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No cliff edge ahead as 700,000 maturing mortgages will sustain business – Davies

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  • 31/03/2021
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No cliff edge ahead as 700,000 maturing mortgages will sustain business – Davies
Some 700,000 mortgages set to mature this year will provide continued business for the market and avoid a post-Stamp Duty holiday cliff edge, Intermediary Mortgage Lenders Association’s Kate Davies has said.

 

Speaking to Mortgage Solutions, the association’s executive director said this was according to figures seen by members of UK Finance.  

It was also suggested that since it had been five years since the introduction of buy-to-let surcharge in 2016, there would be a significant number of landlords looking to refinance. 

She said: “There are a lot of fixed term loans due to mature in the second half of the year. There will be business going on and it will be up to lenders and brokers to attract more of that. 

With this taking place during a busy period, delays in the market could push people towards product transfers as an easier means of refinancing, Davies said. 

She added: “If you remortgage you’ve got to get a conveyancer, but a transfer is quicker to arrange. We might see more of a balance between product transfers and remortgages. 

 

Busy market 

Davies said as the sector was very active, she did not suspect there would be a huge slowdown in business once the Stamp Duty holiday ended. 

Referring to the association’s report The New ‘Normal’, published by its principal researcher Rob Thomas in January, Davies said the outlook remained “almost surprisingly upbeat. 

The report predicted gross mortgage lending would rise to £283bn this year, 17.3 per cent above last year’s levels with purchases driving the majority of activity. It also said gross buy-to-let lending would reach £40bn in 2021 and £41bn next year as landlords use the stamp duty holiday to expand their portfolios. 

Additionally, Davies said pent-up demand, people saving money in lockdown and a lack of housing supply would not affect property prices or purchase activity. 

“There’s no real sign of a dip let alone a crash in terms of prices. It’s just not going to happen, I don’t think, she added. 

 

Lenders looking for business

Davies said the ring-fencing policy from the Financial Conduct Authority which required banks to separate retail banking services from the rest of their business meant there was extra cash to be lent. 

It was expected that much of this would be given out last year, but the market’s reaction to Covid-19 restrictions stopped that from happening. 

She added: “They [lenders] want to lend it out through mortgages and we were expecting a whole load of that to flood the market with all sorts of offers. I suspect there’s still quite a lot of it there.” 

 

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