During the last quarter of 2020 we were incredibly busy as homebuyers took advantage of the stamp duty holiday, but January has been even more hectic. Most people are aware they will not benefit from the stamp duty holiday if they buy now, so that incentive is no longer influencing purchasers. But interest rates are still very low and highly competitive, so from that point of view it is a good time to buy.

The Bank of England’s latest data shows mortgage approvals for house purchase reached 818,500 in 2020, the most since the housebuying peak of 2007. Approvals in May 2020 were at a record low of 9,400 due to the first Covid national lockdown, which just shows the pent-up demand that surged throughout the rest of the year.

Help for first-time buyers

Nevertheless, some first-time buyers are struggling to get onto the housing ladder, particularly with the lack of high loan-to-value products. The past few months of 2020 were harsh for FTBs with small deposits because there were hardly any 90 per cent LTV products on the market. When 90 per cent mortgages did appear, they were snapped up. The lack of high-LTV products, and this applies to 85 per cent LTV products too, effectively locked many FTBs out of the market.

Fast-forward to 2021 and it’s good to see the re-emergence of higher LTVs with more product availability; but there are only a handful of lenders in this space and we could do with additional supply.

What would be even better is for lenders to offer 95 per cent LTV mortgages to further open up the market for FTBs. There is definitely demand for this and I am hopeful we will see some 95 per cent products shortly.

We are also increasingly seeing deposit finances coming from the Bank of Mum and Dad. Covid lockdowns and restrictions on travel, holidays and entertainment have resulted in more disposable income for many parents. They are able to dip into their savings to help their offspring onto the housing ladder and even assist them to move up it.

Housebuilding

Housebuilding was certainly impacted by the Covid lockdowns, as is starkly demonstrated by the seasonally adjusted statistics for England from the Ministry of Housing, Communities & Local Government.

From April to June 2020, new housing starts totalled 15,930 — a 52 per cent decrease on the previous quarter and 59 per cent down on the same quarter in 2019. It is hardly surprising there was such a drop-off considering around six weeks of that period was spent in lockdown with little or no work being carried out.

House completions were also down drastically in Q2 2020 at 15,950 — a drop of 62 per cent on the previous quarter and 64 per cent down on Q2 2019.

The summer months saw housebuilding pick up and between July and September new-build starts were up by 111 per cent to 35,710, albeit down 8 per cent on the same time last year. Completions in Q3 fared even better, rising by 185 per cent on the previous quarter to 45,000 and just 1 per cent lower than the year before.

Although these figures are nowhere near the government’s housebuilding targets, we are living in unprecedented times and must be thankful that homes are being built. Covid is affecting not just the workforce; there is also the knock-on effect of a lack of supplies. There have been shortages of materials such as plaster and plasterboard as well as timber and roof tiles.

It will be interesting to see the housebuilding figures for Q4 2020 as we have had to deal with further lockdowns. But at least builders are still building, even if numbers are lower than usual.

John Phillips is national operations director of Just Mortgages and Spicerhaart