Coronavirus  

Advising clients as the housing market re-opens

On top of that, the UK government has warned that coronavirus is likely to remain with us for several years to come.

As a result some brokers fear that amid efforts to manage risk this could impact valuations.

For example, surveyors may apply a downward pricing model to their valuations over fears of a deep recession and falling property prices. 

Mr Varsani says: “It’s great to see lenders offering higher LTVs, but in reality when the actual valuations go out, because many of these people have risk departments, will the valuations stack up to what they believe it is going to be, or will lenders start taking a future view around building in a bit of a safety margin?

“The risk departments of lenders have to be mindful of how they perceive that level of risk; it is an element of protection for the lenders and also maybe for the person buying the property as well.”

John Baguley, tangible assets valuation director at the Royal Institution of Chartered Surveyors, says: “Valuers reflect the market and assess market value for the asset, which would include some element of supply and demand. 

“As the market settles, valuers will be alert to whether there are isolated transactions above and below market value and will provide their professional opinion of value of what a willing buyer and seller will transact at.”

Another way the market could react is if loan-to-income multiples requirements became stricter.

Mr Morrey adds: “Given how low interest rates are, the cost of borrowing is very, very cheap, so I don’t think they need to start limiting affordability calculations at 95 per cent.

“They might be more stringent on the credit score, but that is just because they want good quality products.” 

Natwest says it has not yet considered reviewing the way in which it will assess affordability.

A Natwest spokesperson says: “We have been ensuring that our current policies support customers and take their current circumstances into account. 

“We also ensure that customers can afford their mortgage at a ‘stressed’ interest rate well above their current ‘pay’ rate.”

Brad Fordham, head of mortgages at Santander, says the bank’s affordability assessment will continue to be based on a customer’s current income and ensuring that any repayments are affordable in the long run. 

Mr Fordham adds: “We’ll continue to monitor the market in coming weeks and review our products, including LTV, in order to support new and existing customers in their home ownership journey.

“To ensure responsible lending we currently stress a customer’s ability to repay should interest rates increase or income falls, and there is no plan to add an additional requirement for a customer to have ‘emergency savings’.”