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What a year it has been… this will be the last Mortgage Memo of 2020, so we would like to take this opportunity to wish you a very Merry Christmas and Happy New Year.
This is our take on recent news in the mortgage market. Our views are often cited in several national publications, including; BBC News, The Times, Telegraph, City AM, FT Adviser and Daily Mail, as well as a number of key trade publications, so this should keep you ahead of the curve. If you have any questions on any of these stories, or would like further information, please do not hesitate to get in touch.
At a glance
SDLT holiday: a tax cut just for the rich?
There is no question that the SDLT holiday has provided a stimulus to people to buy property, especially with the added demand created by the major changes to our lifestyles in the wake of the Covid pandemic. However, due to restrictions brought in by lenders those that would have benefitted the most such as first-time buyers and those with low deposits will have missed out and then there are those whose income has been affected by Covid on furlough and the like, and finally those who are self-employed and who lenders severely reduced their product offering too.
Bonus income is back but with one big caveat…
As has been widely documented, several lenders severely curtailed their lending both on income itself and on the types of income they would consider of late and one area hit hard was that of bonuses and commission. However, a lender who had previously withdrawn this offering, Clydesdale, is now back. Although, with one big caveat and that is that this variable income must have been received after the 2nd of December 2020 to show that borrowers have continued to receive this income despite the challenging economic conditions, and they will only consider up to 60% of the two-year average if paid annually, bi-annually, or quarterly.
Will the new restrictions spell the end of the housing market boom?
It has been a bad few days for UK, a new Covid strain has emerged leading to London and the South East being plunged into Tier 4, ostensibly full lockdown, we are being shut off from the rest of Europe and the World and we still are no closer to a Brexit deal. Recent figures from the ONS do highlight that house prices have reached their highest level ever with an average of £245,000, with UK average house prices having increased by 5.4% over the year to October 2020, up from 4.3% in September. These figures come after other recent statistics, also from the ONS (14th Dec 2020), highlighting that redundancies have reached record highs of 370,000 in the third quarter of the year and the unemployment rate sits at 4.9% – more evidence that the unique circumstances of the year have led to the housing market being detached from the economic reality. With the end of the year approaching and considering recent events, how long the housing market can sustain this level of growth is a pressing question…