Covid-19 has sent the global economy into turmoil which has impacted the UK housing and mortgage market. Thankfully, following the initial lockdown in March 2020 the housing market has been able to open again. With the new lockdown measures in place for 2021, thankfully the housing and mortgage market is being allowed to function still.
Here at AGA Mortgages it’s still business as usual in terms of supporting and advising our clients. Never before has it been more important to get specialist mortgage and insurance advice.
Latest developments as of January 2021
Coronavirus (Covid-19) – The onset of Covid-19 had placed the housing and mortgage market into turmoil. With new lockdown measures in place from 5th January 2021, the housing market might be subdued although viewings and valuations are still being allowed to take place.
Payment holidays – In light of the economy being on hold, many lenders have offered payment holidays and still are. You will need to contact your existing lender to take advantage of this but we would suggest only making use of this out of necessity.
Purchase transactions – Following the news of the new lockdown measures implemented from midnight 5th January 2021, the Government has announced that purchase transactions can proceed as normal. Completions can take place where safe to do so and removal companies are allowed to operate. If you have already exchanged contracts and are awaiting completion such as a new build property still to be built, we are witnessing mortgage lenders extending mortgage offers from the usual 6 months to 9 months but they will seek reassurance that your income and circumstances mean the agreed mortgage remains affordable.
Housing market – The Government have looked to support the housing market with the positive changes to stamp duty although these are due to expire end of March 2021. Given that buyers might be discouraged from viewings given the latest lockdown, it remains to be see if the Government might look to extend the the deadline for the current stamp duty rules.
Remortgages – If you have an existing mortgage and your current deal expires in the next 6 months it would be wise to review your mortgage now. As the industry gets back on its feet, we are witnessing bottlenecks along the way. Many lenders have adapted well and we can source lenders that can handle a remortgage efficiently which coupled with a reliable solicitor can help ensure your remortgage can be processed smoothly. Many lenders now use an AVM – Automated Valuation Model. This allows them to establish the approx. value of your home without the need to enter it. In many instances though a physical survey is required and there remains a backlog for physical surveys.
Mortgage lender reaction – Some lenders are now reluctant to use variable components of income such as commission and overtime. Also, if you have been furloughed but still don’t have a return to work date, it’s becoming increasingly difficult for a lender to proceed as we edge closer to the furlough scheme expiring. It will take a skilled mortgage broker to understand your needs and present your case to a mortgage lender. We are in constant touch with key industry figures and lenders so please contact us today should you need advice in these uncertain times.
Insurances – Despite these uncertain times, insurance companies in general are still offering their suite of mortgage related insurances such as life cover, critical illness cover and income protection plans. For those that are displaying Coronavirus like symptoms or are self isolating, they will struggle to get cover but otherwise we are observing the insurance market trying to function as normal. We are getting continual updates from our key providers and contacts within the insurance world and we are specialists in this arena too. Click here for our dedicated insurance section.
Business as usual – We are a team of 4 mortgage brokers who operate from home with access to the latest technology meaning we can still advise and arrange mortgages for our clients without the need to meet you in person. Please feel free to get in touch and we shall guide you through this minefield.
Facebook – We shall endeavour to keep this page relevant and our Facebook page will also contain more specific information coming out from lenders and the industry as it happens. Please can you like and share our Facebook page especially if you have family and friends who you think would benefit from reading this.
Government updates – Another good place for information about Coronavirus is www.gov.uk/coronavirus
Key lender updates as of January 2021 – Most lenders are trying to offer a wide range of mortgage options but still there is a reluctance to lend from around 85% Loan to Value and upwards. What follows is a brief summary of where some lenders currently sit in the market.
Halifax – They are now offering mortgages to 90% of a property value for purchase transactions. Their service levels to underwrite a case, especially for the self employed are poor.
Santander – They are now offering 85% LTV deals and are back lending at 75% LTV for Help to Buy deals. Service levels are dreadful at present with underwriters reviewing cases submitted to them on 1st December (this is as of 5th Jan 2021).
HSBC – They were until very recently lending up to 90% LTV but have now reduced this to 85% LTV. They are advising this is a temporary measure as they have been inundated with so much business at 90% LTV.
Natwest – They are now back lending to 90% on purchase applications. They are continuing to use all components of an applicants income and their service levels are now good.
Nationwide – They had initially paused lending over 75% LTV on new customer purchases, remortgages and first time buyer purchases but have returned to 90% LTV. They will lend to 90% LTV but have strict criteria for this, please contact us for full details. Service levels are fair although for cases where the applicant is self employed or borrowing in excess of 85% LTV, there is a 30 day queue for assessment.
Barclays – As of 2021 they are lending back at 90% LTV and service levels are better than most competitors. They have curbed their income multiples to 4.5 times income and have no intention to amend this for the foreseeable future.
Service Levels – Service levels amongst mortgage lenders as of 2021 is generally poor especially for self employed cases. Many lenders are taking 20-30 working days to assess new self employed cases and it seems the surge in demand for mortgages due to the stamp duty cut is seeing lenders unable to cope. Many cases are getting delayed if a physical survey is required and in many instances, it’s only by making an application that the lender advises on whether a physical survey will be necessary. If your mortgage needs reviewing within the next six months, we would urge you to get in contact ASAP.