Martin Lewis advises caller on mortgage holiday impact
Mortgage obligations were among the first financial elements to be offered support by Rishi Sunak as coronavirus emereged, with Mortgage holidays being introduced in early 2020. While the initial shock of the pandemic hit the property market hard, additional changes from the Government spurred demand and the latest figures from the Bank of England shows confidence has returned.
In their Money and Credit report released today, it was revealed mortgage approvals for house purchase in 2020 (818,500) were higher than in 2019 (789,100).
On top of this, net mortgage borrowing remained strong at £5.6billion in December and household deposits increased by £20.9 billion in December, the strongest since May.
Much of the demand seen in 2020 was attributed to the changes the Government made to stamp duty rules and Jonathan Sealey, the CEO of Hope Capital, commented on this: “It feels appropriate that on the day Parliament gets to debate the stamp duty holiday, and merits of an extension, it’s revealed we had the largest number of mortgage approvals last year since 2007.
“Today’s Bank of England statistics, which highlight mortgage approvals in 2020 totalled 818,500, underlines the crucial role that has played in driving the housing market back from a record low of 9,400 in May.
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“All those connected to the property sector, not least the c138,000 people who signed the petition demanding an extension, will be listening with interest to the outcome of that debate later today.
“It’s clear that this upward trend that we’ve been witnessing for several months cannot continue if the stamp duty holiday literally ends overnight on March 31, with many transactions still awaiting completion.”
John Goodall, the CEO of Landbay, also commented on completions noting savers may face difficulties in the coming months: “Mortgage approvals for house purchases in 2020 totalled 818,500, the largest number since 2007.
“Some of those mortgage approvals will be awaiting house purchase completion and with the end of the stamp duty holiday looming some of those property transactions and mortgage deals will fall through – we are already seeing evidence of this.”
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Many experts within the field expected the stamp duty changes to have a double edged affect, with demand growing to meet the deadline, it became apparent mortgage deals and property completions may be delayed.
Reportedly, lenders are struggling to process all of the applications before the deadline arrives, with recent analysis from Trussle proving this to be the case.
The online mortgage broker revealed approvals for home purchases rose by 154 percent across the UK in the second half of 2020.
Specifically, the West Midlands, South West and East Midlands say the highest increases in mortgage approvals.
Trussle detailed this strong demand has continued into 2021 but as a result of this, delays in the market means it now takes 132 days to purchase a property, from sign up to completion.
Miles Robinson, the Head of Mortgages at Trussle, commented on these changing dynamics: “Appetite for property remained incredibly strong despite the unprecedented challenges presented by the pandemic, which placed many households under a huge amount of financial strain.
“Lenders had to make big changes to their internal processes to accommodate a working from home set up and, despite experiencing some delays in the market, mortgage approvals rose to the highest level in 13 years during November last year.
“Buyers opting to purchase homes in regional locations, which are typically more rural, was no doubt the property trend of 2020.
“The restrictions imposed during national lockdowns led many to prioritise more affordable bigger properties, with access to external space.
“But, only time will tell if this is a long term trend.
“If 2021 sees us able to return to some form of normality, old priorities of location over space and access to workplaces and amenities might mean people start flooding back into cities.”
Today’s debate on extending the stamp duty changes will commence at 4:30pm, with Elliot Colburn leading the session and Jesse Norman, the Financial Secretary to the Treasury, responding for the Government.
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