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Mortgage approvals reach 13-year high

Mortgage approvals for house purchase increased to 84,700, the highest since October 2007, according to the latest Money and Credit statistics from the Bank of England.

Net mortgage borrowing was £3.1bn in August which stayed consistent with the total recorded in July (£2.9bn), whilst effective mortgage interest rates were broadly unchanged.

The Bank of England suggests that these latest figures signal signs of recovery in August, despite mortgage borrowing being troughed at £0.5bn in April and still being slightly below the average of £4.2bn in the six months to February 2020.

The increase on the month reflected slightly higher gross borrowing of £18.8bn, although it is still below the pre-COVID level in February of £23.7bn.

In total, there has been 418,000 approvals in 2020, compared with 524,000 in the same period in 2019.

Gareth Lewis, commercial director of property lender MT Finance, said:

“The impressive pick up in mortgage approvals is what you would expect – if we go all the way back to Brexit, there has long been pent-up demand and people waiting to move, COVID then hit and people were still waiting.
“Now, there are so many ‘for sale’, as well as ‘sold’ signs, illustrating that there is confidence and a willingness to invest in property.
“Consumer credit has bounced back and stabilised, which is encouraging as it shows people are not over-stretching themselves by increasing debt and getting into financial difficulty. People are maintaining a grasp of reality.”

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Approvals for remortgage are little changed compared to July at 33,400, which is a 36% decrease from figures recorded back in February.

New mortgage rates were 1.72%, a decrease of one basis point on the month, whilst the interest rate on the stock of mortgage loans fell one basis point to 2.14% in August.

Dave Harris, chief executive at more2life, reacted to the data: “Although today’s findings show overall lending in the mortgage market still falls short of pre-crisis levels, there are positive signs of growth.

“Month-on-month increases to new mortgage approvals suggest that buyers have been taking advantage of the products on offer to help manage borrowing during the coronavirus crisis – and lenders and advisers have played a crucial part in this.

“At the same time, the equity release market has also been working hard to support older borrowers, with product innovation high on the agenda.

“The Equity Release Council recently found that product options in this market have increased by 29% year-on-year, further helping to ensure older borrowers benefit from greater choice and flexibility at a time when they arguably need it most.

“Seeking professional, specialist advice is crucial for older homeowners ensure they are aware of solutions like equity release which could help them develop a long-term financial plan.”

David Whittaker, chief executive at Keystone Property Finance,  added: “There were no signs of the traditional summer slump this August, with the mortgage market experiencing a ‘mini boom’ and showing positive signs of recovery following an extremely challenging period.

“Within the buy-to-let market, falling rates, pent-up demand and the Stamp Duty holiday have no doubt acted as an incentive for landlords and investors to take this opportunity to diversify their property portfolios.

“However, whilst today’s figures give us reason to be cautiously optimistic about the market, a raft of regulatory changes coming into force this year means buy-to-let investors must continue to seek the advice of brokers who can help them navigate this complex landscape.

“As we start to emerge from the crisis and the UK returns to some form of normality, we’re committed to working closely with our broker partners to ensure the market can meet the unique needs of each buy-to-let landlord.”

By Jessica Nangle

Source: Mortgage Introducer

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Struggling to get a mortgage? Try a broker… or a small lender

It’s mayhem in the mortgage market at the moment due to a paperwork backlog at banks and pent-up demand from the lockdown.

Lenders are making changes to their home loan deals with little or no notice to limit the amount of business they take on.

So that cheap rate you were eyeing up could quite easily be gone tomorrow. Or the terms and conditions may change suddenly, meaning you no longer qualify for a loan you thought had been secured.

Here are four other places to turn if you are caught up in the chaos…

SMALLER LENDERS

Lee Hockins, from Summit Wealth financial advisers, says: ‘It’s virtually impossible at the moment to get a mortgage at 95 per cent loan to value and there are only a small number of lenders offering 90 per cent mortgages – and none of the big ones.’

Lloyds, NatWest, Barclays, Santander, TSB and most recently HSBC have all pulled out of the market for mortgages with a deposit of 10 per cent or less, hammering first-time buyers.

