‘Brokers who have not relied on stamp duty holiday will do best going forward’ – Marketwatch
Until 30 September, the relief will only apply to properties of £250,000 and under, before returning to the standard threshold of £125,000 on 1 October, alongside the previous duty exemptions for first-time buyers.
With average property prices at an all-time high and now surpassing the new threshold, activity in the market is expected to tail off as savings become less likely.
So this week, Mortgage Solutions is asking: Will the housing market be noticeably affected by the tapering of the stamp duty holiday?
Cloe Atkinson, managing director of mortgage technology solution Mortgage Engine
The stamp duty holiday was introduced and then extended to boost demand following the almost total shutdown of the housing market and this policy seems to have been a clear success.
There is some concern that a small number of purchases might fall through, and overall demand and transaction levels will drop.
Certainly, some buyers who might have benefited from the tax holiday might re-think their options, but any idea that we will see a huge fall in activity ignores the fact that the market simply hasn’t been operating as normal for the past year and a half.
The longer-term economic and societal impact of the pandemic, as well as how the industry continues to respond, will likely play a far bigger role in influencing the future of the housing market.
As lockdown restrictions continue to ease, more pent-up demand will be released as buyers and sellers who have sat tight come to market. Additionally, the future of where and how many of us will work post-pandemic is becoming clearer and more definite.
This could mean the ‘race for space’ accelerates. There are also serious challenges looming over the future of the market that go far beyond the end of the tax holiday.
The end of furlough later this year and the withdrawal of government lending from businesses could have serious ramifications for the finances of potential buyers. As the economic impact of the pandemic becomes clearer, issues of affordability and vulnerability look set to come to the fore.
The property industry needs to look beyond the end of the stamp duty holiday and ensure that it is prepared to meet these challenges, by investing in the right tech and people, refining capabilities and examining procedures.
Kevin Roberts, director of Legal & General Mortgage Club
The mortgage market will certainly be impacted by the tapering of the stamp duty holiday. However, the extent to which it changes the market is still to be seen.
We know that demand for property is currently being driven by a real range of factors and that means people will still be keen to move, even after the tapering takes effect next month. Many still wish to upsize and relocate and there is also significant demand from international buyers.
Last month, our SmartrCriteria data showed that advisers searched for mortgages suitable for buyers with visas more than almost any other criteria point.
It’s also important to remember that we have not seen any significant changes to housing supply or how our housing stock is utilised since the stamp duty holiday began.
That means competition for homes remains high and at a time where housing availability remains unchanged. We must remain positive that the UK’s levelling up agenda will help to change this, but for now, unless there is a big shift in housing supply or usage, stable price growth looks set to remain.
Many have been quick to predict cliff edge disruption when the stamp duty holiday draws to an end, but we’re more likely to see a more gradual return to normal market conditions.
For now, while mortgage rates remain extremely competitive, it continues to be a great time for people to borrow.
Jonathan Stinton, head of intermediary relationships at Coventry Building Society
It’s unlikely that the 1 July will bring as big a ‘cliff edge’ as many in the market previously feared, thanks to the taper.
However, there will undoubtedly be many disappointed borrowers who are unable to complete ahead of the deadline and whose tax bill will be higher than planned – the cliff edge was simply moved and a different set of purchases are now affected.
It’s worth noting though that what we’re seeing is a gradual return to a normal level of stamp duty, so any discount is an added bonus.
For intermediaries, it’s vital that they continue to plan ahead to help their customers both in the short-term and after the tax break ends – the Covid-19 pandemic has changed working patterns for many, and their housing requirements have changed to match, with many now able to look further afield than before.
Brokers who have maximised alternative streams of business, stayed in touch with existing clients, and who haven’t relied on stamp duty holiday-fueled activity to survive will be best placed to carry on their success through the rest of the year and beyond.
The remortgage and product transfer market in particular could offer a strong source of business for many this year, due to a high volume of product maturities on the horizon.
