Stamp Duty Warning For Mortgage Seekers
There is no denying the stamp duty holiday has breathed fresh life into the housing market. When the property market re-opened in May, there was considerable activity. However, industry experts questioned how long this would last before demand for homes dried up.
The introduction of the stamp duty holiday in July means that demand hasn’t dried up, it has actually intensified in the UK housing market.
Of course, while many buyers are buoyed by the thought of saving money, not every prospective buyer has felt supported by the money saving measure.
A range of industry experts believe the stamp duty holiday is best suited to existing homeowners, or people looking to buy larger or more expensive homes. This means the stamp duty holiday hasn’t been of significant benefit to first-time buyers.
It can be argued there is a range of support systems in place for first-time buyers, and not everything needs to be aimed at this market. However, there is no denying that this group of buyers require as much support as possible.
Not every buyer will appreciate the stamp duty holiday
There has also been a warning regarding the stamp duty holiday and some buyers from Martin Lewis. The Money Saving Expert issued a warning in his weekly newsletter that the stamp duty holiday might have a knock-on effect for some mortgages.
Martin detailed how the stamp duty holiday, and the COVID-19 pandemic, has created a scenario where lenders are under considerable pressure. Many mortgage lenders are struggling to keep up with demand, and this has led many lenders to reduce the range of mortgage solutions they offer.
This, sadly for first-time buyers and people requiring additional assistance in the market, is bad news. The most commonly dropped mortgages are mortgages with a high loan to value. This means the mortgages which are more likely to be removed from the marketplace are mortgages which require a minimal deposit.
Many buyers need additional assistance when buying property
In the newsletter, Martin Lewis explained the drop in mortgages available for a small deposit. At the start of the pandemic process, you could choose from 386 mortgages with a 5% deposit, but at the time of writing his newsletter, there was just one standard mortgage at 5%.
There were other 5% mortgages available, but they all featured terms and conditions. An example of the conditions attached to a mortgage would be to have a parent as a guarantor.
With respect to 10% mortgages, there were 751 products available at the start of the pandemic, but at the time of creating the newsletter at the end of September, there were only 57 products. This means for many people in the UK, 15% is the starting point in finding a suitable mortgage.
While there will be many people who are keen to buy soon with the stamp duty holiday, Martin Lewis recommends waiting if you cannot find a suitable mortgage.
While there are new challenges to overcome in the housing market, people shouldn’t consider arranging a mortgage to be an impossible task. However, it is vital people accept help and assistance from professionals in the field. If you are keen to arrange a mortgage, speak to a mortgage broker or experienced adviser and make sure you are fully equipped to make an informed decision.