The lead-up to the end of March has undoubtedly been a hectic one for all mortgage/property market stakeholders, as the entire industry tried to do all it could to get completions over the line before the stamp duty thresholds returned to their previous levels.
Unsurprisingly, first-time buyers will have been particularly motivated to get their first purchases completed by the end of the 31st March, and I hope that many were able to achieve their aims.
A well-deserved shout-out to conveyancing firms in that respect. Much maligned – often unfairly – I’ve heard of conveyancers working a huge number of hours in recent weeks in order to help these customers secure completion, to ensure they secured the stamp duty saving, and we should not forget how stressful this work is, and how without them, no-one moves.
In that respect, let’s hope the next few weeks at least are slightly calmer, although all stakeholders are going to be dealing with clients who were not able to make the deadline, for numerous reasons, and as a result, need more stamp duty money and may have to relook and renegotiate the deals that were predicated on a pre-end of March completion.
It is not an easy task, and the big question that follows this of course is just how impactful the shift in stamp duty thresholds will now have on the market. Particularly in terms of first-time buyer activity, a demographic who tend to have particularly tight budgets with deposit levels now likely to be impacted by the need to put more aside for stamp duty.
In that respect, it becomes even more imperative that we have a strong array of high LTV mortgage options available to potential first-time purchasers, because, coupled with lower rates, it makes securing a product more affordable, and hopefully gets them onto the ladder rather than having to wait to secure a much bigger deposit.
There is however good news here. Each month I look at the number of high LTV - 95% - mortgage products available, based on Nationwide’s average house price, which in March was £271,316, meaning a purchaser would need a 5% deposit of £13,566.
Product numbers over the last month have increased significantly. Up from 257 at the start March to 281 at the start of April – that is close to a 10% increase, and perhaps highlights that lenders are leaning into the greater demand for these options, particularly in a post-stamp duty changes environment.
A large number of commentators have suggested we will see a notable drop-off in activity in Q2 this year, and perhaps the greater number of high LTV products we are seeing is designed to entice and tempt some would-be purchasers to continue in that direction.
In terms of product pricing, it looks like the affordability dial is moving once again, in terms of lower rates making it more affordable for those with a 5% deposit to get on the ladder.
Within the variable/discounts/tracker space, Newbury’s three-year discount has dropped once again, this time down to 4.29%, while Progressive’s Northern Ireland-only two-year discount remains at 4.94% and the Bath Building Society enter the fray with its 5.04% two-year discount.
We’ve talked before about how a discount or tracker might be even more tempting if we get future rate cuts, with the anticipation being that the Bank of England is likely to act again in May, after it’s decision to hold in March.
For fixes, Lloyd’s retains its presence, with a two-year fix at 4.88% and a five-year fix at 4.85% - both however only available to its current account customers. It does also have a two-year fix at 5.08% and a five-year fix at 4.96% which are both available to all.
Elsewhere, in the two-year space we have Halifax with a 5.08% offering and the Newbury Building Society with a 5.09% mortgage. For five-year, we have Progressive with its Northern-Ireland only 4.65%, Scottish with its Scotland-only 4.89%, and Newbury once again with a 4.95% deal.
Overall, it feels like a line in the sand has been drawn after the end of Q1 this year. That we are entering a new phase of the year which has different parameters and will see potential purchasers, particularly first-time buyers, cutting their cloth accordingly because of the shift.
It may take a little time for clients to get their heads around this, and of course to factor in the changed financials. Once they do this, they may be pleasantly surprised to find increased high LTV mortgage options, and pricing still pretty competitive, with the chances of more dips to come. That is good news to take into the rest of the year even if those stamp duty incentives are now behind us.
