Property & Mortgage Outlook – December 2021

The latest property statistics show that compared to September 2021, there has been a noticeable decrease in the number of UK residential transactions completed in October 2021 following significant forestalling activity by taxpayers.

Forestalling is when advanced action is taken to prevent an anticipated event. For the purposes of these statistics, it refers to taxpayers completing property transactions to take advantage of Government policies – namely the ending of the temporarily increased nil rate band for residential Stamp Duty Land Tax from 30 September 2021.

The first set of statistics have also ben released on the new 95 percent mortgage scheme, that was first announced at the March 2021 Budget.

According to the latest statistics, there were 812 mortgage completions from scheme launch on 19 April to end June 2021, which represents 0.7% of all residential mortgage completions in the UK from the beginning of April to end June 2021.

This was expected owing to the infancy of the scheme at this point in time and the average length of time to complete a house purchase.

The corresponding value of the guarantees was £27 million while the overall value of loans supported by the scheme was £185 million.

These mortgages were used to finance properties worth £196 million in total.

The mean value of a property purchased or remortgaged through the mortgage guarantee scheme to the end of June 2021 was £240,993, compared to an average UK house price of £265,668. The median property value was lower at £200,000, reflecting that a higher proportion of properties in the scheme are in the lower value bands.

24% of all mortgage completions through the scheme so far were on properties worth £125,000 or less. 39% of mortgage completions were made on properties valued at £250,000 and above.

The majority of mortgage completions through the scheme were on terraced houses, making up 30% of total completions. 25% of completions in the scheme were on flats or maisonettes, while completions for detached houses and bungalows were much lower, making up 12% and 3% of the total respectively.

Over half of households who completed a mortgage with the support of the scheme had a household income of between £0 and £50,000. Take-up was lower for those on higher incomes; households with an income over £80,000 made up 21% of all completions. The median household income for borrowers using the scheme was £41,524 and the mean household income for borrowers using the 2021 mortgage guarantee scheme was £47,465.

82% of mortgage completions through the 2021 mortgage guarantee scheme to date have been for purchases by first-time buyers.

Best Buys* (as of 3 December 2021)

INTEREST RATE COMMENTARY

It is thought that the MPC are now not likely to hike the base rate until we know more about Omicron and establish how effective the current vaccines will be. The economic recovery is likely to stall in the short term meaning lower rates for a little longer.

EQUITY RELEASE

Many borrowers with equity release mortgages may be unaware that they are able to switch lenders. In fact, the payable rate on these products has more than halved over the past five years, making a compelling case for all existing arrangements to be reviewed.

JOINT BORROWER SOLE PROPRIETOR

Many parents are now helping their children onto the property ladder using the joint borrower sole proprietor option, as opposed to the more traditional guarantor mortgage. This option enables the parents’ income to be used in the affordability calculator but allows the property to be in the sole name of the child, therefore avoiding the stamp duty surcharge.

Whether you are coming to the end of your mortgage product or keen to compare your current rate to the best available elsewhere, please contact your adviser who can put you in touch with our mortgage partners.

* Lending criteria restrictions apply to all products, always seek independent advice.

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Source: Professional Mortgage Services, Gov.UK & Techlink.