Why property demand won't fall off a cliff after the stamp duty deadline

The clamour to beat the stamp duty deadline from new instructions is likely to slow but that does not mean demand for property will fall off a cliff. While lenders may currently be battling service and pipeline issues, their appetites for future lending remain strong.

Recent analysis from Moneyfacts shows that the number of 90% LTV products on the market has nearly doubled since last July. In July 2020 there were said to be just 70 of these types of mortgages available, a total that has since risen to 160 which, according to Moneyfacts, is the largest monthly growth in availability. Meanwhile, over the same time span, the number of 85% LTV deals on the market has grown from 356 to 439. At 75% LTV, the July 2020 count came in at 655 but has lowered slightly to 629 in January 2021.

While choice has improved, rates are reporter to be slightly higher than in July 2020. Across all LTVs, the average two-year fixed rate has gone up from 1.99% to 2.52% and the average five-year fix from 2.25% to 2.71%. At 90% LTV, the average two- and five-year fixed rates have increased from 2.90% to 3.65% and 3.16% to 3.79%, respectively. However, it is worth noting that in December 2020 the average two-year fixed rate at 90% LTV stood at 3.79% and the average five-year fix at 3.92%.

Of course, we’re seeing a wind of change when it comes to borrowing requirements. From shifting demand in what people are looking for in a home to additional complications around their present and future employment status/incomes. The extra layer of complexity around furlough, multiple incomes, mortgage payment holidays and other influencing factors will inhibit some lender’s ability to satisfy these scenarios and lead to more activity across the specialist markets.

When looking at the housing market now, and beyond the stamp duty deadline, it’s imperative that borrowers don’t cut corners from a time or cost perspective. This is especially apparent when it comes to ensuring that they obtain the right level of survey to accurately assess the condition of their property purchase.

From a lending perspective, when it comes to higher LTV cases there will be an increased reliance on physical valuations and we are working closely with our lending partners to ensure we have to capacity and expertise to support them as best we can. And we are constantly evaluating Homefact - our interactive report which combines the expertise of a surveyor with other online information sources gathered about the property and its surrounding area – to react to shifting market conditions.

Whatever the scenario, people need to go into any property transaction with their eye wide open. Understanding what areas of the property may need attention now, or in the future, can make a real difference – especially for first-time buyers. All good, professional mortgage advisers incorporate the importance of surveying into their advice process and now more than ever, this is a message that all buyers really need to be hearing and acting upon.