Mortgages in a locked down world

During these unprecedented times, everybody and every way we work has been affected by Covid-19. I felt it would be worthwhile outlining just a few of the impacts it has had on the mortgage and housing market.

1. There are concerns the housing market will see reduced house prices, with a report published by The Centre for Economics and Business Research suggesting a 13% drop – although Lincoln and Lincolnshire often buck the national trend slightly.
2. On the 19^th March the Bank of England cut its base rate to just 0.1%, the lowest the rate has ever been.
3. No physical valuations (where a Valuer comes into your home) are being completed due to social distancing , but many lenders are working on carrying out as many automated or desktop valuations as possible.
4. Lending criteria has had to be re-assessed for a ‘new normal’. This includes many lenders assessing affordability for furloughed borrowers based on the 80 percent of their basic salary up to the maximum of £2,500 per month or £30,000 a year (or 100 percent of the salary where the employer is topping up the furloughed amount).
5. Zoopla, the property website, suggested that more than 370,000 property transactions worth £82bn have been suspended since lockdown, and that includes my own sale and purchase.
6. According to HMRC 185,000 firms applied for the furlough scheme on its first day of availability, effecting 1.3 million workers and costing the Treasury £1.5bn.
7. Many Lenders have been willing to extend existing mortgage offers by up to three months to help with the delayed purchases.
8. Many of the mortgage lenders withdrew their higher LTV (Loan to Value) products and many of their tracker deals in the early weeks of the crisis. Within three weeks of lockdown the number of residential mortgage products available in the market fell from 5,239 to 2,768. However, some lenders have started to re-launch some higher LTV deals.
9. The legal process has always been able to work without you needing to meet your Solicitor. This is continuing under the lockdown arrangements. Documents that need signing can be witnessed using sensible social distancing processes.

So are mortgage lenders still lending?

Despite all of this, mortgage lenders are very much still lending. Do not assume the mortgage world is closed for business, nothing could be further from the truth!

Our own way of working has of course also had to adapt. We now offer all meetings with clients on a face to face basis using one of the video platforms currently available – Zoom, Facetime and Whatsapp. We can also receive scanned documentation by email or via the postal service. All original documents will be returned to you by recorded delivery. We will work with you to achieve the smoothest possible service and get your mortgage completed as quickly as possible.

The details are correct at the time of writing. However, those looking to get a new mortgage or remortgage should be aware of the recent changes in borrowing capacity due to these market conditions. We can help you to understand your new options, and provide you with advice on the best current deals available to you.

A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.