The good news is that smaller regional building societies may be able to help.

Many still assess applications manually, unlike big banks which often use automated underwriting technology which can result in a computer-generated rejection.

Having your application assessed by an individual means your specific circumstances can be taken into account. Try the Buckinghamshire, the Penrith and Stafford Railway.

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

BANK OF MUM AND DAD

Popular mortgage deals that allow parents to help their offspring on to the ladder are being cut back too.

But the Bank of Mum and Dad isn’t entirely closed.

After Lloyds shut its Lend a Hand mortgage to new applicants, the main mortgage designed for parental help is Barclays’ Family Springboard deal.

This allows a family member or friend to put at least 10 per cent of the purchase price in a savings account with the bank in place of a deposit.

Ray Boulger, of mortgage brokerage John Charcol, says: ‘The Barclays Springboard mortgage is the best of the deals for people who are getting help. It’s really good value for first-time buyers with either a small or no deposit, who has someone who wants to help but also wants to keep control of their funds.’

Tipton & Coseley Building Society has launched a Family Assist mortgage offering up to 100 per cent loan-to-value mortgages for buyers, so long as a relative has a 20 per cent charge on their own property or puts 20 per cent of the amount borrowed into a savings account.

But some are limiting the amount of outside help allowed. Nationwide recently changed the criteria for gifted deposits, so borrowers who want a 90 per cent loan-to-value mortgage can only be given 25 per cent of the deposit, meaning they have to provide the rest themselves.

A BROKER ON YOUR SIDE

With banks launching and ditching mortgage deals on an almost daily basis, a broker can really prove their worth.

Not only do they often get tipped off in advance when a deal is about to be pulled, they are clued up on the specific criteria that each lender will look for in your mortgage application – and can stop you wasting time. Brokers will also have a good idea how stretched a bank’s mortgage department will be, helping you avoid disappointment when demand is high.

TRY A LIFETIME MORTGAGE

For the over-55s who are retired or approaching retirement, an alternative option is a so-called retirement interest-only mortgage. Boulger says: ‘With these deals, the eventual sale of the property can be used as the repayment strategy.

‘So lenders assess whether you can afford the loan on the cost of paying the interest only in retirement, as opposed to a repayment deal where you have to pay back some of the capital each month.

‘The downside is that if it’s a joint application, lenders have to decide whether, after one partner dies, the surviving partner would be able to support the mortgage from the remaining income.’

Lenders offering this type of mortgage include Nationwide, Leeds, Bath, Ipswich, Loughborough and Tipton building societies.

…OR LET THE CHAOS PLAY OUT

  • Mortgage rates are expected to remain at current levels for some time – but house prices may not.
  • Many experts believe that while prices are heading up at the moment, there could be a fall back when the stamp duty holiday ends in March next year.
  • Remember, if you are buying and selling at the same time, then a fall in the market is likely to impact both ends of the deal.
  • So you may be no worse off if you wait – and find it easier to borrow the amount you need for your next mortgage.

By Sarah Bridge, The Mail on Sunday

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Mortgage payment holidays have been a vital lifeline

Mortgage payment holidays have proved a vital lifeline for homeowners struggling financially due to the COVID-19 crisis, according to online mortgage broker Trussle.

However, following the Financial Conduct Authority’s (FCA) statement that mortgage payment holidays will not extend past 31 October, and further financial supports after that point will affect borrowers’ credit files, Trussle has urged homeowners to use caution with this support system.

Miles Robinson, head of mortgages at Trussle, said: “It’s clear that mortgage payment holidays have proved a vital lifeline for some homeowners who have suffered financially as a result of the coronavirus pandemic.

“It’s important to know that unlike before, if you need financial support from your lender after 31 October, it will be marked on your credit file.

“We’d urge homeowners to only utilise the mortgage payment holiday if it’s essential.”

To find out more about how we can assist you with your Mortgage requirements, please click here to get in touch

Robinson also highlighted that once a homeowner’s mortgage payment holiday reaches its end, their monthly payments will increase as a result of additional interest being added to the total mortgage balance.