Being there to advise clients and help them get the best deal will mean that a broker’s services remain in demand. And we shouldn’t forget that house purchases will continue, even if at a lower level. As ever, advice will be crucial, especially for first-time buyers and the self-employed, and it’s there that brokers can really make a difference to borrowers.
Residential transactions surge by a fifth against pre-pandemic levels in May – ONS
Office for National Statistics (ONS) data shows while this is skewed by the closure of the property market last year, compared to 2019 when the sector was operating as normal last month’s transaction levels were still 19.7 per cent higher than the 95,960 recorded two years ago.
The statistics also showed there were 392,860 non-seasonally adjusted transactions during Q1 of this year, which ONS said was the highest Q1 total since the data was first collated in 2005.
It was also the highest quarterly total since Q2 2006 when there were 419,270 residential transactions in the UK.
Although figures for the recent period show the market is busier than previous years, residential transactions in May fell 3.9 per cent compared with April. This represented a difference of 4,600 transactions.
Richard Pike, Phoebus Software sales and marketing director, said: “This morning’s figures indicate demand is still outweighing supply, and the chase for space continues, despite a slight dip in activity.
“The Office for National Statistics (ONS) reported last week that the average house price in the UK dropped by £5,000 in April. This drop could be explained by the expected end of the stamp duty holiday in March, and people submitting lower offers in anticipation. Even so, the average UK house is worth £20,000 more than the same time last year. What we see today is that although this boom is cooling off, it is not yet over. Annual growth remains impressive, and prices could still climb further in 2021.”
Mike Scott, chief analyst at Yopa, added: “Previous stamp duty deadlines have seen a sharp drop in the number of sales following the surge before the deadline, but the numbers remain very strong despite the record March number of 183,670.
“We expect another surge in the numbers for June, to beat the revised stamp duty holiday deadline, but we expect that they will then remain strong for the rest of the year, even after stamp duty is fully back in place, thanks to the continuing high levels of demand from buyers who now have no hope of beating the deadline.”
Stamp duty receipts uptick
Amid the sustained surge in property transactions, stamp duty receipts totalled £652m in May, £291m higher than the same month last year, figures from HMRC showed.
Compared to 2019 when the sector was operating normally and there was no stamp duty holiday in place, this was a relatively small drop of £179m on the £831m taken.
On a monthly basis, this was down on the £991m collected in April, coinciding with the dip in overall transactions.
The Treasury has taken £4.2bn in stamp duty so far this year, analysis of HMRC receipts by Coventry Building Society showed.
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “With HMRC’s revenues still going strong in the wake of the stamp duty holiday, higher value properties, second homes and rental properties are all clearly still a big part of the market.
“And the so-called ‘pandemic boom’, which has seen house asking prices hit record levels across every region of Great Britain will be having an impact on the taxman’s coffers too.”
“If the taxman is still getting a healthy pay day from stamp duty even with this holiday, perhaps keeping the threshold high would help to normalise the market and take at least some of the financial burden off of the average homebuyer,” Stinton added.
TSB and Coventry BS reduce rates across all LTVs
For first-time buyers and purchasers requiring loans between 80 and 90 per cent loan to value (LTV), rates now begin at 2.29 per cent for an 80 to 85 per cent LTV product with a £995 fee.
The fee-free option is priced at 2.84 per cent.
At 85 to 90 per cent LTV, the £995 fee-paying product has a rate of 2.99 per cent, while the fee-free option is set at 3.19 per cent.
For remortgaging borrowers, products up to 60 per cent LTV, with a £995 fee, have been cut by 0.10 per cent to 1.04 per cent.
For remortgage products at 60 to 75 per cent LTV, with a £995 fee, rates have seen the same reduction to 1.29 per cent, while £1,495 fee-paying options are now priced at 1.14 per cent.
Rate changes are effective from today.
Coventry BS cuts rates by up to 70bps
Coventry Building Society has reduced rates on purchase and remortgage products by as much as 70 bps.
Reductions include the two-year fixed purchase only product at 85 per cent LTV, with a £999 fee. This now has a rate of 2.15 per cent, down from 2.85 per cent.
