Mortgage demand and supply - Bank of England report

"The housing market maintained its momentum in the first quarter, turbocharged by the extension of the Stamp Duty holiday in early March and more lenders returning to 95% lending. "Lending criteria remain an issue, with many lenders still extremely cautious, especially when it comes to borrowers on furloughed income or the self-employed. "Hopefully, the second quarter will retain its momentum as the demand for property remains high, with more and more buyers coming out of hibernation to find their next property. The one issue, as ever, is a lack of supply. "Demand for remortgages remains strong with rates remaining at historic low levels. If the purchase market does tighten, brokers will inevitably focus their attention on their back-books, if they are not doing so already."

"The worm has turned in the mortgage market and getting offers through for clients has definitely got easier. "Rates at higher loan to values seem to be creeping down and several lenders have totally jumped the gun on the Government guarantee scheme and are now offering 95% deals of their own volition. "Lower rates can only be good news for the monthly budgets of already stretched first time buyers. The barrier to entry also seems to be lower with more vanilla lenders appearing willing to take a leap of faith for borrowers with mild historic adverse. "A number of high street lenders are still treating some groups, such as the self-employed, like second class citizens and asking for the kitchen sink when it comes to documentation. That's if they'll even take the case on at all. "Demand for mortgages went through the roof in the first quarter, especially for first time buyers and people chasing a bigger garden to entertain in but the supply of new stock is a bottleneck. "We can't recall a time when we've had more potential clients fully prepped and out there looking for properties and a disorganised potential buyer is likely to miss out to someone else who has taken the time to get their ducks in a row already and is therefore in a more proceedable position."

"In the previous survey, lenders expected demand in the first quarter to decrease slightly for purchases, so I imagine the first three months of the year have provided a bit of a shock to them as demand has gone through the roof. "We have seen an increase of 115% in new enquiries and an increase of 125% in applications compared to the fourth quarter of 2020, of which the majority are new purchases. "Demand is exceptionally high and I expect it to remain this way throughout 2021, despite the phasing out of the Stamp Duty holiday. "Demand is likely to rise further, as we haven't hit the busiest months of the year yet when the weather warms up, and there are now far more mortgages available at 95% loan-to-value."

"So far this year, demand for mortgages has continued to increase. In the months ahead, we also expect to see the supply of mortgages increase, as more 95% loan-to-value mortgages return to the market. This week alone, both the Skipton Building Society and Digital Mortgages have announced 95% loan-to-value products. "Moving forward, demand is likely to stay high due to the Stamp Duty holiday and because this time of year generally is often a busy period. The pricing of mortgages is extremely competitive, with some 2-year fixed rates at 60% loan-to-value as low as 1.06%. "

"Demand remains strong, predominantly due to the extended Stamp Duty holiday. We have even seen some properties going to sealed bids, which is generally a sign of a strong property market. "I would expect supply and demand to continue to stay strong during the next few months. The roadmap out of lockdown and the successful vaccination programme appear to have had a significant impact. "The fact that some lenders have reintroduced mortgages at 95% loan-to-value shows there is more confidence in the property market compared to last year."