Contributed by Evolve Financial Solutions
11/03/2021 - Evolve Financial Solutions
With the sun finally (intermittently) shining after those gloomy winter months, and properties looking tip top, the first blossoms of spring traditionally signal the start of the house buying season. However, this was never going to be a traditional year for anyone, and knowing the right time to play your cards could mean the difference between getting a good deal or a bad deal on your dream house. Here is what you should consider now to prepare for buying a house in 2021.
To call 2020 a mixed bag for homebuyers would be an understatement. The first lockdown stopped the housing market dead for several months, and many feared imminent collapse in the industry. And then the stamp duty holiday ushered in record levels of demand, surging values… and, well, as it turns out, the housing market had a lot more legs than many people dared hope.
The stamp duty holiday.
With the budget announcement that the Stamp Duty Holiday has been extended came relief for many people already into their house buying journey.
In the immediate term, this adds a much-needed buffer for the many homebuyers mired in a limbo of overstretched solicitors, surveyors and estate agents. Without the extension, this would have meant a potential bill of several thousand pounds for an estimated hundred thousand house buyers. A cost that could have seen many transactions fall through.
However, it now also opens the doors for new buyers and sellers to enter the market and take advantage of the discount while they can.
Will house prices continue to increase like they did in 2020?
The likes of Rightmove and Savills have forecasted a comparatively modest 4% growth in house prices over 2021, compared to an average 7.6% increase in 2020. However, other sources put this figure lower, and some, like Halifax, suggest prices could even fall by up to 6%.
This relatively slow growth prediction compared to the last half of 2020 has been put down to the impact of recent lockdowns, growing unemployment, and continuing economic uncertainty.
How does this stack up for first time buyers?
In reality, the property boom of 2020 largely benefitted people already on the housing ladder, and the fierce demand for mid and higher range properties masked the reduction in lower deposit mortgages for first time buyers.
For instance, the amount of low deposit mortgage products available to first time buyers shrank from a high of 291 in March, to just six in June. Lenders were wary of the impact growing unemployment and further lockdowns would have on the lower end of the market. And in these conditions, particularly in a buoyant market, lenders tend to ask for higher deposits, and more stringent repayment requirements.
However, with the stamp duty holiday induced rush already receding, 2021 promises more hope for first time buyers. With the competition for homes reduced, and pressure on the market possibly even pushing prices down, lenders will likely find themselves open to loosening up the deposit/loan ratio.
Timing the rush
This year, the rush actually occurred in January, as late-to-the-game house buyers rallied to beat the stamp duty cut off deadline and save thousands on their purchases.
In theory, unless the deadline is extended, the market should start to get back to some kind of normal, and possibly even encounter a lull. As always, things can change quickly during the ongoing pandemic, but if predictions of a subsequent lull in the market are borne out, then for those in the right position, it may be possible to take advantage of the conditions.
For instance, when mortgage brokers aren’t facing more business than they can handle, they tend to loosen access to their products. This might mean reduced deposit requirements, longer repayment terms, and lower fees.
Meanwhile, a less than booming market could see prices remaining steady, or even falling, rather than surging higher.
For those who get the timing right, With the right mortgage product, and the right price, this could be a great time to buy.
What’s the bottom line?
The further along you are in planning your house purchase, the better the position you will be in when you find the home you want to make an offer on. And with the market moving away from its traditional ebbs and flows, it’s never been more vital to ensure you have access to independent expert advice when it comes to finding the right mortgage. This is where Evolve FS can help. Whether you’re looking to get on the ladder, or move to your perfect retirement cottage, we can save you time, money and stress by finding the most suitable product on the market for your needs.
At Evolve Financial Solutions we offer a range of mortgage solutions for every stage of your property journey. Further information about our whole of market options can be found on our website.
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