House price rises continue to cool in February – Halifax
Having seen five months of consecutive strong growth in 2020, this is the third month of easing, with prices coming down slightly from the high of 252,890 in November.
However, on an annual basis prices are still 5.2 per cent higher than the £239,414 in February 2020 before the pandemic hit.
The results are somewhat of a contrast to those from Nationwide Building Society published earlier this week, which showed a 0.7 per cent increase in house prices in February after a January pause.
Halifax managing director Russell Galley welcomed the stamp duty holiday extension which “has removed a great deal of uncertainty for buyers with transactions yet to complete”.
And he approved of the 95 per cent loan to value mortgage guarantee scheme also announced in the Budget.
“While mortgage approvals have reached record highs in recent months, hitting levels not seen since before the financial crisis of 2008, raising a deposit continues to be the single biggest hurdle for first-time buyers to overcome,” he said.
Galley noted the housing market had been at a crossroads to start the year, with upcoming events such as the Budget key to determining the path of activity and prices.
“Having enjoyed an extremely strong period of activity in the second half of last year, the housing market continued its softer start to 2021, with average prices down very slightly compared to January,” he said.
“However, with annual house price inflation currently at 5.2 per cent, property values remain comfortably higher than 12 months ago, when February was the last full month before lockdown.”
Industry commentators expect the Budget announcements to reinvigorate the market and prompt more buyers and sellers to return in the short term.
Former Royal Institution of Chartered Surveyors residential chairman Jeremy Leaf said: “The slight softening in house prices contrasts with those from Nationwide earlier in the week.
“It shows the market pausing in February as many buyers and sellers were deterred by the prospect of not being able to take advantage of the stamp duty holiday, as well as being hampered by further lockdown restrictions.
“However, when it became clear from Budget leaks that there was a good chance of the concession being extended and further support for higher loan to value mortgages, the market perked up and gained in confidence, even though the extension is relatively short.”
MT Finance commercial director Gareth Lewis noted that it was a sustainable slowing, rather than values falling off a cliff.
“There is still a desire to transact and if people are less likely to pay over the odds, then all the better,” he said.
“The stamp duty holiday extension should help that trend. Price growth is great as far as capital appreciation is concerned for investors but it is hard for those trying to get on the housing ladder.
“As those trying to buy a home may have been furloughed for a time, we can’t live in a price bubble for too long.
“The 95 per cent mortgages announced in the Budget are a positive as they will help stimulate the market, encouraging first-time buyers which allows further transactions to happen up the ladder,” he added.
Not sustainable throughout 2021
In the longer-term, Galley highlighted that the performance of the housing market remains inextricably linked to the health of the wider economy.
“The pace and extent of recovery are still highly uncertain, and much will depend on the ongoing success of the UK’s vaccination roll out,” he continued.
“Though there is the likelihood of an economic bounceback from lockdown, with households not unduly impacted by the pandemic deploying the significant reserves of savings that they have built-up, higher unemployment is likely to limit new buyer demand.
“Therefore, we would not expect the level of growth seen in house prices over the past year to be sustained throughout 2021.”
NatWest and Halifax cut rates; Platform caps maximum LTI – round-up
Two-year fixed purchase mortgages have seen rates cut up to 10 basis points. The fee-free product at 85 per cent loan to value (LTV) has dropped from 2.93 to 2.83 per cent. The fee-free offering at 90 per cent LTV has decreased from 3.48 to 3.43 per cent.
Remortgaging borrowers fixing for two years have seen rate reductions. These include the £0 fee product at 75 per cent LTV, on which rates have reduced by 11 basis points to 1.78 per cent.
At 90 per cent LTV, two-year fixed remortgages have seen cuts of 0.15 per cent to, respectively, 3.24 per cent and 3.44 per cent for the £995 paying and fee-free products.
For borrowers fixing for five years, the fee-free purchase product at 85 per cent LTV has been cut to 3.07 per cent from 3.15 per cent.
Brokers wanting to secure current rates have until 10.30pm tomorrow to produce mortgage illustrations and submit applications online. If brokers are unable to submit applications due to technical issues that cannot be resolved over the phone, they must submit a paper application and email their business development manager by midday.
