This year has been a roller coaster when it comes to the mortgage market, during lockdown 1 in March Mortgage Products fell dramatically with lenders very nervous what the affects of the pandemic would bring, removal of higher LTV schemes saw less first time buys able to get a foot on the ladder.
The transition to have Mortgages underwriters working from home, desktop valuation instead of physical visits also affected the lenders capacity to accept business.
However, since then mortgage approvals have reached a 13 year high with lenders gaining more confidence and assessing their products to meet the growing demand.
This strong improvement has all been helped with temporary stamp duty holiday
So, will the stamp duty holiday continue in 2021?
There was a strong push from the industry to extend the stamp duty holiday past the 31st March, however the government have now confirmed that this will not be the case.
More than 22,000 people signed a petition calling for the stamp duty holiday to be extended for a further six months.
The petition stated: “Extending the stamp duty holiday for an additional six-months will assist many buyers who are looking to move to a property that they will not be able to afford otherwise. This will help to stabilise the housing market.”
As it received over 10,000 signatures, the government was required to respond.
The Treasury said the stamp duty holiday was designed to be a “temporary relief” to stimulate market activity and support jobs that rely on the property market.
“The government does not plan to extend this temporary relief”, it stated.
It added that the pandemic caused uncertainty for buyers and sellers with property transactions down by as much as 50% during the first lockdown
“To stimulate immediate momentum in the property market and to support the jobs of people whose employment relied on custom from the property industry, the government decided to introduce a temporary Stamp Duty Land Tax (SDLT) relief. This relief increased the starting threshold of residential SDLT from £125,000 to £500,000 from the 8 July 2020 until 31 March 2021. Since the relief was introduced, transactions have increased and seasonally adjusted data shows that in October 2020, transactions were 8% higher than October 2019.
“As the relief was to provide an immediate stimulus to the property market, the government does not plan to extend this relief. SDLT is an important source of government revenue, raising several billion pounds each year to help pay for the essential services the government provides,” it said.
The Treasury confirmed it will maintain the stamp duty relief for first-time buyers which increases the starting threshold of residential SDLT to £300,000 for property purchases below £500,000.
What impact will this have?
This news will see a rush of potential buyers looking to get their application in to the lenders by January.
The fear then will be will the lenders cope with this influx, timescales this year have been dramatically increased with more underwriting required, searches taking a lot longer and some lenders taking up to 28 days to even look at a mortgage case.
This extension could see borrowers who did not budget for the stamp duty finding they are unable to complete prior to 31st March due to tight timescales and finding they now have the bill to pay.
Clever Mortgages know the importance of choosing the most suitable lender for your circumstance whether that is because of bad credit, low credit or you just don’t know where to start.
Lenders criteria and timescales will be very prevalent in 2021 especially if you are looking to take advantage of the stamp duty holiday, so talk to the experts who can help.
Clever Mortgages will look to assist you from start to finish, liaising with the lender, solicitors and estate agents to ensure you are fully supported through your property purchase.