The five-year fixed product at the same lending tier and equivalent fee has been cut from 3.25 per cent to 2.65 per cent. This mortgage is available for purchase, remortgage, product transfer and further advance.
Rates on interest-only and product transfer deals have also been cut.
Jonathan Stinton (pictured), head of intermediary relationships at Coventry Building Society, said: “As we’re expecting a great deal of existing mortgage deals to be coming to an end in the next few months, as well as plenty of home buyers looking to make their move before the end of the stamp duty holiday, now is the time that brokers can really be adding value for their clients.
“We’re delighted to introduce these rate reductions and make our products even more competitive. This is great news for brokers and their clients, particularly for those with smaller deposits as the larger reductions have been made to the higher LTV products.”
Coventry Building Society cuts rates on 75 per cent BTL products with an eye to clients ready to refinance
The five-year fixed to 31 January 2027 was cut to 2.29 per cent, down from 2.45 per cent. The product attracts early repayment charges (ERCs) to end-January 2027, and comes with a £1,999 fee.
Meanwhile the rate on the two-year fixed to 31 July 2023 was cut to 1.79 per cent, from 1.89 per cent. The ERCs run to end-July 2023 and again the product fee is £1,999.
Jonathan Stinton, head of intermediary relationships at Coventry Building Society (pictured), said: “We know there are some large spikes in products coming to the end of their existing deals in the buy-to-let market over the coming months. These price reductions should be attractive to brokers and help their existing landlords to refinance.”
Accord Mortgages joins Mortgage Brain’s Lendex platform
The platform launched in February this year following a successful pilot, and has Nationwide Building Society, Virgin Money, Coventry Building Society and Platform signed up to the platform so far.
The platform can save mortgage advisers up to 20 minutes per case as it is able to pre-populate data from Mortgage Brain’s CRM or its mortgage sourcing system to the lender’s platform. This allows a decision in principle (DIP) to be made without having to re-enter information.
Accord Mortgages managing director Jeremy Duncombe said: “We’re always looking for ways to improve our systems and processes to make things easier for brokers.
“Our MSO platform, together with Lendex, means placing cases with us will be much more efficient; speeding up the time taken to apply for a decision in principle.”
The platform is currently in pilot with Fluent Mortgages, and Mortgage Brain has said that the number of lenders using its platform will increase to eight in the coming months.
Lendex is integrated with Mortgage Brain’s sourcing solution Mortgage Brain Anywhere and its CRM, The Key. It is available to UK advisers on a standalone user interface so advisers can get multiple DIPs, full mortgage applications, share documentation and track cases with one login.
Mortgage Brain’s sales and marketing director Neil Wyatt said: “We know from the feedback that the time being saved submitting DIPs or carrying out full applications through Lendex is making a tangible difference to the workloads of mortgage advisers across the country.
“At Mortgage Brain we are determined to transform the mortgage process for the better, and the fact that large lenders like Accord are backing innovations like Lendex demonstrates the progress already being made.”
Coventry cuts rates on select 65 per cent and lower LTV residential products
The reductions apply from today and are in place for some of their standard residential, product transfer and offset mortgage ranges.
The rate for its five-year fixed at 65 per cent LTV, which is available for purchase only, will be reduced by 0.14 per cent to 1.65 per cent.
The rate for its two-year fixed at 50 per cent LTV will now stand at 1.09 per cent, a fall of 0.1 per cent. This product is available for remortgage only.
Both the above products are subject to a £999 fee.
Its five-year fixed at 65 per cent LTV with no product fee will now have a rate of 1.75 per cent, down 0.1 per cent.
Coventry Building Society’s head of intermediary relationships Jonathan Stinton (pictured) said: “The next few months will see a lot of borrowers’ current mortgage deals coming to an end, so these products are ideal for those looking to secure their remortgage early.”
Coventry for Intermediaries boosts 95 per cent LTV range
With a rate of 3.59 per cent, the deal has a £999 product fee and is open to purchase and product transfer borrowers.
