Lenders are likely to issue almost 350,000 fewer mortgages for house purchase this year than they otherwise would have done had the UK not entered lockdown, analysis from Knight Frank has revealed.

The real estate consultant suggested the Government’s response to the Covid-19 pandemic had “utterly transformed” the current economic and housing market landscape.

Knight Frank has forecast the number of home sales in 2020 to decline by 526,000, a fall of 38% on 2019 transaction levels, and suggested that fewer house purchases would lead to a sharp decline in mortgage activity.

Knight Frank managing partner, Simon Gammon, explained that as a result of the lockdown, the loss of 350,000 mortgages for house purchase would include more than 150,000 fewer mortgages to first time buyers – underlining how “crucial” it is for the whole economy that property industry professionals are able to get back to work as soon as it is safe to do so.

Gammon also suggested “it is become increasingly clear lenders are eager to do business” and highlighted that many major lenders had been coming back to the market to raise the loan-to-value ratios they are willing to lend at, and “eager” to gain market share. 

Furthermore, Knight Frank indicated that the drop in economic activity as a result of Covid-19 would also result in the loss of £4.4bn in stamp duty, and that there would need to be a stamp duty holiday to get the market moving once the lockdown is lifted.

“There will need to be moves across a wider number of areas including, an extension to Help to Buy to support first-time buyers and support activity across all price bands,” the real estate consultant added.

Share Story: