There were a number of years where the housing market suffered due to the uncertainty around Brexit and more recently the general election. At the end of 2019 the Conservative Party called a General Election that was billed as “one of the most unpredictable elections in decades”. They required a minimum of 326 parliamentary seats in order to have a majority. To the nations surprise they gained a large majority by securing 365 seats. This then paved the way for the Brexit deal, when it received Royal Assent from the Queen on 23rd January 2020. By February people were rejoicing in the “Boris Bounce” and the property market came out of the stagnation of the previous years and saw an increase in transactions and prices.
The “Boris Bounce” was to be short lived as the UK went into lockdown on the 23rd March and the imposition of social distancing. This again brought stagnation to the property market, with Surveyors unable to value properties, Estate Agents shutting their doors and people unable to move house. The immediate effect of this was that the mortgage market immediately plummeted. The banks retreated to the safety of more stringent lending criteria and reducing the Loan to Value (LTVs) ratios.
In recent days we have seen many of the major lenders raising the LTVs as they try to gain market share.
Many are using Automated, Desktop and Drive by Valuations and hopefully this will be maintained post lockdown and save both time and money.
The Bank Base Rate has been reduced to an all-time low of just 0.1% with many of the lenders reducing their interest rates accordingly.
The brief suspension of the housing market is unlikely to have much of an impact on house prices because of the entrenched imbalance of the supply and demand in the UK.
The Government will be keen to get the housing market moving again as it has such a major impact on multiple aspects of the economy.
Action – With many of the UK’s mortgages currently on lenders high standard variable rates now would be the time to commence mortgage applications, in order to secure the all-time low interest rates. Even if these mortgages are unable to complete, due to requiring a physical valuation, we can often secure the rate and if rates drop even further then the application can be cancelled and a new application submitted for the lower rate. It’s a “Win/Win.
By Malcolm Jones