Activity among house purchasers busiest in years amid clamour for low rates
The post-lockdown housing market rebound continues to gather pace, with activity particularly strong among home purchasers and buy-to-let investors.
ESIS volumes among house purchasers, a leading indicator for mortgage market activity, has hovered around 10% above pre-pandemic levels for four straight weeks, according to lending technology company Mortgage Brain. Buy-to-let activity was 7% above February’s levels last week.
The data suggests we’ll start to see signs of recovery in the latest Bank of England lending data, due to be published this morning. Mortgage applications here at Knight Frank Finance climbed 75% in June on a month earlier and July is on course to be one of our busiest months ever for new business.
It’s clear borrowers see now as a good time to reassess their finances due to a range of factors including the recent cut to stamp duty, successive cuts to interest rates, currency fluctuations and tax changes. As a result everybody, from first time buyers to billionaires, is active in the property market.
By way of example, Natwest is currently offering a two year fixed rate mortgage up to £10m at 50% loan-to-value (LTV) for as low as 1.17%.
Higher LTV lending is also showing tentative signs of recovery. ESIS volumes for cases of 80-85% LTV are around 9% higher than they were at the onset of the crisis, and now represent almost a quarter of activity, though lending above this level remains constrained.
The surge in activity continues to put the lenders under strain, and we’re seeing banks alter their rates at an unprecedented rate as they try to control the flow of business. That means it’s possible that deals that were available at lunchtime have disappeared by close of business, so we recommend speaking to a whole-of-market broker to ensure you’re getting access to the best rates available.
How long this surge in activity continues will depend on the development of the pandemic, and how the jobs market contends with the wind up of some government support schemes this autumn. It is however clear that interest rates are going to remain low for the foreseeable.
Please get in touch if you’d like to find out more or discuss your borrowing options.