Meanwhile some lenders offer other viable alternatives; this includes switching some of the loan amount to interest-only payments in the short-term.

Miles Robinson, head of mortgages at Trussle, said: “For existing homeowners, now could also be a good time to think about remortgaging.

“Our customers save £334 on average per month by remortgaging onto a fixed rate, so it is worth using a remortgage calculator to see if switching could save you money.

“Any aspiring or existing homeowners who are considering taking a mortgage payment holiday should seek professional advice as soon as possible to discuss their options.”

By Jake Carter

Source: Mortgage Introducer

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FCA announces extension of mortgage holidays

The Financial Conduct Authority (FCA) has confirmed the extension of mortgage holidays for consumers who still face financial difficulties, as well as those whose financial situation may be newly affected by coronavirus after the current FCA mortgage guidance ends.

The FCA has published additional guidance for firms meaning they must offer further short and longer-term support reflecting the circumstances of their customers. This could include extending the repayment term or restructuring of the mortgage.

Where consumers need further short-term support, firms can continue to offer arrangements for no or reduced payments for a specified period to give customers time to get back on track. This additional guidance will come into force on 16 September 2020.

Christopher Woolard, interim chief executive at the FCA, said: “Some consumers will continue to be impacted by coronavirus in the coming months, or be impacted for the first time. Consumers in these situations will benefit from firms providing them with tailored support.

“However, it is very important that consumers who can afford to resume mortgage payments should do so for their own long-term interests and so that help can be targeted at those most in need.”

Under the guidance published today, firms will prioritise support for borrowers who are at most risk of harm, or who face the greatest financial difficulties.

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The new guidance reinforces the need for firms to deliver outcomes that are right for individual borrowers rather than adopting “one size fits all” solutions. The FCA will be monitoring firms to ensure borrowers are treated fairly having regard to their individual circumstances.

The FCA has said that firms will also signpost borrowers to the support they need in managing their finances, including through self-help and money guidance, or refer borrowers to organisations that can provide free debt advice if this meets their needs and circumstances.

Where borrowers have taken, or are taking, payment deferrals under the existing guidance and require further support from lenders these further arrangements can be reflected on credit files in accordance with normal reporting processes. This also applies to borrowers newly affected by coronavirus who receive support from their lender after 31 October.

This will help to ensure that lenders have an accurate picture of consumers’ financial circumstances and reduce the risk of unaffordable lending. Firms are required to be clear about the credit file implications of any forms of support offered to borrowers.

The FCA’s current guidance published in June will continue to provide support for those impacted by coronavirus until 31 October 2020 – with consumers able to take a first or second three-month payment deferral until this date.

The June guidance is due to expire on 31 October and the FCA do not intend to extend this guidance. The guidance published today ensures consumers will still be able to obtain the support they need from their lenders after their payment holiday ends or they are newly affected by coronavirus after 31 October.

However, the watchdog has said it will keep the guidance under review and if circumstances change significantly, consideration will be given to any further measures that may be needed to support consumers during the ongoing pandemic.

Source: Scottish Housing News

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BoE: July mortgage borrowing up £0.3bn month-on-month

In July, households borrowed a net additional £2.7bn secured on their homes, according to the BoE Money and Credit report.

This was up on the £2.4bn in June, but below the average of £4.2bn in the six months to February 2020.

The increase reflected a slight increase in gross borrowing to £17.4bn in July, below the pre-COVID February level of £23.7bn and consistent with the recent weakness in mortgage approvals.

The number of mortgage approvals for house purchase continued recovering in July, reaching 66,300, up from 39,900 in June.

Approvals were 10% below the February level of 73,700, but more than seven times higher than the trough of 9,300 in May.

Approvals for remortgage were little changed compared to June, at 36,000; they remained 30% lower than in February.

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The effective rates on new and outstanding mortgages were little changed in July.

New mortgage rates were 1.73%, a decrease of 4 basis points on the month, while the interest rate on the stock of mortgage loans fell 1 basis point to 2.15% in July.

Hugh Wade-Jones, managing director of Enness Global Mortgages, said: “The latest rate of mortgage approvals is really quite astonishing given the dire position of the market just a few short months ago.

