‘Vanilla’ mortgage applicants tipped to be scarce in 2021

‘Vanilla’ mortgage applicants tipped to be scarce in 2021
Credit: Jason Alden/Bloomberg

Standard mortgage cases will be uncommon in 2021 following the financial impact of the coronavirus, Accord Mortgages has predicted.

The lender’s director of intermediary distribution, Jeremy Duncombe, told FTAdviser that ‘vanilla’ customers would be “few and far between in 2021”.

Mr Duncombe added: “The impact of Covid-19 has been indiscriminate and many industries which were considered as ‘safe’ employers are now struggling.

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“Furlough will have impacted cash flow and savings balances, contractors may have had a quieter period.”

Michelle Leyland, director at Adverse Money and Wellgate Money, agreed, saying she “genuinely [fretted]” that the industry will not see the ‘vanilla’ client for several years to come, and that the pandemic had created different complex financial repercussions for many.

But Ms Leyland added: “I fear it is just the tip of the iceberg, and the true impact of which we will not see until well into next year, starting when the government’s financial ‘safety bubble’ bursts next spring.”

She also said: “People have had to reach out for financial support, probably for the first time in their lives. These all have financial implications when it comes to securing a new mortgage, and we will undoubtedly see more ‘complex credit’ cases emerging over the next two years.”

In October specialist lender Bluestone Mortgages said it expected growth in demand for specialist lending to continue over the long-term, given the number of borrowers who could emerge from the pandemic with more complex borrowing needs.

Higher LTV market

While Mr Duncombe predicted a scarcity of ‘vanilla’ customers, he did hope for a greater number of higher LTV lenders in 2021 after a shortage of products during the pandemic.

He said: “I’d like to think we’ll see more lenders joining us with higher LTV products offering increased choice to the market.”

Over a period of three months Accord had offered 90 per cent LTV home purchase products for limited periods of several days.

But in mid-November the lender relaunched home purchase products at 90 per cent LTV into its core range, as well as remortgage products for the first time since the start of the pandemic, on a “more consistent” basis.

At the time, Mr Duncombe said criteria changes and increased resource had helped increase the lender’s capacity to offer 90 per cent LTV products for the foreseeable future.

Other lenders have since also launched 90 per cent LTV products to the welcome of mortgage brokers.

Data from Moneyfacts showed there were 88 products at 90 per cent LTV at the start of December, the highest number since the beginning of June.

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