08 Jun Record Mortgage Demand
Record Mortgage Demand
The number of mortgage approvals in April came to a value of £20.2bn, compared to £18.6bn in March (Bank of England), showing a record demand for mortgages. In Q1 2021, home mover activity leaped by 82% compared to Q1 2020, bringing volumes to a level not seen since 2007.
“It’s not only home movers who are taking advantage of the favourable market conditions,” says Lee Howard of Howard Mortgages. “We’ve seen record levels of remortgages too. House prices are at their highest in seven years, but as demand increases, supply is a problem for some people. We’re urging prospective home movers to ensure that they have an agreement in principle (AIP) to take with them in order to put themselves in the best buying position possible. Having a decision in principle shows that you can, in theory, afford to buy a property. This could make you a more attractive buyer and stand you apart from other prospective buyers.”
While a few may delay moving during the Summer months, there are still a huge number of buyers in the market, and demand is still outstripping supply significantly. Therefore, market experts predict that the housing market should continue its impressive run, while perhaps slowing slightly in the coming months.
The percentage of properties selling for over the asking price reached the highest level on record as eager buyers outnumbered available properties by 16 to one, according to NAEA Propertymark. The trade body says that 32% of properties sold for more than asking price in April, which was twice as many as in March when the figure stood at 16%.
With a number of lenders launching sub-1 per cent products, there is clearly an appetite to lend. Cheap borrowing rates look set to be with us for a while at least and will continue to support demand for property purchases.
Why should I get an Mortgage Agreement in Principle (AIP)?
An agreement in principle, also known as a ‘decision in principle’, a ‘mortgage promise’ or a ‘mortgage in principle’, is a certificate or statement from a lender to say that, ‘in principle’, they would lend you a certain amount.
Having a decision in principle shows that you can, in theory, afford to buy a property. This could make you a more attractive buyer and stand you apart from other prospective buyers. The size of your agreement in principle can be a helpful indicator of how much you’ll be able to borrow. You can use this to search for a property in your price range.
When you apply for an AIP the lender will check your credit file to establish whether you’re eligible to borrow from them and if they are happy to lend the amount you need. An agreement in principle is not a mortgage offer or an official confirmation that you have a mortgage. To get that, you’ll need to go through the full application process.
How do I get an AIP?
To get an agreement in principle, you’ll either need to approach a mortgage broker to help you to shop around the market or a specific mortgage lender directly. You won’t need to go through the full application process to get an agreement in principle. But even though it’s not a full mortgage application, you will still need to provide: name date of birth, three years of address history, income and expenditure details and more.
Why seek professional mortgage advice?
It is very important to seek professional mortgage advice to suit your personal circumstances and financial wellbeing. Our mortgage experts then will do the hard work for you to recommend the best product to suit your requirements. If you would like to find out more, we offer an initial appointment at no cost or obligation to explore the options which can be done remotely via phone or video call such as Zoom or Skype.
Here’s our FREE Guide to Moving home >>
It is important to take professional advice before making any decision relating to your personal finances. If you have any queries, please contact the team at Howard Mortgages on 01803 554455 or contact us here.
Your home may be repossessed if you do not keep up repayments on your mortgage.