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Five Predictions for the Mortgage Market in 2021

No one could have predicted what a rollercoaster year 2020 has been. So what does 2021 hold for the mortgage and housing market? While none of us have a crystal ball, here we summarise some of the main areas that we think home owners and home buyers need to know about. With our top five predictions for the mortgage market in 2021.

  1. End to stamp duty holiday

In August, the Chancellor announced a stamp duty holiday for some property purchases. You can read more about this here. This is due to come to an end in March 2021. With buyers being able to save up to £15,000 on the tax they would pay after March next year, it is worth buyers acting if they want to take advantage of potential tax savings.

Some have called for the stamp duty holiday to be extended*. We would agree with the calls to extend the scheme. There are many who are in the process of purchasing their property who might not be able to proceed with their purchase should the process take longer than expected or run past the deadline.

The average house purchase taking 12 weeks, buyers don’t have long to act should they wish to complete before the holiday comes to an end.

  1. House prices

When talking about predictions for the Mortgage Market in 2021, house prices have to be one of the key areas. Overall, the housing market has exceeded most expectations this year. Many reports have found that house prices have grown the most in six years with Nationwide saying that UK house prices are 6.5% higher than they were a year ago**.

Looking forward to the housing market in 2021, it is very difficult to make predictions. There are so many factors which could impact house prices from Brexit, to how the Pandemic pans out over the year to the jobs market (and a mixture of all of these).

However, few statisticians are predicting a fall in house prices next year with most forecasting a modest 2% rise in prices over the year ***.

  1. People wanting more from their properties

More than ever before, people have been spending time at home. And, working from home is likely to continue whatever happens with the pandemic over the year. So improving home space will be very important for the mortgage market in 2021.

With this in mind, people are looking for their properties to deliver more. More outside space, office space, better living space and overall a better standard of living****.

Housing renovations are probably going to continue to be key. With people remortgaging their properties to ensure their home works for the new life they are living.

  1. Where we live becoming more important

Over the past year, where we live has become increasingly important and this trend is likely to continue.

Fuelled by the pandemic, buyers are increasingly looking to move to greener areas where they can make the most of the great outdoors being right on their doorstep. This has meant that places like the New Forest have commanded higher than average house prices. In fact, villages such as Ashurst, Lyndhurst and Brockenhurst the average house prices is £475,000.*****

Our office is based in Salisbury, Wiltshire. And, with so much green space right on our doorstep, it is possible that this trend towards country living could benefit house sellers here.

  1. Length of time it takes to mortgage and remortgage

The mortgage market has been especially busy the second half of the year. The stamp duty holiday has fuelled a lot of moves and lenders and conveyancers have been working hard to catch up.

Added to this, lenders have been increasingly carrying out additional checks to ensure affordability. The pandemic has meant that lenders have been especially risk adverse and building additional measures into their due diligence to assess how the pandemic has or is likely to impact buyers and to ensure they can genuinely afford the purchase or remortgage.

In fact, many brokers have started to express dissatisfaction towards to the service levels many lenders have been providing their customers******.

With this in mind, if you are looking to buy a property or remortgage your existing one, we would advise you start the process sooner rather than later. As, chances are it is going to take longer. So the length of time it takes to get a mortgage we predict will impact the mortgage market in 2021.

With all this in mind, if you are considering purchasing in the near future, we would recommend you seek independent mortgage advice. At Your Mortgage Expert, we understand how the mortgage market is currently working. What new information lenders are asking for as part of their new financial checks. We also understand what the current service levels are and how much longer your application is likely to take.

If you are interested in having a no obligation chat about your mortgage or about any of the questions we have raised in this article about the second lockdown and the mortgage market, why not get in touch? We don’t charge anything up front, so by speaking to us, you are under no obligation. We are based in Salisbury, Wiltshire, but we can help you no matter where you live in the UK.

Simply call us on 01722 322683 or complete a contact us form on our website and tell us when it would be best to get back in touch with you.

The information contained within this article was correct at the time of publication. It is intended for information only and does not constitute advice. Neither Your Mortgage Expert Ltd nor TenetLime Ltd cannot be held responsible for information that was correct at the time of publication but subsequently changes or goes out of date due to changes in legislation. For further information, contact Your Mortgage Expert on 01722 322683.

Please note, by clicking on the link you will be departing from the regulated site of Your Mortgage Expert Ltd. Neither Your Mortgage Expert Ltd nor TenetLime Ltd are responsive for the accuracy of the information contained within the non-regulated site.

*source: https://www.yourmoney.com/mortgages/thousands-sign-petition-calling-for-stamp-duty-holiday-extension/

**source: https://www.bbc.co.uk/news/business-55143223

***source: https://www.propertyreporter.co.uk/property/average-uk-property-values-expected-to-increase-by-2-in-2021-say-jackson-stops.html

****https://www.mortgageintroducer.com/thousands-brits-want-more-from-their-home/

*****source : https://www.theguardian.com/money/2020/dec/01/uk-house-prices-national-parks-covid-nationwide

******source: https://www.mortgagestrategy.co.uk/news/fall-in-broker-satisfaction-with-lenders-customer-service-and-it/

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