Change is the only constant as criteria keeps shifting

Nicola Firth | Knowledge Bank
25th November 2020
Nicola Firth Knowledge Bank
"Despite being a quieter month when compared to the incredible amount of changes in September, October still saw a raft of changes across the board."

When looking at the overall trend of the month, lenders on the whole were increasing LTVs steadily, testing the waters. High LTV products were still scarce however, with flash sales at 90% LTV.

NatWest and Metro Bank tightened criteria for those who are self-employed and NatWest also launched its first ever ‘green mortgage’ for energy efficient homes. There were also products launched specifically for key workers and medical professionals.

With these new products popping up it is more important than ever for brokers to keep on top of the ever-evolving criteria. As many are former mortgage brokers themselves, the team at Knowledge Bank understands the challenge that brokers are facing with the raft of changes, and are constantly working to ensure they are kept up to date and can give best advice to their clients.

WC 28th September

The month started in quiet fashion with Barclays pulling its core residential products to cope with existing demand and Precise Mortgages increasing its LTV and maximum loan size in the bridging space.

In Knowledge Bank news, we exceeded 300 brokers registered on to our Criteria Clinic webinar for this week. These sessions have proved incredibly popular as brokers have the chance to directly talk to lenders. And even place tricky cases.

WC 5th October

Alongside the news that the government was planning to support first-time buyers onto the housing ladder, the week started with an increase in maximum LTV to 85% from Dudley Building Society and to 80% at United Trust Bank. Swansea Building Society launched a new mortgage for medical professionals with more generous affordability and Precise Mortgages launched products for the Help to Buy scheme which launches on the 1st April next year to capitalise on the fact that applications are open from this autumn.

Boris Johnson asked ministers to put together a plan to turn ‘generation-rent’ into ‘generation-buy’ and proposals included removing stress tests for applicants, possibly in favour of a “state guarantee” to provide comfort to lenders around risk. The Help to Buy scheme ends in March 2023, following several extensions, therefore it’s possible that some other scheme to help first-time buyers could well replace it.

These proposals will certainly have repercussions for brokers as clients with smaller deposits will surely benefit from whatever the government implements.

WC 12th October

The Bank of England’s latest Credit Conditions survey was published this week and reported that getting a mortgage is expected to become more difficult towards the end of the year as banks tighten their lending criteria. The survey of lenders highlighted that credit scoring criteria for secured loans to households tightened in Q3 and was expected to tighten slightly more in the final quarter of 2020.

Bucking this prediction slightly, there was a flash sale from Coventry for Intermediaries at 90% LTV, launching the products on Wednesday with a deadline to apply of 8pm Thursday.

Halifax Intermediaries looked to support ‘mortgage prisoners’ in response to the FCA initiative to help those trapped due to their current lender not accepting new applications.

Swansea Building Society added a number of key workers such as bank employees, delivery drivers and farmers to the list of professions that are eligible to apply for the Society’s ‘professional mortgage’ product. The product offers a lower interest rate to individuals in a range of professions including medical professionals, military personnel and utility workers.

WC 19th October

There was a flurry of activity this week with Cumberland Building Society increasing LTVs in buy-to-let. Reliance Bank launched a key worker mortgage range with an increased max LTV of 90% aimed at essential employees who have been crucial to supporting the UK this year.

Barclays launched a range of residential and buy-to-let products with up to 75% LTV and they also returned to the portfolio landlord market which they had left in July. Buckinghamshire Building Society launched a flexible mortgage option for older borrowers struggling to afford their repayments by allowing their children to be added to the loan. In a reverse ‘joint borrower, sole proprietor’ scenario, instead of parents or grandparents being added to the mortgage to boost the affordability of younger borrowers, the children are added instead.

WC 26th October

Halifax released a report this week that found the ‘mini-boom’ in house purchases had been driven by a surge in demand for larger properties. Zoopla also reported there is a backlog of 418,000 purchase transactions which total £112bn in sales that are yet to complete and many of which are looking to complete before the stamp duty holiday ends on 31st March 2021.

As we neared the 31st October, Hope Capital launched two revamped first-charge bridging loan products labelled as Halloween specials. Metro Bank adjusted criteria for self-employed applications, requesting more supporting evidence to be supplied. The lender requires six months of bank statements, up from three months previously. NatWest launched its first ‘green mortgage’ range which will offer preferential rates to either new or existing customers who are purchasing an energy efficient property.

Despite being a quieter month when compared to the incredible amount of changes in September, October still saw a raft of changes across the board. There were some increases in residential, buy-to-let and bridging LTVs, however 90% residential products were only available for a short time on the few occasions they returned to the market.

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