Like many businesses, mortgage lenders have had to adapt to a very different environment as the Covid-19 pandemic put the UK’s lending market on hold. The vast majority withdrew mortgage deals leading to media reports that homeowners and first-time buyers were being locked out of the mortgage market. The reality, however is that there is plenty of liquidity in the market and banks are keen to lend.
An evolving mortgage market
At the start of the pandemic banks were thrown into turmoil by the perfect storm of payment holiday requests, staff having to work from home, business loan requests and the closure of overseas call centres. These operational difficulties led to a number of banks restricting the product options available as they sorted out their operations to cope with these many different factors. Now several weeks on we are seeing continuing improvements in the overall capacity and whilst there are a small number of banks with significant problems, the majority are back up and running with vastly improved product ranges.
We are now seeing greater options for many different borrower types, whilst at the same time, fixed rates continue to be at an all-time low and with the base rate at almost zero, there are plenty of good deals available.
Nationwide, Halifax, Virgin and Santander are just some of the UK lenders beginning to kick-start new mortgage lending in an effort to adapt to the current situation. We have seen loans at 85% loan-to-value (LTV) return or LTV levels raised, as well as increases in maximum loan size and a cut in fees. Birmingham Midshires have recently announced a return to 75% LTV on their buy to let remortgage range.
Adapting to these ‘new norms’ and restrictions, lenders have also adjusted to the way they complete valuations on a desktop or automated basis, as properties can’t be visited for inspection. Lenders are embracing digital initiatives using system-generated valuations to get property purchases and remortgages agreed, known as “drive-by valuations”. As lockdown restrictions begin to be lifted, lenders may return to onsite visits where valuers are at minimal risk and where social distancing can be observed.
What all these moves highlight, is that there are mortgage options currently available. In the weeks and months ahead, further steps from lenders to offer competitive rates will be warmly welcomed by mortgage brokers and customers alike as life begins to return to a more normal state.
Despite the reality that this remains an uncertain time, our priority is to deliver valued reassurance and support to our clients and partners. While we can all acknowledge there will be operational challenges for lenders resulting in delays for borrowers, the mortgage market will gradually improve as they adapt to a more remote way of working.
Henry Knight, Managing Director, Springtide Capital commented: “While several lenders cut mortgage deals or changed their lending criteria at the start of the lockdown, the news that some big lenders have resumed loans and raised their loan-to-value indicates a more encouraging trend in the market. It’s important to recognise that the mortgage market remains open for business and the temporary reduction in lending is not reflective of liquidity and their ability to lend to borrowers, but a complex set of circumstances. I can assure you that banks are still lending and borrowers do have increased options going forward.”