As we reach the midway point of 2021, now is an ideal moment to pause for breath.
Whilst Covid-19 restrictions remain in place, they have eased. Non-essential shops are now open, and people can enjoy a restaurant meal inside. The UK’s vaccine programme has also proven a success, with more than 45 million people in the UK have now received at least one jab. While almost 34 million have received both vaccination jabs.
The first six months of the year, like the six months that preceded it, have been filled with a fair amount of trepidation and uncertainty due to these lingering restrictions. However, in contrast, the property market has been positively buoyant. Soaring demand for bricks and mortar has seen record average house prices reached across the country, as such, demand for residential bridging loans is sky high.
Source: UK Government
UK economy bouncing back
The vaccine is allowing social distancing rules to be slowly relaxed. In the past week, it is now confirmed that lockdown measures will fully lift on the 19th of July. In turn, this has provided a notable boost to the UK economy.
For instance, the Confederation of British Industry recently revised upwards its growth forecast for the UK economy. It is now predicting that the country’s GDP will increase by 8.2% this year – this is higher than the EU (4.2%) and the US (7.5%). This followed a similar move by the Bank of England in May.
Source: The Telegraph
The 5-year anniversary since the announcement of the UK vote to leave the EU also hallmarks how much we have overcome in just half a decade. To find out more, download our latest industry leading report here.
Property market boom continues
As we head into the summer months, the bigger picture is now looking brighter than it did at the start of the year. Meanwhile, the property market is continuing its remarkable rate of growth. Over the first two quarters of 2021, house prices soared.
In fact, according to Nationwide, UK house prices rose by 13.4% in the year to June, reaching a record high £245,432. This is the fastest annual rate growth recorded in the past 17 years.
Source: The Guardian
Of course, the stamp duty holiday has played a key role in this. The three-month extension to the tax break has been a catalyst in the rapid rise in demand from homebuyers and investors. With the first reduction of the stamp duty holiday in place, lenders will be watching the market carefully over the next 12 weeks. They’ll need to respond quickly to borrowers needs by monitoring their initial reaction. The importance of the continuation of the holiday between July and September, albeit with lower savings, is crucial to the continuation of the buoyant market. The tax bands will return to their normal levels from the 1st of October.
Demand for bridging
With property transactions rising sharply, we have seen a notable rise in demand for short-term finance. Due to the first stamp duty deadline on the 30th of June, many borrowers have spent the last few months rushing to complete. That demand does not look like it is going to let up quite yet though.
In our Homebuyer Wishlist 2021 survey, we uncovered how the pandemic has changed property owners’ perspectives. We also discovered what potential buyers now look for in a property in the current market.
In particular, residential investments and buy to let loans have become highly sought after. This is perhaps best evidenced not only through our research, but also through the success of MFS’ 753 initiative (find out more about 753 here).
We launched 753 in May as a means of fast-tracking property deals. And demand for our fast bridging loans has been so high that we recently secured an additional £50 million of funding from an institutional investor to further strengthen the popular scheme.
MFS enjoys bumper start to 2021
The success of the 753 initiative is the latest in a line of notable achievements for MFS this year.
It began with our relocation to a new office in Mayfair. The larger space was required to help the team to grow and, sure enough, we have increased our headcount by more than 40% since the start of 2021.
We have brought on board new business development managers and underwriters in the first half of the year. It ensures MFS can handle enquiries at pace and deliver bespoke bridging finance without delays.
Following on from a successful first six months, we enter the second half of 2021 full of confidence and optimism. More importantly, we remain fully committed to supporting all the brokers and private clients we work with – there is never room for complacency, and we will continue to strive to deliver the best possible bridging products with the highest standards of service.
To find out how MFS can support your property investments in the months to comes, get in touch today.