Since the end of the initial lockdown, the UK has experienced a ‘mini-boom’ in the housing market. Part of this was caused by people reconsidering their housing needs during lockdown, while low interest rates and other incentives gave many people the nudge they needed to move home.
However, if you’re thinking about moving home, you may want to act quickly. Read on to find out two reasons to act now if you’re considering moving home.
The Stamp Duty holiday ends on 31 March 2021, but experts predict house move delays
The first big reason to act quickly if you’re considering moving to a new house is that, by moving before the 31 March 2021, you can save yourself a significant amount of money in tax.
In his Summer Statement, Chancellor Rishi Sunak announced a temporary Stamp Duty holiday – a measure aimed to boost the flagging housing market.
As a result of the initial lockdown, many surveyors and prospective homebuyers were unable to visit houses that were for sale, which caused a fall in transactions.
To boost the struggling housing market, the government abolished Stamp Duty on properties worth less than £500,000 and reduced the amount of Stamp Duty payable on more expensive homes.
This worked as intended, creating a ‘mini-boom’ in the housing market which saw a surge in the number of house sales. According to the Financial Times, there are estimated to be around 418,000 sales currently in the process of being made, compared to only around 280,000 this time last year.
Furthermore, September saw the average house price rising to a historic high, breaking the £245,000 barrier for the first time.
However, this glut of demand has raised other issues, as many banks have been inundated with mortgage applications. This means that, while the scheme is not set to end until 31 March 2021, experts are warning that there may be delays as people rush to complete purchases before the deadline.
This could cause a potential problem for many buyers, as some people may not be able to complete the sale by the time the holiday ends, meaning that they will not be able to take advantage of the saving in Stamp Duty.
According to a survey by online estate agency Purplebricks, published in The Times, 37% of first-time buyers have reported that they can only afford to buy a property due to this significant tax reduction.
Experts estimate that these delays will mean more than 300,000 house sales won’t be completed before the holiday ends, as some sales are taking up to five months.
If you’re considering moving to a new house, it’s important to act now to ensure that your house sale is completed before the end of the Stamp Duty holiday, as doing so could save you up to £15,000 in tax.
Speaking to a mortgage broker can be very beneficial in this situation, as they will know which mortgage providers are able to process applications faster, which can increase your chances of completing your sale before the Stamp Duty holiday ends. If you think that you may need the help of a mortgage broker, get in touch to find out what we can do for you.
Many lenders are raising the interest rates on their mortgages
The second reason to act quickly if you’re considering moving home is that that market data appears to show an upward trend in the interest rates being charged for mortgages.
While mortgage interest rates are at a historic low, many banks have increased their rates in recent months.
According to Moneyfacts, the average two-year fixed mortgage rate has increased by 0.14% month-on-month, rising from 2.24% at the start of September to 2.38% by 1st October.
Due to the surge of interest in mortgage products in recent months, many lenders have become inundated with applications. This has led to them raising their rates to reduce the number of mortgage applications they have to process.
Furthermore, there is the potential of economic uncertainty in the near future, largely due to the prospect of rising unemployment when the furlough scheme ends.
This has led to many lenders raising their interest rates to reflect the increased risk, and this is especially true for higher loan-to-value mortgages.
When applying for a mortgage, speaking to a mortgage broker can be very useful as they can scour the market to secure the best possible deal for you. In the current market, where many mortgages are only on offer for a brief period of time before being withdrawn, the help of a mortgage broker can be essential.
Get in touch
If you’re considering moving home and want to act quickly, we can help. Email enquire@london-money.co.uk or call us at (0207) 808 4120 to find out more.
Please note
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.