2021 – A golden year for mortgages

 2021 – A golden year for mortgages

2021 has seen a strong market for the lending sector.

This year is on course to be the best for home-buying activity since 2006, according to the main trade body for UK banks – which is fantastic considering the global pandemic.

Since the first lockdown in 2020, the market has been on an upward trend ever since, driven by many different factors.

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We have had everything within this year to test us as brokers, with lenders consistently changing their criteria (some just about on a weekly basis), stamp duty holidays and a reduced supply of houses on the market to cope with the volume of buyers looking to purchase for either the first time or simply as a home mover.

The stamp duty (land and buildings transaction tax in Scotland) holiday certainly helped the market, with huge numbers of people trying to push their sales and purchases through.

This rush to buy, combined with changing priorities for buyers because of the coronavirus pandemic, brought forward sales and meant larger homes became more popular.

Also, previous lockdowns have given buyers the urge to move properties after potentially working from home all week and deciding they required a change, and this has driven the market significantly. Recent surveys suggest the 'race for space' is set to persist, as working from home becomes commonplace for many.

According to statistics, the market has seen growth of around 27 per cent, which has been reflected in house prices increasing by an average of 10 per cent over the year throughout the UK.

House price averages have increased to a new record high in December, according to Halifax, which says it expects the current strong housing price levels to be maintained. The average UK house price is now £272,992, almost £34,000 higher than at the start of the pandemic, which is a huge increase and again is driven by the shortage of houses on the market and the demand for them.

2021 saw the return of 95 per cent mortgages, along with the mortgage guarantee scheme from the government. This has also made buying a property more accessible for everyone, especially first-time buyers – and the sharp rise in house prices has aided the demand for purchases and driven the market.

We have even had lenders offer 95 per cent lending on new-build properties, which is unheard of, further driving the demand for properties in the market.

This has been a great time to secure a mortgage due to the decreasing interest rates on offer, with many below 1 per cent for hundreds of fixed rates depending on the loan to value the borrowers desired.

Again, things like the rates on offer have pushed clients to move to secure them quickly before they are changed, and this has driven the demand for properties even higher. This was also aided by the Bank of England maintaining the base rate at 0.10 per cent (albeit this was been changed last week) and allowing the lenders to offer these rates.