“There is no doubt that the huge surge of buyer demand seen once the market reopened has been seriously turbo-charged due to the stamp duty holiday announced shortly after, with the combination of both causing buyers to return to the market at mass.

“As a result, we’ve seen the number of people approved for a mortgage rebound from the depths of pandemic paralysis in May to hit almost the same levels as this time last year in just two months, with the current trajectory sure to return the market to pre-lockdown levels in no time.

“The rate of this return to form really shouldn’t be underestimated and these notably heightened levels of buyer demand should prove just the medicine for the UK property market, reversing any pandemic decline in house price growth seen during lockdown.”

Gareth Lewis, commercial director of MT Finance, said: “There are positive signs indicating plenty of consumer confidence out there as people are borrowing money.

“There are more ‘for sale’ and ‘sold’ signs springing up, and even tales of gazumping.

“August’s numbers will show even more of an uptick in transactions once the stamp duty holiday starts to filter through to the figures.

“While July’s numbers show an improvement on June, they would have been better still if transactions weren’t taking so long.

“Lenders still have staff furloughed or working from home, and it is taking them too long to process applications.

“This isn’t going to change for a while yet as they don’t have the capacity to bring everyone back to the office.

“With many surveyors only just coming back off furlough as well, this is having a negative impact on turnaround times.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Mortgage approval numbers always provide a useful lead indicator of direction of travel for the property market in the coming months.

“Unfortunately, these figures relate to the period when we were emerging from lockdown but before the full benefit of the stamp duty holiday was being felt.

“Contact with mortgage brokers or lenders is not always the first thought of aspiring buyers.

“As a result, these approvals do not reflect the stronger upsurge we noticed across most property types and price ranges from the beginning of August.”

By Jessica Bird

Source: Mortgage Introducer

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Mortgage brokers urged to diversify in wake of Covid

Mortgage brokers have been urged to branch out into specialist lending as a way to diversify against falls in mortgage activity.

Encouraging brokers to “embrace” specialist lending, Rob Barnard, director of intermediaries at Masthaven, a specialist lender, said: “I think brokers now won’t just rely on mortgage business; they won’t just rely on product transfer business. Because they’ve had a period here right at the heart of the lockdown where there wasn’t a great deal of mortgage business about”.

Statistics from the Bank of England show approvals for purchase mortgages reached 40,000 in June, up from the record low of 9,300 in May, but still below a pre-Covid level in February of 73,700.

Mr Barnard added: “One area that we found that was rebounding quicker than any was bridging. And we found that brokers wanted to find out more about the bridging sector.”

He continued: “Make sure that you’re not just dependent on mortgage business, so if this ever happened again, you’ve got more strings to your bow”.

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Anthony Rose, director at LDNfinance, said his firm had seen a “large increase” in clients who required a bridge, or thought it might be their “only option”.

Jamie Lewis, managing director at Affinity Mortgages, which also offers advice on bridging loans, said his firm launched a specialist lending arm in 2018 after packagers and master brokers did not meet their expectations.

Mr Lewis said: “We noticed that we as a broker were being asked for more than mortgage broking and were merrily delivering these clients to a third party business that maybe had a different working ethic to ours where the client will always come first”.

Additionally, Masthaven’s Mr Barnard predicted a change in demand for specialist lenders. He said: “Lots of people’s financial circumstances have been radically affected by the crisis. Small business owners, the self-employed, people who’ve been furloughed or who have had to take a mortgage payment holiday may all now be prospective customers for specialist lenders”.

Carl Shave, director at Just Mortgage Brokers, agreed that in the current financial and economic climate, cases previously regarded as “vanilla” were no longer necessarily as straightforward.

Likewise, LDNfinance’s Mr Rose said that the financial implications of the coronavirus for certain clients had “highlighted the need to be able to look at the full range of options, ranging from the most vanilla high street solutions all the way to the most complex bridging or private bank mortgage”.

Clayton Shipton, managing director at CLS Money, also agreed with Mr Barnard, and warned that some clients may not look elsewhere if they were unable to find a mortgage through an adviser with limited specialist knowledge.

