Tested and confirmed it's working now.

There appears to be a behavioural change from 4.2.6 to 4.2.8 when using
the local clock as a source.

In 4.2.6 the sync would be almost instantaneous while on 4.2.8 it will
poll itself for a while before syncing as if it were an external
resource.

I was able to overcome this delay by setting the local source as
preferred

The new config in /etc/ntp.conf
server 127.127.1.0 prefer 
fudge 127.127.1.0 stratum 3

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https://bugs.launchpad.net/bugs/1558125

Title:
  ntpd doesn't synchronize to local clock (ntpd 4.2.8p4/xenial)

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