The mortgage industry has been reacting to news that the UK is set to go into another lockdown on Thursday 5 November as coronavirus cases continue to rise.

As uncertainty rocks the market once again, mortgage payment holidays are being extended by six months for homeowners affected by the COVID-19 pandemic after the scheme was due to end on Saturday 7 November. 

Mark Harris, chief executive of SPF Private Clients, said: “It is good to see such decisive action taken so quickly.

stamp duty

Irwin Mitchell: Market overload may cause many to miss stamp duty holiday

“Many borrowers will be worrying about paying their mortgage and extending payment deferrals for a further six months will provide them with some comfort.

“However, the advice remains the same – only ask for a payment deferral if you need one. 

“Interest will still rack up and you will have more to pay off in the long run so the option should only be utilised by those who really need it.”

Chris Sykes, mortgage consultant at Private Finance, said: “With infection rates spiralling across the country, a second lockdown was always an inevitability, however this time the property market is not going to be shut down as in March.

“However, the question remains how many people are going to be out and about viewing property given the circumstances?

“Ultimately, this is likely to entrench the current trends for those looking to move to houses with more space, both outdoors and to work remotely, and means areas outside major cities are likely to see higher demand than pre-COVID.”

Sykes expects further restrictions on borrowing, particularly for those with smaller deposits.

He added: “A second lockdown and the corresponding economic repercussions are exactly why mortgage lenders have been being cautious of late and this is likely to cement this position for lenders going forward.

“We expect to see further restrictions on borrowing certainly for those with deposits smaller than 20%, with these products almost certainly becoming even harder to find, and those that are available will charging even higher rates to account for the risk.

“The housing boom and corresponding number of mortgages issued has defied the economic reality.

“Given that there does not appear to be a silver bullet currently for COVID we could see buyers taking the plunge sooner, rather than later, benefitting from the stamp duty holiday and looking to acquire a property that will make living in the new normal more enjoyable – keeping the housing boom going in the short-term.

“So far the crisis has disproportionately affected younger people, who are more likely to be renters.

“However as the economic outlook remains highly uncertain, with unemployment now rising across the board, the market will come back to earth with a large shock unless the SDLT holiday is extended in the medium term.”

Martijn van der Heijden, chief strategy officer at Habito, highlights that although the housing market will remain open, delays are likely as the mortgage process adjusts to these new restrictions.

Van der Heijden said: “The good news is that the housing market will remain open throughout this period and the government has asked that everyone continue to play their part in reducing the spread of the virus by following the current guidance.

“Right now, it’s not looking like a repeat of March’s lockdown when everything in the property market stopped overnight.

“That being said, it’s now more likely that we will see delays to home-buying services – such as conveyancing, and property surveys, as they adjust once again to tighter restrictions.

“This will be compounded by the rush of home buyers wanting to complete before March, to benefit from the stamp duty holiday.”

Like Chris Sykes, Habito is calling on the government to extend the stamp duty holiday to bring about more certainty.

Martijn van der Heijden added:”We now call on the government to extend the stamp duty holiday beyond 31 March, to give more certainty to those concerned about missing the deadline, bring stability to a nervous market, and avoid a rush of property transactions being canceled in February and March.”

Adam Kasamun, associate director at LDNfinance, agrees that the property market remaining open is welcome and that those involved in the housebuying process have already adapted to the “COVID climate”.

Kasamun said: “The statement from Robert Jenrick advising that the property market is to remain open is welcome.

“Estate agents and the majority of other professionals involved in the house buying process have already adapted to the COVID climate as a result of the previous lockdown, which we must recall was far more strict, and have come out of that with a renewed focus and determination.

“For as long as viewings are able to continue (virtual or otherwise), and demand outstrips supply, in the short-term the market will remain active and buoyant.

“Buyers will still want to try and complete in time to benefit from the SDLT holiday, which let’s not forget is supposed to end in the next four months.”

Kasamun believes however that the true long-term impact of both lockdowns are yet to be felt.

He added: “However, the long-term impact of not only this lockdown, but the first lockdown, on businesses, jobs, and the economy are yet to be felt and the New Year also sees the UK leave the EU.

“Attempting to forecast and explain the impacts that this second lockdown may have must be tempered by an awareness of what is already a very complex economic climate.”