Mortgage Round up!
So another week along and lock down restrictions have eased again with people being able to go to the non-essential shops and money being pumped into the economy by the Bank of England to try and ease the impact of Covid.
Hot topics in the mortgage world this week have been around the potential decreases in property values which has seen some lenders draw back again and want bigger deposits to purchase a property. On the other hand however other lenders have joined the party with specialist products to support first time buyers back into the property market such as Accord with an exclusive 90% First time product only available via mortgage brokers like myself.
Nationwide hit the headlines from being a lender that put themselves out there with up to 95% direct lending to drawing the horns in with the lending – in fairness this will be a combination of market uncertainty and the pure numbers of applications that went in over the last 3 weeks as lockdown eased and the lenders ability to process the numbers.
Employees on Furlough are still seeing some impact on their ability to lend – with most lenders asking for Covid impact forms on applications. This is a prudent thing to do both for the lender and the applicant as it’s important to ensure that the mortgage is affordable for them both now and in the future. The impact on employees / employers is wide ranging with some just waiting to push the button to go again whilst others at this point are seriously considering the employee numbers and possible redundancies July the 1st being a key date in the diary.
Key Questions this week
How much will property values be affected by Covid / current economy?
Well there are lots of opinion’s out there at the moment with commentary changing daily. The numbers are wide ranging from a possible 15% drop in property values to a 5% drop – but really this is all opinion rather than fact as we are facing an unknown threat. The main difference now from when we had the last recession is that lenders are still want to lend and the current parliament want us to almost spend our way out of recession hence the reduction of lockdown to get the economy going.
Mortgage Payment Holidays
Well the first round of mortgage holidays will becoming to an end in the next couple of weeks which will increase the call volumes into lenders looking at the next option – and that is to speak to your lender or a broker and get your personal situation assessed and get a bespoke solution for you. If we are worried that you may loose your job or income will be affected – speak to your lender they are there to help and if required have specialised staff to help financially vulnerable customers….don’t bury your head in the sand it doesn’t achieve anything!
Can I view the Property I am looking to Buy?
By and large the estate agents have opened up and dependant on the vendor you can go and view the property with the appropriate social distancing. It is however the vendors right to refuse entry at present – request a virtual tour from the estate agent if access is difficult.
Is a But to Let property a good investment?
All through the lock down the rental market has remained buoyant – the investors looking at buy to let properties has increased further since the lock down has eased. The incredibly low interest rates offered on savings at present is making more people think about their investment choices and better ways to make their money work smarter for them with rental yields still outdoing savings interest rates. The larger required deposit ( generally 20-25%) also means that they are less likely to be impacted by potential property value declines. Buy to let lenders are still offering amazing rates on the mortgages and are really supporting the market and the economy.
Protection Zone
Headline news on this is that the physical medicals are now happening so pipeline cases that have been stuck in underwriting are now progressing to an underwriting decision.
People are definitely more attuned to the risk of ill health and how this impacts their ability to either pay the rent or mortgage with numbers for income protection applications are increasing month on month – now is the time to ask the question – How would I cope with no sick pay?
There are lots of options out their to suit all budgets – give me a call to discuss 07495 774277
Caris
