Stephen Kerrigan, mortgage Broker of MortgagesRM – Fee Free Mortgage Advisor Doncaster reflects on a rollercoaster of a year for remortgaging and looks at what 2021 may hold for the mortgage market.
Stamp Duties was put on hold during 2020 so that ‘First-Time Buyers’ could climb onto the property ladder without the extra worry of the stamp duty, but even this saw a decline in interest for new younger people looking for a home.
April and May 2020 were when the pandemic really started, or at least the problems of lockdowns and restrictions that came with it. It was a challenging time for all sectors, as social distancing forced a huge portion of the workforce to work from home, and household finances were put under unimaginable pressure.
However, the Remortgage market stayed string and outperformed many other areas as borrowers took advantage of the very low-rates. It actually worked well working remotely, as more cases came swinging in.
Then Lockdown ended, the housing market boomed in May 2020. House prices rose, and continued to rise, so much that it made homeowners earn more money on their property in the past ten months than they did in three and half years prior.
These rising house prices meant it brought new opportunities for borrowers, as Remortgages were able to secure better deals thanks to increased equity and more homeowners began to assess their options to sell up and move after weeks confined to their homes.
Low interest rates also created more competitive offerings for both purchase and refinancing. This was further fuelled by the government by raising the stamp duty tax from £125,000 to £500,000 to give many prospective first-time buyers a stamp duty holiday until 31st March 2021, although, we are at least expecting this to be extended for a couple more months.
As the rising property values and temporary tax break enticed more homeowners to the purchase market, mortgage advisors, lenders, and lawyers became increasingly stretched and the pressure was felt across the entire housing and property industry.
Fast Forward to 2021, the capacity issues caused by the booming home-moving market have led to a fall in Remortgage activity. Last month in December 2020, remortgaging activities was down by 61% from January 2020.
However, this is no cause of alarm. The property market is seeing the number and the value of approvals begin to rebuild as lenders regain their confidence and cases are processed and done so efficiently, and also securely.
Even though 2021 is being faced with a task of predicting yet another unpredictable year, with calls of another “National Lockdown” to help stop the spread of the new variant of COVID-19.
The previous year has taught us how adaptable the Remortgage side of the housing market is. With sophisticated technology allowing us to continue business, largely unscathed throughout the pandemic, and by the time the second Lockdown in England struck in November 2020, the tech was in use to ensure there was little impact on activity as a whole.
Until this date [31st March 2021] it is likely the market will see a continuation of the subdued Remortgage market that the industry is currently in. This date as we know it marks the end of the stamp duty holiday, mortgage payment holidays, and the furlough scheme (which has been extended twice already), and the current help-to-buy scheme.
Ultimately, the mortgage industry has navigated an unfathomably challenging year, and while the current limited capacity will continue until the end of March, this will result in very little change. However, we can expect some growth and stability, as well as normality as move further into the year.