August experiences uncharacteristic spike in mortgage applications
The stamp duty holiday and the flurry of activity following the re-opening of market after lockdown created a ‘highly unusual’ spike in mortgage searches and applications in August.
This is according to Twenty7Tec which saw brokers process 2.22 more loans than their five-year average in August, making it the second busiest month of the year behind July.
Data from the mortgage fintech firm behind the CloudTwenty7 platform revealed 14 August was the busiest day of the year for first-time buyers. All this, despite the fact the month is usually one of the quietest.
Indeed, Twenty7tec revealed, search volumes and the number of ESIS documents prepared over July and August surpassed the year’s pre-Covid peaks in February and March. It said the 60 busiest days of the year for ESIS documents were all in July and August.
What’s more, mortgage searches for properties in the £250,000 to £499,000 range heavily spiked during this time, highlighting the impact the temporary scrapping of stamp duty on properties under £500,000 has had on this sector of the property market.
Support for first-time buyers
James Tucker, CEO at Twenty7Tec, thought the ‘unusually high’ mortgage activity in August demonstrated there was still much to be hopeful about in the market.
He also thought the government’s stamp duty cut had clearly ignited demand among first-time buyers.
“Demand is there,” he said. “But, the government needs to stay vigilant to support the entire market, and do their bit to stimulate the supply side as well as demand, so lenders can adjust their risk profiles and lend confidently to these first time buyers.
“Without addressing the supply side issue, we’ll continue to have a mismatch between buyer demand and lenders who want to de-risk their lending.
“Simply put, without a functioning first-time buyer element, the rest of the housing market doesn’t function.”
Although search volumes were still slightly down on July’s performance, August still managed to ‘massively outperform’ expectations for demand.
In fact, Phil Bailey, sales director at Twenty7Tec, said it had been very interesting to see quite how positive the stamp duty effect had been on the volumes of ESIS documents.
It was also notable almost two out of every five mortgage products available now was for buy-to-let.
Bailey said: “That’s well ahead of long-term averages and means that first-time buyers and remortgagers are having to access a smaller pool of available products, especially in the 90%+ LTV brackets. Lender capacity is front of mind for the whole market now.”