Demand in Britain’s housing market shows no signs of letting up just yet. Advisers are busy searching for options for their clients, while lenders are continuing to respond to high levels of demand. Despite concerns about a possible collapse in interest among buyers this year, this surge in activity appears to show otherwise, with data now suggesting that the future will be brighter than expected for many buyers.
Over the last few weeks, we have been looking at the post-Covid mortgage market and the changes we could expect to see in future. Is all this pent-up demand a mere tailwind? Are buyers changing their minds and holding off on their plans this year? These were just some of the questions we wanted to answer with some research we commissioned with YouGov.
The results have certainly painted a positive picture, particularly for first-time buyers. More than nine out of 10 respondents (93 per cent) said they were still planning to buy their first home this year – and the majority said they would definitely do so.
The indications even show that many FTBs are now in a stronger position than before the crisis, having saved on commuting and other costs. As a result, more than two-thirds (69 per cent) said they had been able to save more towards their deposit during the lockdown, with the average FTB saving more than £100 extra each week.
And all of this was before the changes announced this week. In the 24 hours following this week’s Summer Statement, figures were showing an instant uptick in activity. Property website Rightmove reported a 22 per cent increase in web activity, while Nationwide has reported a significant increase in web activity on both its intermediary and consumer websites.
Demand from FTBs is likely to be fuelled even further by this week’s changes. FTBs have already enjoyed a Stamp Duty ‘holiday’ on properties up to £300,000 for nearly three years, but this latest move will remove the tax altogether for thousands of people making their first step into homeownership. That could give their deposits a real lift and, combined with the extra savings during lockdown, could even see some younger buyers bringing their plans forward.
This boost in demand should also quell any concerns in the market about house price deflation and encourage other buyers who have decided to hold off their plans to now press ahead. The market has already been busy dealing with pent-up demand in recent weeks and this new impetus will only accelerate it – good news for our industry. ‘Unprecedented’ has certainly been an overused word this year and it looks as though June has continued this theme. My conversations with lenders and advisers are pointing towards June being a record month – so unprecedented seems to fit the bill.
Therefore, matching this increase in demand with the supply and expansion of mortgage options available will be critical.
Lenders have already been facing the challenge of managing overwhelming demand whilr responding to the impacts of lockdown on their businesses. Many are approaching or at peak operational levels and they are rightly concentrated on ensuring that they can continue to meet the needs of their existing customers. An increase in demand will be a new challenge to face into and one each and every lender will now have at the forefront of their minds.
The situation will be complex. For example, the temporary Stamp Duty change will mean that lenders will have one eye on a potential cliff edge of demand come 31 March next year; how will this influence any recruitment strategies?
We will begin to understand how lenders will respond over the next couple of weeks, but what is clear is that we will all need to work together; lenders, advisers, distributors – all of us – to manage this activity.
For consumers, having a mortgage adviser working for them will be more important than ever. Helping them to navigate the market in the weeks and months ahead. I am sure we can work together as an industry to make the most of this consumer demand and make 2020 a year to remember for the right reasons.