Platform caps maximum LTI
Platform has reduced the LTV its maximum income multiplier can be considered for from 75 per cent LTV to 70 per cent LTV.
Borrowers requiring loans up to the threshold can borrow up to 4.85x their income while anyone with requirements above 70 per cent LTV and those using Help to Buy will have borrowing capped at 4.49x their income.
The change applies to applications submitted from 1 March.
Platform has re-introduced its Help to Buy mortgages at 60 per cent LTV and 75 per cent LTV with two and five-year fixes.
All products have £500 cashback and free valuations. At 60 per cent LTV, rates for both two and five-year fixes with a £999 fee are 1.79 per cent. At 75 per cent LTV, rates are 1.95 per cent.
For fee-free Help to Buy products, rates are 2.02 per cent at 60 per cent LTV and 2.2 per cent at 75 per cent LTV.
The lender has also relaunched fee-free mortgages at 60 and 75 per cent LTV, with two- and five-year fixes.
Elsewhere, Platform has reduced rates on residential, professional and mainstream mortgages by up to 0.12 per cent. Product switches for residential and buy-to-let mortgages have seen rate hikes of up to 0.19 per cent.
Halifax and BM Solutions
Halifax has reduced rates on remortgages.
Meanwhile Lloyds Banking Group’s buy-to-let brand BM Solutions has increased the rate of a five-year fixed at 75 per cent LTV with a £999 fee. The product transfer now has a rate of 2.21 per cent.
Halifax and Virgin Money cut high LTV and shared ownership mortgage rates
The lender has made reductions to two and five-year fixed rate products across the 75 per cent and 90 per cent LTVs.
This includes the two-year 75 per cent LTV deal with £999 fee at 1.31 per cent and the 90 per cent LTV equivalent which is at 3.09 per cent. The five-year versions are at 1.66 per cent and 3.41 per cent respectively.
Selected rate reductions have also been made on three-year fixed rate products across the 75 per cent and 85 per cent LTV ranges.
Here the 75 per cent LTV zero fee deal is at 1.84, while the 85 per cent LTV option with £999 fee is at 2.69 per cent.
In the new build range, the two-year fix at 75 per cent LTV with £999 fee is at 1.51 per cent and the five year version up to 85 per cent LTV is at 3.03 per cent.
Meanwhile, Virgin Money is cutting rates on some of its products by up to 31 basis points, including a pair of broker exclusives and shared ownership mortgages.
The broker exclusives with £1,000 cashback and £995 fee at 75 per cent and 85 per cent LTV for purchases have been reduced to 1.74 per cent and 2.69 per cent respectively.
Rate reductions across its core range include the 65 per cent LTV five-year fixed cut by 31 basis points to 1.68 per cent and the first-time buyer 90 per cent LTV five-year zero fee mortgage trimmed by seven basis points to 3.62 per cent.
Shared ownership deals see two of the biggest reductions.
The 90 per cent LTV five-year fixes with £995 fee and £0 fee have been reduced by 27bps and 31bps to 3.59 per cent and 3.78 per cent respectively.
Monmouthshire Building Society
Monmouthshire Building Society also introduced a range of five-year fixed deals at up to 80 per cent LTV, with purchase and remortgage options available.
Interest rates range from 1.5 per cent at 50 per cent LTV to 2.25 per cent at 80 per cent LTV, with a minimum loan size of £40,000 and maximum loan size of £1m.
Halifax and BM Solutions make second set of rate cuts in a week
Halifax’s changes have been made to its homemover and first-time buyer products.
Selected rate reductions have been made on two and three-year fixes across 60-75 per cent and 80-85 per cent LTV deals.
And some five-year fixed rate products have also had rates cut across 60-75 per cent and 80-90 per cent LTVs.
Meanwhile, BM Solutions has made reductions to it buy-to-let remortgage and let-to-buy ranges at £0, £995 and £1,995 fee options.
Two-year fixes have been cut at the 60 per cent and 75 per cent LTV bands, while five-year fixes have been reduced at 75 per cent LTV.
The lenders did not give details of the magnitude of the cuts.
Earlier this week both lenders made changes to their rates with Halifax adjusted products in its remortgage range and BM Solutions cutting its remortgage, let-to-buy and product transfers.