Mr Shipton added: “It shouldn’t come down to a lottery of picking the right broker – every broker should be educated in prime and specialist lenders”.

By Chloe Cheung

Source: FT Adviser

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Recovery: Mortgage market activity in July branded ‘astonishing’

Mortgage searches for loans of more than £500,000 increased in July but buy-to-let demand dropped off as the month ended.

That’s according to the latest data from mortgage technology provider Twenty7Tec which has described the market recovery seen in July as ‘astonishing’.

In its monthly report on supply and demand it revealed there were three times as many broker searches for purchase mortgages in July than in May.

The largest rise, it found, was in the £500,000 to £1 million region – an increase driven by the stamp duty savings buyers could make on these properties.

However, there was also an increase in first-time buyer queries, with searches rising from 13% in May to 19% in July. Searches were regularly hitting 10,000 per day and the top ten busiest days for first-time buyer mortgage searches this year were all in July.

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However, there was some concern over buy-to-let. Although searches for this sector were up by nearly 30% at the end of the month the seven-day rolling average fell to levels seen at the beginning of the month.

James Tucker, CEO of Twenty7Tec suggested this could be ‘blip’ following the prime ministers tightening of rules nationwide. But he said it would be interesting to watch what happens over the next few days as it could also be a pre-cursor to what we might expect over the coming months.

Product demand and supply

Product availability also dropped off slightly in July compared to June, despite the increasing demand.

At the maximum loan-to-value points of 70% and 75% Twenty7Tec noticed product volumes drop by 14% and 10% respectively.

Discussing the report in general, Tucker added: “July has been the busiest month of 2020 for mortgage searches.

“This is not a sentence that I was expecting to write less than a month ago. For our business, and indeed for our customers, the speed of the recovery of activity in the mortgage market has been truly astonishing.

“This is not a time to be complacent however – the positive momentum that we have all found both in business volumes and in the speed of technological change should not be lost.”

By Kate Saines

Source: Mortgage Finance Gazette

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UK mortgage approvals beat expectations as housing market reopens

UK mortgage approvals beat expectations and rocketed in June as the housing market reopened from the coronavirus lockdown, the latest figures have shown.

The number of mortgages approved by UK banks rose to 40,000 in June after May’s record crash to just 9,300, the Bank of England said today. Analysts had predicted a rise to 34,000.

However, approvals were still 46 per cent below the February level of 73,700.

“The mortgage market showed some signs of recovery in June, but remained relatively weak in comparison to pre-Covid,” the Bank of England said.

An increase in house purchases helped consumer borrowing trends take a step closer to normality in June.

UK households pay down debts as mortgage approvals rise

Households repaid £86m of debt last month. But that was lower than the repayments totalling £15.6bn over the March to May period.

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People have been paying down their debts and saving money as there has been little to spend on during lockdown. The net repayments of the last four months contrast with an average of £1.1bn of borrowing per month in the year and a half to February.

The UK government has gradually loosened the country’s coronavirus restrictions over the last two months. In May it allowed the housing market to reopen, leading to June’s uptick in mortgage approvals.

In June the government allowed “non-essential” shops to reopen. And earlier this month pubs, cafes and restaurants were allowed to serve customers again.

The Treasury has unveiled a number of policies to encourage people to part with their lockdown savings. It hopes a VAT cut for the hospitality and tourism sectors and “eat out to help out” vouchers will boost the economy.

Chancellor Rishi Sunak’s stamp duty holiday has already helped the London housing market after just two weeks, data showed yesterday. London house sales rocketed 27 per cent after the property tax was slashed, housing website Zoopla said yesterday.

By Harry Robertson

Source: City AM

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Criteria searches soar as property market gets back to business in June

Residential mortgage searches increased by 79% in June as brokers scoured the market for deals for furloughed workers and for products with temporary maximum LTV restrictions.

That’s according to the latest criteria activity tracker from Knowledge Bank which has provided an insight into borrower behaviour in the first full month after physical valuations and viewings resumed.

