CoronavirusMar 31 2020

How government and BoE steps are affecting clients' mortgages

  • Describe the implications of the government mortgage holiday
  • Identify the impact of BoE measures on the housing market
  • Explain what has happened to the housebuying market
  • Describe the implications of the government mortgage holiday
  • Identify the impact of BoE measures on the housing market
  • Explain what has happened to the housebuying market
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Approx.30min
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CPD
Approx.30min
How government and BoE steps are affecting clients' mortgages

“It’s a good idea that the lenders are saying it won’t go on credit reports. [One credit reference agency] has confirmed to me it won’t go on credit reports,” Mr Riach says.

“It’s better than missing a payment and having a bad credit history.”

He has spoken to one client; an electric contractor with 30 people working for him, who is taking the three month mortgage holiday, so that he can keep that cash in the bank, in case he needs access to emergency funds.

Another client, with 40-plus buy-to-let properties, is looking to apply for the mortgage payment holiday as he has concerns that if his renters lose their jobs or struggle financially amid the crisis, they might struggle to pay rent.

And even if they seek help from the government with help to pay the rent, the money typically goes to the tenant rather than the landlord.

Jane King director at Ash Ridge describes the government’s plans as a “very good idea and will be a life saver for many, especially the self-employed and those in the gig economy.” 

She adds: “I am very pleased that the government has taken this action not only to protect homeowners but to protect the market in general.  

“The last thing we want post this virus is a flood of repossessions hitting the market.”

Ms King has already received several phone calls from clients and she expects the demand will be very high.

So far, the enquiries have mainly come from residential customers where one or more of the borrowers are self-employed or unable to work due to children being home from school. 

“We already know that the vast majority of working people do not have sufficient savings to last more than two or three weeks without an income,” she adds. 

Mr Riach says he is also concerned about customers with business mortgages.

For example, he knows of one individual who owns several pubs and smaller hotels, who has not been able to get a payment holiday, although his bank has offered him the option of only making interest payments for now. 

To help individuals looking for answers on topics, ranging from mortgages to employment, Mfr Riach has set up two websites: https://www.coronavirusfinancial.net/forum and https://www.coronavirusfinancial.net/profesionals.

People can post their questions and information via the forum on the website.

He is also calling on more advisers and professionals to come on board and help people who are looking for guidance.

It is as yet unclear how long the Coronavirus crisis will last for or its after effects for that matter.

Hence, the government might need to go back to lenders to get them to extend the payment holidays further, Ms King says.

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