House prices dip in early sign market could be ‘losing steam’ – Halifax
The average home was worth £251,968 at the start of 2021 marking a 0.3 per cent fall from December, according to data from Halifax.
The results from the Halifax index are remarkably similar to those from Nationwide’s index earlier this week, suggesting the trend is being well recognised.
January’s monthly drop in values reported by Halifax is the largest since April last year, taking the average home price to levels last seen in October.
But on an annual basis, house prices were 5.4 higher and were also 1.6 per cent above the preceding three months to the end of October.
It means average prices are still £13,000 higher than a year ago.
‘Running out of steam’
The housing market has been booming since last summer but there are fears the end of the stamp duty holiday in March could derail the recovery out of last year’s lockdown.
Russell Galley, managing director at the lender, said: “There are some early signs that the upturn in the housing market could be running out of steam, with the annual rate of house price inflation cooling to its lowest level since August.
“Industry figures for agreed sales remain well above pre-pandemic levels but new instructions to sell have decreased noticeably, and total stock held by estate agents has risen to its highest level since before the EU referendum in 2016.
“The stamp duty holiday has undoubtedly helped to fuel growing demand among households for larger properties. However, given the current time to completion across the market, transactions in the early part of 2021 probably don’t include many borrowers who expect to benefit from the stamp duty reprieve.
“How far and how deep any slowdown proves to be is a challenge to predict given the prevailing uncertainty created by the pandemic.”
Sarah Coles, personal finance analyst at Hargreaves Lansdown added: “A winter chill blew through the housing market during January, cooling the market and raising the risk of cold feet.
“A new lockdown, combined with growing concerns for the future, and the looming stamp duty holiday deadline, are making buyers think twice before throwing themselves into a house purchase.
“This was always going to happen as we neared the cliff edge when the stamp duty holiday ends.
She added that those who have already committed to a purchase may decide to power on regardless, the situation was clearly putting people off getting started, although there could be some respite if the chancellor decides to tinker with stamp duty.
“MPs this week called for some sort of phased withdrawal, or assistance for people who are already in the middle of a purchase, and if the government decides to provide some sort of gentle ramp off the cliff edge, it could help enthuse new buyers again,” she said.
Halifax and BM Solutions cut rates
Halifax has adjusted products in its remortgage range with some rates increasing by up to 0.14 per cent and others cut by up to 0.17 per cent.
The remortgage deals affected include affordable housing shared equity products and shared ownership scheme.
The lender did not give any examples of specific product changes.
Meanwhile, BM Solutions has also overhauled its buy-to-let mortgage rates.
Remortgage and let-to-buy products saw a range of reductions across two-year fixes at 60 per cent and 75 per cent loan to value (LTV) and five-year fixes at 75 per cent LTV.
The cuts were applied to products with £0, £995 and £1,995 fees.
Product transfer deals at 60 per cent LTV with £995 fee also had rate reductions, while the 75 per cent LTV versions were increased.
And the lender aligned its further advance rates with its two-year 75 per cent £0 fee product transfer deals.
Halifax launches 90 per cent LTVs for home movers
The launch of these mortgages come a month after the bank resumed lending at 90 per cent LTV with two products for first-time buyers.
Purchases for new-build properties will not be eligible on the mortgages, neither will purchases made using schemes such as Help to Buy or Shared Ownership.
An enhanced credit score will be applied to applications and it has a maximum loan to income (LTI) of 4.49x.
The maximum loan amount is £500,000.
Mortgages include a two-year fixed with a fee of £999 and a rate of 3.35 per cent, while the fee-free option is set at 3.44 per cent.
There are also two five-year fixes including a £999 fee paying product with a rate of 3.59 per cent, and a fee-free alternative at 3.79 per cent.
The two-year mortgages have early repayment charges (ERC) starting at two per cent in the first year, before dropping to one per cent in the final year.
For the five-year fixes, ERCs start at five per cent in the first year, before dropping to one per cent in the final year.
First-time buyers need extra £10k for deposit after Covid
The average amount put down by a first-time buyer in 2020 was £57,278, compared to £46,449 the year before, a rise of over 23 per cent, according to research by Halifax.
It comes as the average price paid by a first-time buyer in the UK last year was £256,057, up by £22,939 from £233,118 a year earlier.
