Recent data from Legal & General Mortgage Club’s SmartrCriteria tool has revealed what types of products buyers and mortgage advisers were searching for in the run up to the end of the September, which saw the Stamp Duty holiday come to an end.
Capital-raising mortgages saw a rise of 18%, becoming the second most-searched for product in September. This type of mortgage is usually acquired when it is time to remortgage and is a way for the homeowners to raise cash by releasing equity from the property. This could be for a variety of reasons from home improvements to consolidating debts.
A change of pace in the market
There may be many reasons why searches for capital-raising mortgages have increased over the last month but one could be that as the house market has been slowing down after the boom the Stamp Duty Holiday provided, more people could be looking for ways to renovate or do up their existing home instead of moving. It was recently reported that annual house price inflation is up to 7.4% and that the average British home is now worth £50,000 more than in 2016. With that in mind, homeowners may be hoping to use this upward trend to their advantage, hence seeing a demand in more capital-raising product searches.
Another increase seen was that of searches on behalf of international buyers, which rose 160% in August according to the data. This is perhaps the corollary of the easing of international travel restrictions thanks to effective vaccine rollouts. Further to this, products for shared ownership saw a 4% rise in demand during September.
It is positive to see that despite the tax break having come to an end, and the obvious rush and subsequent slowing down that could have brought on, there are still other factors at play when it comes to demand in the market.
Less popular products
But not all products have seen demand increase in the same way. While capital-raising products saw a boost in September, applications for those with credit impairments actually decreased month-on-month throughout Q3. Not only that, but the data from Legal & General’s SmartrCriteria tool also recorded a 9% decrease in demand for products to suit those with debt management plans.
The housing market has performed strongly this year, with an estimated leap in value of £550 billion in the last 12 months. It will be interesting to see what next year brings, and how prices will react if and when interest rates may rise. To read more about what we think may happen to the market following the tax holiday, read our analysis here.