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This article discusses the UK Budget 2021 and its impact on the mortgage market at the time of publication. Please note that economic conditions change, and this information may no longer be accurate.
Following the 3rd March 2021 Budget, we got a handful of positive news and found out how the economy is going to recover from the effects of COVID-19.
Ex Chancellor Rishi Sunak provided some information on how he’s going to get the mortgage market back on its feet. It’s news that we’ve been looking forward to for quite some time; the only way is upwards now!
90% mortgages crept back into the market in October 2020. During this time, it seemed like it wouldn’t be a while until you could access 95% LTV mortgages.
However, after the recent 2021 Budget, we learnt that 95% are making their return to the market once and for all. The name of the scheme is a tiny bit misleading as not everyone that applies is going to be guaranteed a mortgage. Lenders are still going to assess your credit score and make sure that you are going to be able to afford a mortgage alongside all of your other financial commitments. Of course, Lenders never want to repossess someone’s home unless it is the last resort, but if that happens then the new scheme would cover any shortfall.
Lenders have been worried about the prospect of home values decreasing so this measure should alleviate that concern although of course, the chances of negative equity occurring will naturally reduce should property prices increase as a result of these announcements.
The Chancellor announced that both first time buyer in Hull and home movers in Hull will have access to this scheme. It can also be used on any property too, not just new builds.
The scheme was available from April 2021 and will run until December 2022, and according to Sunak, many credible and huge lenders are already backing the scheme.
As a Mortgage Broker in Hull, we are delighted to hear this news and are excited to see what the market has to offer over the next month.
On top of 95% mortgages making their way back into the market, the stamp duty holiday has been extended until 30th June 2021.
When the stamp duty holiday was introduced last year, we all hoped that life would be very much back to normal by now, however, things didn’t pan out the way that they were expected to. Solicitors are struggling to keep up with the workload and if lots of chains had collapsed then it would have partly defeated the objective of trying to push people to carry on progressing their Moving Home journey.
To keep the property market running and to carry on home purchases, the government have decided to extend the stamp duty holiday. Property purchases up to £500,000 will remain tax-free until 30th June 2021 and those up to £250,000 will remain tax-free until September 30th 2021.
Now that the market is getting back on track and 95% mortgages are slowly making their return, we’re hoping that this is the sign that we needed that things are returning to somewhat normal for us. In no doubt, there’ll still be a while before things completely turn back to “normal”, but this is a start for the property market. The Government certainly sees the property sector as an area that can play a big part in our economic recovery.
The government seem keen on wanting people to transition back into buying over renting by introducing this new “mortgage guarantee” scheme. Seeing this news as a Mortgage Broker in Hull brings us nothing but hope and positivity.
Remember that we are still open and here to answer all of your mortgage questions. In Hull, we are available 7 days a week so don’t hesitate to get in touch and get your process started.
Date Last Edited: 09/28/2023