1, but since then it just seems to have become busier and busier. From our perspective, everything in the new about how busy the market is, is 100% true. The demand is affecting everyone from Brokers to lenders to surveyors and solicitors. We have seen delays at all stages in the home buying process, although things do seem to have improved since December time. We are still seeing delays with the more in depth surveys (things like home buyer reports building surveys) and occasionally solicitors are putting holds on any more business but in the main things are improving.

House prices

It is hard to deny house prices are on the increase. This is probably due to a number of reasons:

  1. Lockdowns – I think this drove the initial surge in mid-late 2020. A combination of living at home in lockdown with mum and dad (enough to make anyone want to move out 😛 ) or people in flats/houses re-assessing what is important to them. That could mean wanting bigger homes for the extra space, moving out of the town centres etc.
  2. Furlough – I fully understand furlough affected a lot of people in a negative way financially but at the same time I think a lot of people did actually benefit from this. A combination of not having to pay to go to work, not being able to go out to spend money and maybe saving money by not getting that coffee on the way to work or lunch from the cafe opposite your work place has given people the ability to save up some money.
  3. The stamp duty holiday – I think this one speaks for itself, although I think this has been more beneficial to those looking at the more expensive properties.
  4. Now we have the return of 95% mortgages, although I am yet to see how this will filter through in terms of applications. We have had some enquiries for these but not as many as I expected. Potentially because of house prices being high or possibly the interest rates are a little higher than people are prepared to pay.

Summary

Without doubt the market is definitely moving. By the end of March, we were already around 2 months ahead of where we expected to be in terms of business written. I have spoken to other mortgage brokers I know and they are all saying they are very busy.

We have seen a number of people asking more than the offer price in order to secure the property and seeing more examples of best and final offers from estate agents. All of that combined means that we can only really echo what you may have read in the news in that house prices are increasing and there is a lot of demand out there. I do think it will slow down and get back to normal as things get back to normal and people start to return to work.

It will be interesting to see if there is a new norm which could be caused by people moving from the town and cities which could distort house prices up or down due to the change in demand. Time will tell.