Lock down directives have changed and from ‘Stay at Home’ advice to ‘Stay Alert’ being the new buzz phrase – As the country celebrated in the best way they could the sacrifice and bravery of VE Day veterans the streets turned red white and blue to honour the end of the war in Europe. I still feel that we are currently still in the midst of our own modern day war but there are signs of progress that we are winning the fight.
Mortgage Market Noise
The effect of Covid – 19 will could have lasting positive affects in the housing and mortgage market – by the nature of necessity lenders and estate agents are changing the way they work in order to try and function in these unprecedented times. We have seen a big increase in digitalisation of organisations and changes in technology to enable home working and ‘viewing a property’ now may only involve turning on your phone and clicking on a Rightmove link to have a guided tour around the home for sale or rent. The need to digitalise business especially the financial business as been on the board room table for several years in most big organisations however the Covid - 19 Crisis has brought forward those conversations in a bid to remain in the market place – bringing the financial world more in line with the rest of the retail world.
Treating customers fairly and offering wide scale relief at speed is also something that lenders have never had to do in the past however they now have a protocol to follow and if we have a similar situation in the future they are far better equipped to ‘man the gates’ so to speak and help the borrowers in the here and now.
Alternative technology to deal with customer demand and ways of interacting with customers and brokers alike has changed in that there has been greater avenues to interact with lenders such as chat boxes, online mortgage holiday requests, social media messaging, text messaging and constant website updates and support systems to borrowers – all of which is likely to stay in place for the foreseeable future making it easier to do business with the mortgage and estate agencies.
Weekly Diary
House Purchase / Remortgage
This week I have seen an increase in enquiries around house purchase with potential first time buyers looking to get onto the housing market whilst the market is showing slightly decreased house prices. Some lenders are now offering up to 90% on desk top valuation’s making this transaction possible along with socially distanced viewings / Virtual tours and online chat. Lenders are still adapting lending criteria to the new income with Furlough pay and potential job losses however they are going in with an open mind and will consider all applications however there may be a bigger lean towards low risk cases. Rates remain very competitive on house purchase products and still include fee assistance and in some cases cashback to make moving house that bit easier.
Remortgage levels still remain strong with borrowers looking to get the best rate rather than sit on the Standard variable rate (SVR) – Don’t be fooled into thinking that the SVR will be as low as the rates on the market as only a few lenders have dropped their SVR rate with the Bank of England Drop. Plenty of fee assistance with the remortgage available with lenders offering free legal services and no booking or application fees to encourage the market forward a little.
Buy to Let Market
The let market is still very buoyant with people still needing a roof over their head. The none payment of rent has been far lower than industry expected with a rent levels holding steady for the landlords even in these unprecedented times. With the bank of England rates being so low the returns on savings currently negligible meaning that a buy to let proposition could be just what you are looking for to boost that pension pot in the future – with monthly profit over above the potential mortgage costs and the eventual increase in equity of the property itself.
Protection Zone
We are currently at a time when health and wellbeing has never been so close to our everyday thoughts – Protection firms are again like the mortgage companies changing constantly to deal with the crisis and still have an appetite to pay out claims. Having a review of what provisions you have in place currently could highlight some real gaps in your armour which could easily be solved by putting a protection portfolio in place which not only increases your resilience to life’s little curves but can also increase your opportunity to claim – and actually take advantage of the protection you have. With provider’s and policies offering additional features such as enhanced critical illness cover for children / GP 24/7 services / Best doctors / Fracture cover / Private sick pay…….. the list is endless.
Top Concerns
- How can I reduce my overall outgoings whilst income is tight?
Many people have taken advantage of the 3 month payment holiday on the mortgage but did you know that you can also look to make arrangements with your life cover and insurance providers to reduce your monthly premiums in the short term? Each provider is different with some are offering reduced cover levels for a set period and then after the reduced payment period put the cover levels back up to the same level without further underwriting, whilst others are offering bespoke terms with the customers based on their own personal circumstances if you contact them directly. This is a far better option that just cancelling the cover especially as now is the time when income protection / life and critical illness cover are most relevant. Other top tips include checking your bank statements for unwanted direct debit payments that have never been cancelled – small amounts that you may not notice in everyday life however now pennies make pounds – However Never cancel the Direct debit until you know exactly what it is for!
- What happens after the Mortgage Holiday finishes and the Furlough System is also being wound down?
This is something that is still very much in the air and I have no doubt that mortgage lenders across the country are at this minute sitting around board table’s working out a strategy – or several based on what Boris and the Government are going to do in the coming weeks. These are the ideas that are currently kicking around the industry that the chancellor could consider –
- A mandatory extension of the 3 months to 6 months payment holiday – lenders would have to see if they could stand the financial impact of this on their solvency
- A qualified extension to the payment holiday – which would require underwriting and individual case by case assessment – this could be very time consuming in reality
- Improved welfare net for mortgage holders who are unemployed – this would require a review of the current benefit system and also government funding
All of the above are just idea’s at present but gives some insight that the industry is looking forward to dealing with the next hurdle that comes along!