London saw the biggest monetary increase in the average price paid over the last 12 months, up by £33,486 from £455,611 to £489,098.
Overall the number of first-time buyers fell by 13 per cent last year, according to analysis by Halifax.
But this was largely during the first half of 2020 as the property market closed. In the second half, activity bounced back with transactions down two per cent compared to the same six months of 2019.
First-time buyers made up around half of homes bought with a mortgage – a similar level to the previous year.
Regionally Northern Ireland saw the biggest fall in first-time buyers with a 23 per cent decrease, while London had the smallest reduction with a dip of six per cent.
Russell Galley, managing director of Halifax, said: “Whilst these figures confirm the almost inevitable fall in the overall number of first-time buyers in 2020 – with the entire housing market effectively shuttered during the first national lockdown – they also underline just how strong the bounce back was in the second half of the year.
“Despite the obvious challenges presented by soaring house prices, not least the need to raise an even bigger deposit, first-time buyers still accounted for half of all home purchases, a reassuring statistic given their overall importance to the market.
“However, with the economic impact of the pandemic likely to be felt most keenly by the young and those in lower-paid jobs, the need to prioritise improved housing availability and affordability for all those looking to make that first step onto the property ladder becomes ever greater.”
Top 10 biggest mortgage broker stories this week – 08/01/21
And while stamp duty stories continued to make the most read of the week, news that Danish banks were launching 20-year fixed rate mortgages at zero per cent stole the show.
The continuing recovery of the 90 per cent lending market was evident as HSBC stepped back in to low deposit lending and Barclays added more choice to its range.
And in a welcome break from Covid-related news, readers were interested in the buy-to-let remortgage surge expected at the end of March.
Danish banks offer 20-year zero per cent mortgage deals
Halifax tightens income multiples
Mortgage industry should accept stamp duty holiday end – Marketwatch
Buy-to-let brokers prepare for surge in remortgages
First-time buyer market shrinks 12 per cent following stamp duty holiday – Reallymoving
Barclays adds 90 per cent LTV deals and overhauls cashback
Housing market remains open in fresh Scottish lockdown
HSBC re-enters 90 per cent LTV lending
Mortgage market ‘under extreme pressure’ and ‘likely’ some will miss stamp duty deadline
Connells completes £130m Countrywide takeover
House prices jump six per cent to finish 2020 at record high
The typical home is worth £253,374 after edging up by 0.2 per cent between November and December to mark six months of continuous gains, data from Halifax showed.
Average house prices were six per cent higher at the end of 2020 when compared to December 2019.
However, monthly growth significantly slowed in December from the one per cent monthly rise recorded in November, indicating the current burst of activity in the market maybe winding down.
Covid restrictions closed the property market in March, affecting confidence and prices, but it soon picked up with the reopening in May.
Chancellor Rishi Sunak bolstered activity with a temporary reprieve on stamp duty for properties under £500,000 until the end of March this year.
Russell Galley, managing director of Halifax, said 2020 was a tale of two distinct halves for the housing market.
“Following a strong start, the first half was dominated by the restrictions on movement due to Covid-19, and prices were subsequently down 0.5 per cent at mid-year as the market effectively ground to a halt,” he said.
“However, when the market reopened, prices soared as a result of pent-up demand, a desire among buyers for greater space and the time-limited incentive of the stamp duty holiday.”
Downward pressure likely in 2021
Critics warned the end of the stamp duty holiday and the economic uncertainty could restrain house price growth in 2021.
Galley said “downward pressure” remains likely.
Jonathan Hopper, chief executive of Garrington Property Finders, said: “In the space of just six months the property market has gone from wiped out to white hot, before ending up back in the middle.
“December’s sharp deceleration in price growth – down to the lowest monthly level seen in six months – suggests the party is winding down.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “Not surprisingly, the pace of house price rises started to slow in December, which is exactly what we found in our offices, as home movers were deterred by further lockdown restrictions and seasonal distractions.
“However, we recorded very few abortive sales, other than when chains had broken down or price renegotiations in response to reduced activity.
“Therefore, looking forward we expect the pattern to be repeated and the overwhelming majority of transactions to proceed to completion, followed by more balance between supply and demand as rollout of the vaccinations hopefully accelerates.”