What’s going on this week in the mortgage world – well lot’s actually!
Mortgages
This week has lenders coming back into the market at higher loan to value products meaning that deposits can be reduced with some lender’s even going up to 95% with family assist mortgages still available. Rates have been changeable with some lenders increasing rates slightly – this is in response to high volume levels into the business which have to be managed in terms of service levels and customer experience. Some lenders have decreased rates to push business volumes back in and have increased the maximum loan to value levels with lender’s such as TSB coming back to the market with 85% loan to value products. Physical valuations are back in full swing with companies adapting to the new regulations which as really started getting the property market back up and running.
The big headline this week is that the government has agreed to extend the mortgage holidays by a further 3 months taking this to the 31st of October giving additional respite to those who are struggling financially – but this should be taken with a warning that mortgage holidays can have an impact on your future borrowing ability and increased payments at the end of the period as the payments don’t just vanish they accumulate on your mortgage balance. There has been reports that lenders have been prioritising ongoing applications where the borrower has not taken a mortgage break even if this has not affected their credit score. Other things to consider in relation to a mortgage holiday are that the Covid effect will have a longer term impact and borrowers who are receiving 80% income at present and can afford the mortgage payment should continue to pay as future redundancies and the stopping of the furlough scheme would really have an impact on their ability to pay and therefore applying at later date may be more beneficial to the borrower – up to the current deadline of the 31/10/2020.
Buy to Let Market
This seems to have bounced back quicker than residential lending with landlords looking to get a bargain with the reduced house prices and people eager to sell. The rental market was also very active during lockdown with property analysists saying that the supply in rental properties dropped in April but has since rebounded to 99% of the norm in 2019 ( Source TwentyCi). New to the market landlords are also dipping their toe in with area’s such as Stoke on Trent being of particular interest to new investors drawn by the low house prices and the high demand for rental properties. There are some amazing deals out there for people looking to start a rental empire and get a better return for their hard earned savings.
Landlords who have several properties should really take this time to review their current mortgage status – on average 1 in 5 BLT properties sit on the Standard variable rate which funnily enough hasn’t dropped to the low levels being offered being offered on the deals – even with a record low Bank of England rate.
Protection Zone
With the loosening of the covid restrictions and less pressure on the GP service Medical assessments are being started back up again by the Insurance providers meaning that life insurance application’s stuck in underwriting can now start up again – this inability of some borrowers to get the life cover they need as prevented some borrowers completing the mortgage transaction with the added worry of the current pandemic.
Insurance companies have adapted particularly well to the lock down with already advanced online medical underwriting and the ability of the companies such as Royal London being able within 4 days to get 90% of staff working from home – meaning that cover could be offered even in the worst of times.
Insurance companies have also been busy upskilling the broker population with fantastic webinars and communications through meaning a broker can really sell to need and bring the best value to the customer from the policies recommended.
Hot Topic’s This Week
Vulnerable Customers in the Mortgage World
Many Lenders are really getting on board with the ability to help customers affected by Covid – its not just about putting a sticking plaster on with a mortgage holiday its about great communications with the borrowers and savers alike. Its about setting up payment plans with realistic payments and continued support throughout to the borrowers. Being debt can be one of the biggest causes of mental health concerns and may bank such as Lloyds have Samaritan trained staff that can help to identify a vulnerable customer and offer the appropriate care. If you are being impacted by Covid for things such as isolation / financial hardship / relationship break down or anything else that can affect your ability to be able to deal with your finances please reach out to your lenders or brokers.
First Time Buyers – Can they still get on the property ladder?
There have been several reports by paper’s that borrowers could have to wait years to get on the property ladder. The main impact of covid is still the requirement generally to have a 10% deposit for the mortgage although this is changing all the time. Other things to consider as a first buyer is that most lenders will allow gifted deposits from family members to help towards the deposit and for those not willing to wholly part with the cash there is still the family assist mortgages available where the monies essentially sit like a fixed rate bond for 3-5 years against the mortgage and after this point go back to the gifter in full.
Don’t be put off by press reports – speak to broker who can search the market for the options available to you.
