The coronavirus crisis and subsequent lockdown has caused one of adviser Jiten Varsani’s clients to see his income fall by more than half, meaning the mortgage advice he receives now that the lockdown is being eased will be vastly different to pre-lockdown.
This is just one example of the way in which the lockdown has affected borrowers.
And although the relaxing of social distancing rules means the housing market is beginning to reopen, it is unlikely its recovery will be like flicking on a switch.
It is early days, but some lenders are returning to the market with high loan-to-value mortgages – one of the first features to all but disappear at the start of the lockdown.
- The housing market is slowly starting to re-open
- Client enquiries have increased
- The level of risk lenders take is unpredictable
Leeds Building Society says it has resumed lending at 85 per cent LTV as part of a refresh of its mortgage range.
Barclays has reintroduced a selection of new 85 per cent LTV mortgages back into its residential remortgage and purchase ranges.
Carl Shave, a director at Just Mortgage Brokers, says although he is seeing gradual changes, the higher LTV mortgages are still few and far between.
It is expected to be a slow process as lenders attempt to clear a backlog of an estimated 60,000 plus cases – according to numbers bandied around the market at the time of writing.
Mr Shave says it could be as much as a two-month backlog, from conversations he has had with surveyors.
He adds: “[Lenders] have had a huge amount to deal with. Many are now back in a position where they are able to offer physical valuations, but it is more about dealing with that pipeline business to get those cleared rather than lenders opening up floodgates [to new business].”
Nick Morrey, product technical director at John Charcol, adds: “Not having the big lenders there will put the brakes on the housing, because a lot of first-time buyers need a 95 per cent product and if they cannot get a mortgage it means far fewer first-time buyers to prop up the bottom of the market.”
Understandably, client enquiries have increased as the lockdown eases.
Mr Varsani, a mortgage and protection adviser at London Money, says: “Some clients we had conversations with pre-lockdown in January/February are now coming back to us to see if they were to resume their search whether they would be in the same position.”
But uncertainty continues to drive the market and is affecting consumer confidence.
Mr Varsani says: “Clients often expect us to know what is going to happen in the housing market. Are we going to see house prices increase/decrease/stay the same?
“We have to tell them it is a bit of a guessing game at the moment.”
Meanwhile, one of the biggest factors affecting consumer confidence is job security, as furlough continues and chancellor Rishi Sunak warns of a recession, “like we have never seen”.