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Interesting House Sale Statistics

Property Investor News has produced some very interesting house sale statistics this month, courtesy of the Skipton Building Society

In the last 4 months 12% of UK homeowners put their property on the market for sale. In addition, 28% are considering moving and a further 5% are looking to relocate before the stamp duty holiday ends. As we know the latter sector have very little chance of completing before the holiday ends; but this is a colossal number of properties hitting the market at one time. The result of the first lockdown meant that demand outstripped supply quite significantly and as a result prices moved much higher. Add to that the stamp duty holiday and a buying frenzy ensued and as I previously reported in November many properties were fetching in excess of asking price (Property market not achieving quick sales)!  I am not so sure the same market conditions apply now and there could easily be a situation of supply being far greater than demand.  The economic outlook has changed with many retailers continuing to struggle and with the furlough scheme being extended to April we may see lenders making it harder to obtain competitive mortgages.

Alex Beavis of the Skipton Building Society commented on the issue, he said: “There is concern, I think, more widely that if that situation continues in the long term, that actually might start to hurt house prices because the first-time buyers that are wanting higher loan-to-value mortgages won’t be able to get them and that means the vendors that are selling these properties won’t be able to sell or may be forced to lower their prices”.

Additionally, Mr Beavis said the high level of demand met by lenders offering products at 90 per cent LTV, before having to temporarily withdraw from the market, had made it difficult and potentially deterred some new lenders from joining.

While the building society is lending up to 85 per cent LTV on standard residential purchases and remortgages, Mr Beavis said there were three factors at play when it came to a potential return to higher loan to value lending.

Citing service and operational constraints amid just a few lenders offering high loan to value products, Mr Beavis said providers were also trying to deal with the multitude of customers who had taken payment deferrals.

Additionally, Mr Beavis raised the question of what will happen in the economy when the government’s coronavirus support schemes for furloughed employees, the self-employed and mortgage borrowers come to an end in October.

He said: “How many [customers who deferred their mortgage payment] will lose their jobs, might struggle to pay their mortgages, and for lenders what that might mean depending on [what] proportion of that is additional impairment held on the balance sheet, which reduces profitability, eats into lender capital and might then in turn impact their ability to lend on new loans.

“The higher the loan-to-value, the more susceptible those customers are from adverse movement in house prices.

“And what we don’t want to do is loan to a lot of customers who then immediately go into negative equity and then become mortgage prisoners or trapped borrowers.”

He added: “I think a lot of lenders, Skipton included, are cautiously waiting to see what happens with the wider economic recovery”.

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