Bank of England mortgage data

"Lenders seem to be entering a price war, gearing up for a summer slow down with a number of new deals at the deliberately eye-catching rate of 0.99%. This week Nationwide joined a number of smaller lenders launching a 0.99% two-year fixed rate. In short, where one major lender leads, others often follow. "Whether this is a short-term marketing gimmick or the beginning of a longer trend only time will tell. In the meantime, however, it does point to some lender nerves around the state of the market as they scramble for market share at lower loan-to-values."

"The mortgage market has been busier than ever in recent months, partly because of the mad stampede to take advantage of the Stamp Duty holiday but also because of a greater number of higher loan-to-value products becoming available and adding fuel to the fire. "The increased competition among higher loan-to-value products has seen rates improve slightly for people buying with a 10% deposit or less."

"The momentum in March carried on into April, with the Stamp Duty deadline can kicked down the road. Buyers are acutely aware of what they can save and this has been giving the market real impetus in recent months. "The lockdowns of the past year have resulted in more people having more money in their pockets, or squirrelled away in savings accounts. "Many people have found themselves with lump sums built up over lockdown and are now looking at ways to harness this buying power to improve their lifestyles. "Clients who paid down debt are now looking to see what they are willing to take on further credit for. The number of car sales in my local area is an indicator that people are back making larger purchases. "People with less debt or more savings now find themselves with significantly greater buying power than they had pre-Covid and I expect larger homes, home improvements, and new cars to be significant outlets for this spending power. "Over the summer, consumer credit will deteriorate from the artificial high of recent months, however the picture will now return to pre-Covid levels for some time as people enjoy greater financial freedom caused by the enforced lack of spending. "The black swan is the end of furlough, its impact on employment and knock on effect on household finances. We need to see how this works, however the labour market is strong currently and we may see roles available for those displaced. "The headwinds are a lack of stock and the service delivery times of certain lenders and conveyancing firms, many of whom have staff working from home, which slows deals down by default. "The end of the Stamp Duty holiday will have some impact, but I see this impacting deal pricing rather than volumes as it impacts both the sale and onward purchase. Lender criteria continue to improve but the improvement is occurring at a glacial pace. The self-employed have seen tangible criteria easing since the start of the year, but the retreat of lenders in 2020 was so pronounced that things are really only starting to return to normal.

"April was as unhinged as March was mad. There were armies of buyers frantically trying to arrange mortgages in April to squeeze in ahead of the June Stamp Duty deadline. "Lenders and borrowers alike are making hay while the sun shines, which is understandably causing a buying frenzy. "There is cause for concern though, as this artificial spike in activity will not continue without Government support. Activity levels in May were noticeably lower than previous months and potentially a sign of much quieter months ahead as the Stamp Duty incentive fades away. "If the drop in demand causes house prices to fall then we could end up in a situation where a significant percentage of borrowers find it difficult to remortgage when their current deal expires and their monthly payments could go up. "Those who have borrowed to their maximum capacity might struggle to cope with such increases and take out further unsecured borrowing to get by. The knock on effect of that is missed payments, increased evictions and a recipe for financial disaster."

"In a year of stonking months, including April, May was our best month yet with more mortgages submitted than at any other time of the year. "Lender criteria are getting easier to navigate although some lenders do still seem to treat the self-employed with a huge degree of caution, with the dreaded phrase 'at underwriter's discretion' a regular lament. "Fundamentally, though, demand is still vastly outstripping supply and this shows no sign of changing and will continue to drive house prices upwards in the coming months. "On top of that with outdoor socialising now becoming an entrenched part of our society everyone seems to aspire to bigger gardens to fill with egg chairs, hammocks and garden offices, the 2020-21 must-have items. "Borrowers, these days, are coming to us with a lot less personal debt. Enquiries for debt consolidation mortgages are lower than I have seen in 14 years in the industry. "Only a hardy few seem to be spending big money on foreign holidays, with many others using the cash accumulated during repeated lockdowns to pay down debt or become less dependent on plastic. "Homeownership is the real aspiration for most young people and what we are seeing in the mortgage market is a growing pool of ready-to-react first time buyers, cash rich after a year of limited spending, desperate to buy and get onto the housing ladder and invest in something rather than fritter it away on renting a property. "Generation buy is certainly ready to do so but they just need the housing stock to actually do that."

"A summer slump is possible once the Stamp Duty deadlines have passed, but the UK mortgage market - like a runaway train - has shown no sign of slowing just yet. "March, April, and May have been exceptionally busy for lenders, with huge pressure to push sales through thanks to Government-backed incentives for buyers. "The cliff edge will be when the furlough scheme ends: there's no doubt this scheme has disguised and abated future unemployment, which may also pose a threat to the market. "But for the time being, we're seeing more products being offered to more people thanks to higher LTV mortgages from a variety of sources."