Strong housing and mortgage market

The residential property and mortgage markets continue to defy the odds, showing strong activity in the final months of 2021. UK average house prices increased by 10.6% over the year to August 2021, according to the latest Office for National Statistics (ONS) UK House Price Index. The average UK house price was £264,244 in August 2021, around £25,000 higher than the same time last year.

Despite the end of the Stamp Duty holiday, activity has continued apace. This has led to the Intermediary Mortgage Lenders Association (IMLA) upgrading its projections for gross mortgage lending in 2021 from £283bn to £285bn. Executive Director of the IMLA Kate Davies, commented on the data:

“Following a difficult period in the wake of the coronavirus crisis, it is very encouraging to see yet another positive prediction for the remainder of 2021. Our findings forecast that 2021 will see the highest level of mortgage lending since 2007 and, with a combination of government support helping to underpin new purchases and a bumper year for product maturities, we expect this high demand to continue.”

Homes still in high demand

Provisional HMRC data suggests that 165,720 property transactions took place in September, 59.7% up on August and 67.3% higher than September 2020. There are certainly other factors at play in the ongoing property market boom in addition to Stamp Duty savings. Key contributory factors include low mortgage rates, buyer demand for more space, and the return of higher loan-to value (LTV) mortgages bringing more first-time buyers back into the market.

Interestingly, in Scotland, where the Land and Buildings Transaction Tax reduction ended in March, data shows that buyer momentum has been resilient and house prices have continued to rise. In the recent ONS figures for August, the average price of a property in Scotland surged by 16.9% to reach a record high of almost £181,000.

Is now a good time to fix your mortgage?

The competition between lenders is intense, resulting in extremely competitive rates becoming more available. According to Moneyfacts UK Mortgage Trends Treasury Report for October, the average rate on a two-year fixed deal is 2.25% and the average rate on a five-year fixed rate deal is 2.55%. Some lenders now even offer deals below 1% on their two and five-year fixed rates.

However, rock-bottom deals aren’t likely to last for long, especially with the Bank of England hinting at a possible Base Rate hike either later this year or early in 2022. Whether you should switch to a new deal depends on your individual circumstances, so for expert advice on the latest deals, please get in touch.

Your home may be repossessed if you do not keep up repayments on your mortgage


23 November, 2021

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