Trussle: Stamp duty holiday failing to motivate UK mortgage applications

11 August 2020 | General

Data from online mortgage broker Trussle has found that the stamp duty cut has not had an immediate impact on the UK mortgage market, despite reports that the holiday has fuelled a rise in property searches.

Research by Trussle has found that the situation is increasingly challenging for those unable to gather more than a 10% deposit. Whilst there have been reports of lenders returning to the market with 90% LTV mortgage products, the overall number of high LTV mortgages decreased during July, Trussle has revealed.

In addition, lenders are implementing stricter criteria to those with lower deposits who are also having to cope with rising house prices. As a result, a significant portion of home buyers are finding the home ownership journey “challenging and inaccessible” according to the data.

The research also shows that mortgage applications for buyers with more than a 10% deposit have remained consistent with levels that brokers saw previous to Coronavirus. As such, while there have been reports of surges in properties viewed through online portals, Trussle’s data demonstrates little evidence of a spike in new mortgage activity resulting from the cut in stamp duty.

Furthermore, there is no sign that the cut to stamp duty is incentivising buyers to increase the price they are willing to pay for property. Trussle found that, since the announcement, those with larger deposits have not significantly increased the prices of the properties they are searching for.  While the reasons for this remain unclear, Trussle claims that this suggest buyers are approaching the market with caution and are hesitant to take on more debt than absolutely necessary during uncertain times.

Despite this, Trussle has seen a 30% decrease in application times for both first time buyers and next time buyers with a deposit of more than 10% when comparing the month before and the month following the stamp duty holiday announcement.

Miles Robinson, head of mortgages at Trussle, said: “There’s been a lot of focus recently on how the stamp duty holiday could be prompting a ‘mini-boom’ in the market. While this is promising, our data suggests that actually the cut is having a minimal impact on buyers’ behaviour and we’re perhaps just seeing a level of pent up demand following the lockdown.

“We are continuing to see an increase in remortgages from existing homeowners. This may be an indication that many are choosing to stay put and remortgage on their current property, rather than move to another house, despite the stamp duty holiday.

“What is perhaps more worrying, and where we hope the industry focuses  its attention, is the diminishing support for those with lower deposits, who are most likely to be first-time buyers. This is a demographic who have traditionally relied on competitive products from lenders to step onto the property ladder.

“At Trussle, we want to ensure that the mortgage process helps everyone feel empowered when embarking on what should be an exciting, hassle-free journey of buying their first home. Getting a mortgage is often one of the biggest financial and emotional commitments a person will make in their lives, and ensuring the industry is supporting young people as they take this step is crucial.”

This post has originally been featured in Property Wire.