Could lockdown lead to mortgage market boost?

Could lockdown lead to mortgage market boost?


These are certainly challenging times in the UK, but in the gloom of lockdown, there may be some positive news for UK property buyers. That’s because in recent weeks, changes to mortgage products have seen restrictions eased and rates made more favourable for those looking to get on the housing ladder. Read more in this UK mortgage review.

More choice than pre-lockdown?

It appears that there are now more options for UK buyers – including the first time buyer – as products are being updated. Let’s round up some of the key developments.

Halifax, Nationwide, Santander and Virgin are among the lenders to have made it easier to qualify for a mortgage. Halifax and Nationwide are again accepting mortgage’s with a 15 per cent deposit, which brings renewed hope for the return of the 5% deposit mortgages.

Santander took the step of slashing the fees on its residential mortgages, while also upping the maximum loan size which it offers – up to £500,000 from £300,000. Virgin Money also got in on the act, facilitating 75% mortgages with non-physical valuations after a period of absence.

So what does it all mean? According to Eleanor Williams, the Moneyfacts expert, the changes are a reflection of lenders adjusting to the changing landscape around them. She explained: “Continuing the encouraging trend from last week where we saw early indications of lenders acclimatising to the ‘new normal’ and beginning to return products to their ranges, this week has seen further positive updates from a variety of mortgage providers.”

Getting the job done

“Lenders have certainly shown that ‘the show must go on’ during lockdown, finding ways to circumnavigate the problem of issuing valuations” says Hello Mortgage’s MD Keith Ahmed. This is because many properties cannot be visited at this time in order to make an inspection.

Mortgage providers are making better use of drive-by valuations, which use a system based process to agree property purchases. Henry Jordan, Nationwide’s director of mortgages, suggested to the BBC that now confidence has grown in methods such as drive-by valuations, lenders are happy to stay as active as possible even given the current situation.

Mr Jordan said: “As the UK’s second-largest mortgage lender, it is right that we still play an active role in the market, while maintaining the levels of service expected of us, during what are unprecedented and evolving times.”

Payment holidays

For those currently linked in to mortgage deals, there has also been some respite, with lenders offering payment holidays to those who wish to take the option during the coronavirus pandemic. According to the UK Finance trade association, payment holidays that have been taken across the country total an estimated £3.6 billion and are equivalent to one in seven mortgages.

The organisation reports that loans taken out on 1.6 million homes now qualify for the payment break, giving Brits some leeway as they attempt to keep their personal finances on track during this difficult period.

Building Societies Association (BSA) chief executive Robin Fieth suggested that the leeway offered to borrowers now go further than simply a payment holiday. He said: “Lenders are working hard to help in a range of ways and it is right that this now includes the ability for those on a three-month payment holiday to be able to switch on to a new product with their existing lender at the end of a fixed-term product should the two events coincide.”

In the first instance, if they are concerned about their finances, borrowers are being advised to check the website of their mortgage broker to see what the recommended steps are, including how to apply for a payment holiday.

However, a mortgage holiday is necessarily a great thing, as Keith Ahmed explains “Borrowers should exercise some caution when opting for a mortgage holiday and only do so if they are in genuine financial difficulty. Any payment holiday ultimately results in you being in debt for a longer period of time. Borrowers should take a holistic view of their finances and look at making other sacrifices before opting for a mortgage holiday”

Housing demand up in the North

Lastly, Zoopla has reported an increase in housing demand in the North of England over the last two weeks of April, for this reason, the northern cities have been tabbed to rebound quicker from the lockdown than urban hubs in the South.

“Northern cities have seen the strongest improvement in underlying demand although levels remain half those at the start of the crisis,” explained Richard Donnell, Zoopla’s director of research and insight.

“Having our roots firmly in the North of England, this is welcomed news. The North often suffers when compared to the South, let’s hope the upwards trend continues for us. It really isn’t all doom and gloom for the mortgage market, there are some fantastic remortgage deals out there as well as a comeback for the first time buyer market” says Keith Ahmed.

If you are looking for a mortgage, or perhaps want some free mortgage advice, rely on the region’s trusted mortgage broker, Hello Mortgage.

Contact: Keith Ahmed
Company: Hello Mortgage Limited
Phone: 0800 292 2557

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