The state of the 2021 mortgage marketplace amid 3rd UK lockdown
With a third national lockdown being implemented last week by Boris Johnson we will take a look at how this has and will effect mortgages across the UK. Now this lockdown is not the same as the ones prior. We have a lot more freedom than we did in the first one let’s make that clear. The property market has also adapted with the times and systems / working procedures are a lot more fluid now that most people are familiar with working from home.
The first UK lockdown saw a grinding halt placed on the mortgage and property market. This had a significant negative impact on the economy in our country. I am certain the government will not want a repeat of this drastic crash after a stronger finish to 2020. Home buying has since recovered from the first lockdown and we actually saw a surge in activity. This did help to make up for the dip in the first part of 2020 but not fully.
The return of high loan to value lending
In the initial lockdown lenders reactions to the whole situation were ones of fear. In light of the economic uncertainty some banks even stopped lending altogether. As there was also no ability to do valuations this made pending mortgage applications tricky to finish. Luckily a lot of lenders moved towards desktop valuations which eased the pressure on a lot of mortgage brokers.
One of the big steps a lot of the banks made is to drastically cut their higher loan to value lending packages. This meant that the availability of 5% or 10% deposit mortgages was non existent. Leaving a lot of first time buyers completely stumped. In this time lending was drastically reduced and a lot of mortgage consultants and advisors took time out from the industry. We had to wait patiently but slowly after the first lockdown was lifted we saw 10% deposit lending come back. The second lockdown did not help this return and lenders would often pull out and come back later as the demand was so high for this lending.
Luckily though towards the end of 2020 a lot of the bigger, high street banks returned to the market. As soon as one of the bigger banks came back a lot of the others followed and currently we have the best range of 10% deposit lending that we have had for the last nine months. And brokers are more than happy for it.
Valuations & Lender’s service levels
Most lenders currently are operating with a mix of physical and desktop valuations. Usually this depends on the loan to value of a property. So if it’s below a certain value they see the risk as lower and therefore are happier to go by a desktop valuation. If it’s a higher loan to value, therefore higher risk, they’ll want to see it. With remortgages this can be a lot easier due to the fact that the property has less risk as it’s not raising new money and has also had a mortgage in the clients name recently.
On top of this some banks are still running behind on their workload. Being such big institutions it’s taken some of them longer than others to get used to the whole working from home model. This has led to delays in their service. COVID has also not helped in this equation meaning more staff sick days then in previous years due to isolation needs etc.
To properly navigate the lending landscape there’s nothing like professional mortgage advice. We offer a free initial consultation to go over your wants and needs, then we tailor our advice from there.