"There continue to be plenty of criteria changes to keep brokers on their toes, but there is a strong sense that relative calm is beginning to return."
A period of frenetic activity – following on from the dramatic changes of previous weeks – gave way to more tranquil waters towards the end of the month. There continue to be plenty of criteria changes to keep brokers on their toes, but there is a strong sense that relative calm is beginning to return. Whether this will last, is quite another matter...
Week commencing 1st June
The big news on Monday 1st June was buy-to-let specialists Landbay increasing their top LTV to 75% and lifting a number of property restrictions.
It was the next day that things really kicked off as the Government confirmed that mortgage payment holidays could be extended beyond the initial three-month period, and that borrowers could continue to apply up until the end of October.
At the same time, there was a flood of criteria changes, including important changes from specialist lenders around affordability criteria. Lenders such as Kent Reliance and Precise responded quickly to the Government’s announcement the previous week of the extension of the ‘furlough’ scheme. With the latest figures showing more than nine million workers on furlough, this is clearly a very important consideration!
There was a welcome slew of increased LTVs, including Zephyr raising its LTVs on a range of property types, before a slower end to the week, as we all enjoyed some unseasonably warm weather. The sunshine, sadly, did not last into the weekend.
Week commencing 8th June
The earlier upward trend in LTVs was thrown into sharp reverse at the start of the second week of June, with a number of lenders dropping their higher-LTV products. In particular, many 90% LTV products began to be withdrawn by lenders – clearly a worry especially for first-time buyers with limited funds for a deposit.
Fortunately, through our close relationship with lenders, we were able to reassure brokers that this was a temporary blip rather than a long-term trend. Lenders were less concerned about the possibility of falling valuations than their own capacity and ability to service demand. We were also able to point to lenders who were still offering high LTVs, not least Buckinghamshire Building Society, which continues to offer a 100% LTV product for first-time buyers.
We also saw more lenders showing their hand as to how they were treating the income of furloughed workers, and also self-employed borrowers, reflecting continued uncertainty as to the government support available.
Week commencing 15th June
The third week of June got off to a frenetic start with news of both Coventry and Monmouthshire reintroducing 90% LTVs and more changes, notably from TSB, around how they were planning to handle furloughed workers. The initial scheme had been simple to understand but the extension, and the plans for increased employer contributions, was causing many lenders to reassess their positions.
As the week wore on, we saw more lenders, including Accord and the Scottish Building Society, announcing 90% LTV products. The real excitement was kept for the end of the week, however, as Saffron launched a range of 95% LTV deals with no product fees for first-time buyers.
Less gratifyingly for brokers, who had been hoping that Nationwide would extend their 95% LTV direct-only products to broker channels, the world’s largest building society instead announced that they were being discontinued altogether.
A stormy week drew to a close with a few rumbles of thunder in places, but a quieter day in the mortgage market, with some good news from Platform (aka the Co-op Bank) reintroducing its Help-to-Buy range, along with 85% LTV purchase products, and Coventry, who updated their affordability criteria to accept 50% of overtime, shift allowance and commission payments.
19th June also saw news form UK Finance that 1.9 million mortgage payment holidays had been granted to households affected by Covid-19 – around one in six of all outstanding mortgages. Sobering news, even without the pubs being shut.
Week commencing 22nd June
In line with the notion of ‘going out like a lamb’, the last full week of June got off to a quiet start in terms of criteria changes. There was plenty of other news to report, though, not least the Government’s announcement that pubs and restaurants could reopen from 4th July!
As the weather really began to heat up throughout the week, it might have been nice to take to the sun-lounger, and have a cold glass of something in the shade. But no such luck: lenders made sure we were all still paying attention with a sudden raft of changes.
Several lenders announced they were resuming physical valuations in Wales, in response to updated Welsh Government guidelines. We also saw Platform announce a limited range of 90% LTV products, and the Family Building Society went one better with a 95% deal.
As the sun was replaced by storms in many parts of the country at the end of the week, the market returned to relative calm, with Friday 26th distinguished mainly by more lenders announcing the resumption of physical valuations, this time in Scotland.
Week commencing 29th June
A report released by the Bank of England on 29th June showed that the impact of coronavirus on the property market had been worse than many had feared, with the number of mortgage approvals in May falling to the lowest levels since records began.
But we couldn’t end the month on that gloomy note: we know from the volumes of broker searches that demand is coming back, especially in the residential market, and it seems that the market is primed for a strong rebound.
As if to prove the point, the last days of June brought more positive movement, as both Hodge and The Mortgage Lender resumed physical valuations in Scotland and Wales.
