But some analysts are warning that we might be riding a temporary wave of demand and are simply making up for the time lost when the market was shut during the first lockdown (with some added fuel for the fire from the Stamp Duty Holiday).
Once the Stamp Duty Holiday ends though, some think mortgage lending might dip again.
This could mean that people are (understandably) wary of big purchases at the moment. Or that many are using the time as an opportunity to save money on commutes, meals out and big holidays etc. People who could be saving up for house deposits, so that they’re ready to buy in the not-too-distant, pandemic-permitting future.
It might be hard to imagine a world without Covid right now, but when the restrictions are lifted and the economic landscape looks a bit clearer, we’ll see whether consumers feel comfortable borrowing again.
With difficult times still ahead for many businesses, it remains to be seen how much will be repaid by the businesses themselves. On one hand, a lot of them are folding with each passing day. But on the other, we are seeing businesses evolve at pace, with many finding inventive ways of bringing in revenue under the restrictions.
With a lot of uncertainty in the air, the alternative lending market took a hit.
In theory, the lack of tight regulations makes P2P lending a good option for some borrowers and investors. But in a time of crisis, this becomes less appealing. Many of them are now converting into banks or struggling to stay afloat.
Yet, it’s possible that the P2P platforms that survived 2020 will be even stronger going forward. Imagine, for instance, that the banks withdraw support for low-deposit mortgages in the future, or they set negative interest rates. In these scenarios, P2P lending might offer better returns than traditional banking institutions.
What happens next?
We might be in our third national lockdown, but it is not all gloomy. With the vaccination programme going full steam ahead, it is very possible that we return to a kind of normal by Summer.
This includes a £7.1billion National Building Fund and a new infrastructure bank to fund such plans. In fact, where house building is concerned, there was a sharp increase from July to September, which will hopefully pick back up as restrictions ease again.
It’s worth noting, though, that “normal” will look a bit different, given that GDP and unemployment levels might take a while to heal.
Where and when the dust settles after Covid, and what happens to lending, remains unclear. It’s likely that due diligence will be of increasing importance for both developers and lenders as we continue into these uncharted waters.
We’re actually working on a new product that could help – LandFund.
The aim is to get lenders and developers on the same page, and both feeling confident that the numbers add up.
If you’re already a LandInsight or LandEnhance user, you can get free access to our beta version to put it to use, and to help us shape the final product.
Oliver is leading the charge on the next LandTech product, looking into the world of development finance. He loves an adventure – he once bought a 1970s camper van to travel around Australia, and bought a boat off eBay to teach himself sailing. His family home is in one of the most notorious crop circle hotspots in the world (though he claims to know nothing about them).