The Coventry has also cut the rate on its 95 per cent LTV five-year fixed rate deal from 3.89 per cent to 3.79 per cent.
Average 95 per cent LTV two and five-year fixed rates across the market now stand at 3.93 per cent and 4.09 per cent respectively, according to Moneyfacts.
Jonathan Stinton (pictured), head of intermediary relationships at Coventry Building Society, said: “This is great news for brokers and their first-time buyer clients. Our new competitive two-year fixed mortgage at 95 per cent LTV adds more choice to the market and means that more aspiring home owners will be able to take that all-important first step on the property ladder.
And the product is open to all purchase customers, so brokers can also secure a great rate for their clients looking for a higher LTV option.
“Plus, we’ve also recently widened our lending policy on bonus income and increased income multiples for loans greater than 90 per cent LTV, so clients could borrow more.”
Coventry BS increases LTIs for high LTVs and updates bonus policy
The changes will be effective from today and pipeline applications will be switched onto the new criteria.
The mutual will also now accept annual bonuses of 50 per cent of the average two years’ bonus income, or 50 per cent of the most recent year’s annual bonus income, if the two-year amount is lower.
Additionally, 50 per cent of regular bonus payments will be accepted for affordability assessments and three-month accounts must be provided to show a consistent level of earnings.
Jonathan Stinton (pictured), head of intermediary relationships at Coventry Building Society, said: “Increasing the income multiples and allowing more flexibility on bonuses will increase the options available to those clients who want to get onto the property ladder.
“Building up a deposit for a mortgage is one of the bigger challenges facing buyers and this has been made all the more difficult with such strong market demand and rising property prices.”
He added: “We’ve consistently supported the market at higher LTVs and these extra measures will help to broaden the choices for those with smaller deposits who are looking to buy now.”
Stamp duty take hits ‘surprising’ high in March — Coventry BS
“These numbers are surprising, but anyone in the industry will know how frenetic it has been over the past few months,” said Jonathan Stinton, head of intermediary relationships at Coventry BS (pictured).
The monthly take of Stamp Duty Land Tax (SDLT) was the fifth-highest since the levy was introduced in 2003.
SDLT receipts were 22 per cent higher compared to £928m in March 2020.
“The original March deadline for the holiday would have driven a lot of people to get their house moves through last month,” Stinton said.
“That has clearly boosted activity across the market as these tax receipts indicate higher value homes, second homes and rental properties have been exchanging hands. As the holiday has since been extended, we can probably expect to see this busy period continue for a while.
“Increased market activity is always good news for brokers, and we understand the need for speed when it comes to answering phones and dealing with queries,” he added.
For the tax year 2020-21, SDLT receipts totalled £8.7bn, down from £11.6bn in 2019-21.
BTL2021: Buy-to-let rates unlikely to see huge drops this year – Coventry BS
Speaking at the Buy to Let Online Forum on Wednesday, Ben Williams corporate relationship director at Coventry Building Society (pictured), said the number of lenders in the buy to let space could keep prices competitive.
However, with mainstream residential rates starting at 1.4 per cent in some cases, Williams said he did not expect buy-to-let rates to fall much further.
Williams said: “In the buy-to-let world, it’s as much about criteria as it is about rates.
“A lot of the time, products are driven more by whether the customer’s circumstances meet the lender criteria. Then rates always become a little secondary, unless they’re low loan to values. Maybe there will be some change in buy to let rates, but I can’t see them dropping hugely from where they are now.”
Secure BTL market
Williams was also asked if the return of 95 per cent loan to value products and the mortgage guarantee scheme would negatively affect tenancy as people were incentivised to purchase their own homes.
He predicted there would be little impact on the sector.
Williams said: “Thinking about pre-Covid, most mainstream lenders were offering 95 per cent LTV mortgages anyway. It didn’t have a hugely detrimental impact on buy to let then, so no reason to suggest it will do now.
“There will be some private tenants that will look to get on the housing ladder because of the scheme but I really don’t see it being hugely different to what it was pre-Covid.”