During 2020, lenders issued more mortgages for house purchase than any year since 2007.

That kind of market liquidity is usually good for borrowers, however during the latter half of the year the sheer scale of mortgage applications began to overwhelm the banks. Lead times grew and loan criteria became stricter as the lenders attempted to get new business levels under control.

The early weeks of 2021 have played out very differently. The banks have clearly worked through a backlog of applications and have started the year with new targets, eager to gain market share. If you’re considering purchasing a new home, taking out a Lifetime Mortgage, or remortgaging, here are five things you should know:

• Product availability is at an 11-month high

Product choice has increased 42% since October, the largest quarterly increase than any time since 2007. This is the clearest indication banks are eager to do deals and are improving their offering to secure new customers. Borrowers now have 3,215 products to choose from, the highest number since March 2020, according to Moneyfacts.

• That includes higher loan-to-values (LTVs)

In January, the largest increase in new products came at 90% LTV, according to Moneyfacts. This is great news for first-time-buyers, who were largely frozen out of the market during last year’s lending squeeze. In fact, availability has climbed 386% since October to 248 products.

There is still some way to go, however. Availability at 95% remains poor, largely due to uncertainty over the outlook for house prices following the wind down of government support measures such as the furlough scheme. Should employment remain robust, this should improve as the year progresses.

• Bonuses and commission are back

During the latter part of 2020 many banks stopped accepting bonuses and commission as income that could be used to underpin borrowing. This significantly weighed on the ability of certain professions to borrow, particularly those in financial services.

Banks are now beginning to revert back to their old policies - one global lender earlier this week announced they would begin accepting bonuses and commission once more from Monday.

• Average rates are edging up, but remain close to record lows

At the time of writing we had lenders offering 2 year fixed rate mortgages at 75% LTV as low as 1.24%, and 5 year fixed rates at 60% LTV as low as 1.29%. These have edged up since the summer, but remain close to historic lows. We are now seeing instances of lenders dropping rates for short periods in order to gain new customers. Speak to us to see what’s possible.

• Lifetime mortgage rates may be about to rise

Four Lifetime Mortgage providers have announced they will raise rates this week. Lifetime Mortgage rates broadly rise and fall in line with the gilt market, which in turn generally move upwards when the economic outlook becomes brighter. With confidence returning amid the successful roll out of vaccines, it’s likely rates for these products are now on an upward trend.

The good news is Lifetime Mortgage rates remain close to all time lows - the lowest rate on the market has just moved up from 2.34% to 2.41%, and these rates are fixed for life.

Do get in touch for more advice on navigating the current mortgage market to meet your current needs and future goals. We'd love to help you.