Overall, brokers’ searches were up to 68% in June as the market responded to eased restrictions following the Covid-19 lockdown.

But the residential market showed even greater pick up of searches, with a 79% increase – reflecting the demand in the market.

The terms brokers were searching for continued to follow the same pattern which has been dominant since the pandemic began.

Indeed, the main residential searches, Knowledge Bank revealed, included ‘Covid-19: Temporary Maximum LTV Restrictions’ and ‘Furloughed Workers’.

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What’s more, the ‘Temporary Maximum LTV’ term was also strongly represented in broker searches in the buy-to-let, second charge and bridging categories.

Matthew Corker, lender relationship manager at Knowledge Bank, said: “Lenders have been very active in June, withdrawing and then reintroducing higher-LTV products.

“Many have also adjusted their affordability and allowable income criteria, as details of the extension to the Government’s furlough scheme become clearer.

“It is no surprise to find that brokers are searching more frequently for these criteria. As demand returns to the market, lenders and brokers are having to move fast to stay ahead of the curve.”

Knowledge Bank has responded to this increase in demand by establishing a weekly Criteria Clinic, enabling brokers to discuss the issues and hot topics they are most concerned about with a panel of experts from a cross-section of lenders.

Top five searches performed by brokers on Knowledge Bank – June 2020 (source: Knowledge Bank)

RESIDENTIALBUY-TO-LETSECOND CHARGESEQUITY RELEASE
1COVID-19: Temporary Maximum LTV RestrictionsLending to Limited CompaniesMaximum LTV / Loan To ValueEarly Repayment Charges
2Help To Buy Equity Loan SchemeFirst-time landlordCOVID-19 : Temporary Maximum LTV RestrictionsProperty with an Annex / Outbuildings / Land / Acreage
3COVID-19: Furloughed WorkersRequirement to be a HomeownerCapital Raising for Debt ConsolidationTimber Framed Construction
4Self-employed – one year’s accountsMinimum Income – Interest-Only / Part-and-Part Single ApplicantSelf-employed – one year’s accountsFlexible Payments / Ad hoc
5Maximum Age at End of TermCOVID-19: Temporary Maximum LTV RestrictionsIncome Multiple used for Affordability AssessmentMinimum Property Value
SELF-BUILDBRIDGINGCOMMERCIAL
1Maximum LTV / Loan to ValueRegulated BridgingMaximum LTV for Commercial Investment
2Maximum LTC – Loan to CostMaximum LTVSemi-Commercial Properties
3Lend against LandCOVID-19: Temporary Maximum LTV RestrictionsMinimum Loan Amount
4Maximum Loan AmountMinimum LoanCommercial Owner Occupier
5 Barn ConversionMinimum Property ValueMixed-Use Properties / Part Commercial

By Kate Saines

Source: Mortgage Finance Gazette

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Stamp duty freeze leads to ‘busiest’ week for mortgage searches

The week following the stamp duty holiday announcement has been the busiest for mortgage searches all year, according to mortgage technology provider Twenty7Tec.

Yesterday (Tuesday 14 July) experienced the greatest number of searches in the year to date, highlighting how much of an impact the chancellor’s announcement to cut stamp duty has made on the market.

There was also a flurry of activity in the buy-to-let sector which had not been experienced since February. Twenty7Tec reported this week has been the busiest for buy-to-let searches, according to its platform’s data.

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Today marks exactly one week since chancellor Rishi Sunak announced he was freezing stamp duty on properties worth up to £500,000 until March 2021.

Phil Bailey, Sales Director at Twenty7Tec said: “Since the stamp duty announcement last week, the market has really hit its stride.

“The last seven days have been the busiest for mortgage searches all year and we’re handling increased volumes of searches each day. Yesterday was the busiest day of the year, closely followed by the day before. Yesterday’s residential mortgage searches were triple the volumes in lockdown.

“Buy-to-let has definitely pushed on and the past few days have been the busiest since the first couple of weeks in February.

“Our sense is that buy-to-let will increase further as the products are there for that part of the market and the risk profile of buy-to-let is still attractive to lenders.”

By Kate Saines

Source: Mortgage Finance Gazette