The mortgage market is changing so rapidly at the moment and we thought it could be useful to give you a snap shot of the market and the challenges it has faced since the Covid-19 crisis began.
Note: All data and Rates are accurate as of 26th April 2020
Lenders / Payment Holidays / Remote Working
Businesses up and down the country were stretched to the limit when the Government called for a lock-down on 23rd March. The main high street banks were not only facing the challenge of moving their entire workforce to remote working but also simultaneously became inundated with enquiries from customers wanting information on Mortgage Payment Holidays. It took most lenders around a week to set up review processes, application websites and dedicated phone lines to deal with customer questions. This meant that many were left worried and with no hope of getting through to their lender for help. This is where we stepped in – with our general mortgage information service, we gave guidance and reassurance to many clients who were unsure where to turn.
Mortgage Products / Interest Rates
Whilst the banks were diverting staff resources to deal with Payment Holiday requests as well as everyday bank and savings account logistics, they started to reduce the type of mortgage products on offer. Many pulled higher loan to value mortgages from the market (some even went as far as to pull every product above 60% LTV). This became worrying for anyone looking to remortgage. New applicants were expecting mortgage rates to drop (in line with the Bank of England rate reduction to 0.10%) and were confused as to why not only were they not reducing but actually becoming harder to get. This problem was compounded by the lock-down stopping surveyors from visiting properties for Valuations. Without a valuation, even mortgage applications that had already been submitted to lenders, before products were pulled, were suddenly at a stand-still. We fielded many phone calls from worried clients who would have been totally in the dark if they had been dealing directly with the lender instead of using our services.
Desktop Valuations / Return of Higher LTV Mortgage Products
The good news is that the early logistical problems faced by the mortgage market have been overcome. We have been working very closely with the banks, surveyors, conveyancers, Mortgage Clubs & Networks and the industry has proved resourceful and resilient. Desktop and Automated Valuations are being conducted and accepted by lenders, most lenders have returned to the market with not only reduced rates (v’s pre-Covid-19) but also extended the loan to value product range with many now back to 85% LTV.
Current Transactions / Need for Advice
With the market changing on a daily basis, the support of an expert adviser is so important, now more than ever. We are best placed to guide your staff through these turbulent times and ensure their home finances are in the best possible shape. We are currently processing many remortgage and product transfer applications. Surprisingly, we even have clients offering on new purchases and moving home. When the lockdown ends, there will be lots of people who have decided they want to move on from their current homes, or want to make their first purchase after being forced to isolate with their parents or flatmates. We are here to help your staff understand and explore all of their options, so when the time is right, they are in the best possible circumstances and are not left confused or in the dark.
Remortgage and Product Transfers
According to the Yorkshire Building Society, over £37.2 billion of mortgages are coming to the end of their initial tie in period within the next 3 months. That means 274,000 homeowners will be switched to their lenders standard variable rate if they do not arrange a new mortgage product in time. This could then cost customers many hundreds of pounds more than they need to pay out, every single month. As you can see from the chart below, on a £400,000 mortgage switching from the lenders variable rate on to a 2 year fixed rate (rates accurate as of 26th April 2020) would save the homeowner £498 per month – a saving of £11,952 in the 2 year period (if the SVR stays at 3.95%). Helping your staff access the best possible available mortgage product for their circumstances in this uncertain time is therefore so important for their financial wellbeing, stress levels and their pocket! Encourage them to book a free video appointment with one of our advisers today!
|Mortgage Loan Amount||SVR||2Yr Fixed||3yr Fixed||5Yr Fixed|
|Examples rates avail. on 26th April||Av @ 3.95%||@ 1.19%||@ 1.34%||@ 1.41%|
|Saving per month by Switching||£156||£147||£143|
|Saving per month by Switching||£249||£235||£229|
|Saving per month by Switching||£374||£353||£346|
|Saving per month by Switching||£498||£470||£460|