MORTGAGE APPLICATION SURGE SUGGESTS GREEN SHOOTS IN HOUSING MARKET TWO MONTHS POST LOCKDOWN
Appetite for house buying increases with the two months following the property market freeze being the busiest of the year so far
182% increase in first time buyer applications in the last two months¹
176% increase in next time buyer applications²
Interest rates spark remortgage interest with both tracker and fixed rates at an all-time low³
Two months after the housing market was given the green light to restart, activity appears to have restarted right across the sector. Whether it’s a breakout bid to leave the big cities and head to the country (of which a quarter of UK adults are considering⁴), or a fast and furious race to take advantage of some of the best mortgage deals the UK has seen for decades, there’s no doubt about it, it’s a busy and turbulent time. Online mortgage broker, Trussle, reveals its insights over the last two months and shares some top tips for navigating the mortgage market over the coming months.
Appetite for Mortgages
Trussle has reported a 182% increase in first-time buyer mortgage applications and a 176% increase in next-time buyer applications over the last two months, in comparison to the two months previously. Additionally sign up enquiries have increased by 35%⁵, with house buyers keen to seek out the best possible rates – of which we have access to over 12,000 with over 90 lenders. For some, it’s a good time to remortgage. Trussle has found that customers save £334⁶ on average per month by remortgaging onto a fixed rate, so it’s worth using a remortgage calculator to see if switching could save you money.
First Time Buyers
Latest figures from Trussle have shown it’s first-time buyers (FTB) who are being hit the hardest. The volume of FTBs being disqualified due to high loan-to-value (LTV) is 7 times higher than the previous period which makes getting on the property ladder more challenging. Trussle saw a 182% increase in FTB applications in the two months following the property market freeze. However, there’s a very limited range of mortgage products available at the moment for borrowers with lower deposits. This time last year there were 145 products available for buyers with a 5% deposit, whereas currently there’s only one⁷. To help FTBs navigate a challenging market, Trussle has access to over 12,000 deals from 90 lenders and finds customers the best deals based on their own circumstances.
Demand and Supply
Whilst it is widely recognised that the demand for house hunting is currently very high, it’s also been reported that there’s a 15% drop⁸ in housing availability compared to before the coronavirus outbreak. In order for a buoyant market to return, it’s vital we start to see an increase in house listings. Typically Spring and Summer are the busiest seasons in the sector but it’s possible we may well see a revision of this in the coming months and years.
The Stamp Duty holiday could be the push the property market desperately needs to get it back on its feet again, putting up to £15,000⁹ in the pockets of those looking to make the next move. At Trussle, mortgage applications for a property of up to £500,000 increased by 40% when comparing the first six months of 2019 and 2020¹⁰. Additionally, 64%¹¹ of Trussle’s mortgage enquiries over the past month have been for properties less or equal to £500,000, suggesting that a large proportion of the housing market would benefit from this reform directly.
Miles Robinson, Head of Mortgages at online mortgage broker Trussle comments, “Like many other industries, the mortgage market is undoubtedly in a state of flux, with house prices fluctuating and lenders pulling mortgage products.
But, the more positive news is we’re beginning to see some green shoots. House buying has for decades been a sign of economic recovery and we believe this situation is no different. Estate Agents are recording a real surge in demand for houses¹². Similarly record interest rates mean there are some great deals for those who are in the right position.
However, we still need to tread carefully. The stamp duty holiday will undoubtedly add a much needed boost for those who are looking and able to buy. Over time, we hope to see lenders add a wider variety of products to the market to make homeownership more accessible.
Any current or aspiring homeowners who are concerned about the impact of coronavirus and what it might mean for their mortgage, should seek professional advice from a broker to discuss the options available to them.”
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We’ve taken extra care to ensure the information provided within this release is presented in a way that’s compliant with regulatory requirements. If you have any questions about how to repurpose this information or require any further assistance, please contact Leilah Mackie at Trussle.
The most up to date figures¹³ indicate that 373,000 transactions were put on hold when we entered lockdown in March, meaning a long wait for many. For the 9.1 million people¹⁴ who have been furloughed in recent months the house buying market is particularly challenging. Most lenders will only consider 80% of a furloughed customer’s income in affordability calculations, provided that the applicant has confirmation that they’ll be going back to work. As there’s a monthly cap of 80% of salary paid up to £2,500 for furloughed workers, those earning more than this will be impacted more significantly. Many lenders are also hesitant to consider overtime and bonuses. The impact of the furlough scheme on the housing market is not yet known to its full extent but some lenders have now put in new criteria to take this into consideration and in many cases only offer based on the furloughed payment and not the original salary. Experts warn that even if employers are topping up salaries that doesn’t mean lenders will take this into consideration, it’s more about the stability of the applicant’s employment.
The Impact of Valuations
Since the property market reopened surveyors can enter the home to complete valuations, renters and prospective buyers can view properties, and removals can once again assist people in their moves. Many believe that in such an uncertain time, valuers are more likely to down-value properties to give a degree of caution and protect buyers against negative equity. This ultimately means would-be buyers could renegotiate the price they were once willing to pay for a home. Knight Frank forecasts that UK prices will fall by 3% this year and bounce back by 5% in 2021. Some forecasts have suggested average house prices could plummet by 30%¹⁵. Ultimately, it is all proportional as if buyers are able to lower their offers, they may well accept a lower offer on their own home. Add to this the fact that 373,000 property sales were put on hold due to the lockdown, there’s still a delay in the data that’s available and it will take some months to see the true impact on house prices.¹⁶
1. Source: Trussle data as of 9th July
2. Source: Trussle data as of 9th July
4. Source: Calculation: 483 respondents answered ‘Yes, I am thinking of relocating’ when asked: ‘Are you currently thinking about relocating in the next few years? This can be moving to a new house in a different city, region or country.’ 483 of 2003 respondents = 24% 5. Source: Trussle data as of 9th July
8. Zoopla figures released 25th June 9. Source: https://www.thetimes.co.uk/edition/news/coronavirus-stamp-duty-plan-risks-bringing-sales-to-a-standstill-for-months-nj8tfzgf0
10. Trussle internal data, accurate as of 06/07/2020
11. Trussle internal data, accurate as of 07/07/2020. 12. Savills 25th June 13. Source: https://www.mirror.co.uk/money/coronavirus-82billion-worth-house-sales-21940538
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In September 2016 Trussle launched an industry-first partnership with online property portal Zoopla, making it possible to find and buy a home in one seamless experience. Trussle is backed by some of Europe's leading technology investors including Orange Growth Capital, LocalGlobe, Ed Wray (founder of Betfair), Ian Hogarth (founder of Songkick), Seedcamp, and Zoopla Property Group.
Trussle is a trading style of Trussle Lab Ltd, which is an appointed representative of Mortgage Advice Bureau Limited and Mortgage Advice Bureau (Derby) Limited which are authorised and regulated by the Financial Conduct Authority.
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