The property market is continuing to flourish during the Covid pandemic.

Mortgage approvals were up to 98,300 in October 2020 as November went on to break through the 100,000 barrier, in which a whopping 105,000 mortgages were agreed – the highest it has been since August 2007. Remarkably, The Bank of England suggested that these figures will continue to rise during 2021. It is undeniable that there is currently a mini boom in the housing market.

So why is this happening?  Well, simply put, thousands of people have changed what they want from a dream home, and the banks and government are being very helpful! Since March 2020 (Lockdown 1.0), countless people have reconsidered the kind of home that they want to live their lives in. Many have moved from urban locations to rural ones, others have decided that space is more of a priority and of course, the novel requirement of obtaining a home office has caused many more to move.

Many of these moves have been made possible by the abundance of mortgage deals out there at the moment. As it stands, if you are willing to offer a 10% deposit, there are one hundred and sixty deals available from different lenders (banks and building societies). That is fifty-one more deals than in November 2020 when 105,000 mortgages were agreed! However, if you are hoping to purchase a home with a 5% deposit your options are currently limited.  This is understandable with the current increase in unemployment – as many lenders cannot risk giving away 95% in today’s market.  Therefore, there are currently only eight 95% mortgages available in the UK.

Though the chances of obtaining a mortgage in 2021 are extremely possible for many, be aware that the overall cost of a mortgage may be much steeper this year. The average interest rate for a two-year fixed-rate mortgage is currently sitting at 3.65% (it was around 2.59% last year).  If you are after a 5% deposit mortgage, you will be paying off a loan around 4.44% (up from 3.25% last year).

Nonetheless, it appears that increased interest rates have not deterred buyers thus far. Perhaps the stamp duty holiday has made up for the increased mortgage interest rates. The housing market is booming – even more so by the day. So much that between 24th December 2020 and 2nd January 2021, the Houso App was the busiest it has ever been!

We do expect the storm to calm on April 1st, the day after the stamp duty holiday ends. What this will do to mortgage deals, we do not know. All we do know is that if you want to save taxes and seal a mortgage, then you may have to act quickly, very quickly!

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