You may be wondering what the current situation is with the mortgage market. Have providers stopped lending altogether? Are all new mortgage deals off?
It is true that some providers have withdrawn their higher loan to value (LTV) mortgage products. Nationwide, Santander and Skipton Building Society have recently announced that they are only going to be offering loans to borrowers with a 75% LTV ratio. So only people who have a 25% deposit or equity in their home will be approved for a mortgage.
Other lenders, including Barclays, Halifax, Virgin Money and The Family Building Society, have gone even further, reducing the LTV ratio to 60%, while the Coventry Building Society has reduced thiers to 65%.
As a result, first-time borrowers or those with low equity in their homes, currently will not be able to proceed with their plans.
Support for existing customers
Nationwide has stressed the change in policy will not affect deals in progress. In fact, they say the step has been taken so that they can focus on helping existing members to process ongoing applications. They will still be offering mortgage deals of up to 95% LTV to existing customers.
It is hoped the changes will be temporary but they were taken to limit new applications so that providers could concentrate on their existing customers. Many are dealing with thousands of calls from worried borrowers requesting mortgage payment holidays while at the same time coping with staff shortages due to the virus. In addition, as valuers cannot get out to see properties under the current restrictions, it is not possible for the more complex property purchases to go ahead anyway.
What is still possible?
Despite the difficulties, however, industry experts stress that the mortgage market is very much open for business. Lenders are still working with existing borrowers, advisers are still contacting existing clients to offer support and conveyancers are still communicating with people over whether their housing transaction will complete. Mortgage products are still available, albeit with lower LTVs, and online or automated valuations are still possible for some cases.
So no one should feel that the mortgage industry is in lockdown. Providers are urging anyone who is concerned to contact their advisers, whether it is about taking a mortgage holiday, reducing a payment, remortgaging, doing a product transfer or even starting a mortgage journey. There are many options available, even in the current circumstances.
15 April 2020
The views expressed in this blog do not in any way constitute advice and are specific to the date noted. As time passes the facts can change and readers should consult their adviser for up to date advice on any matters covered within the blog. Invest Southwest offers an initial review, which is free of charge, however long it takes. From this we will be able to confirm how we can help and give you an opportunity to decide if you would like us to. Thereafter, we will provide you with detailed recommendations and exact costs. Please note that we promise not to levy any kind of fee unless we can demonstrate a benefit to you.
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