Recently, the BBC’s Personal Finance Reporter, Kevin Peachey, warned that lenders were looking to ‘reduce the availability of mortgages, loans and other forms of credit’. That’s despite the high, post-lockdown demand from consumers.
According to Peachey, “mortgage and loan providers told the Bank of England that the supply of these products [mortgages, loans, credit] will fall in the summer months owing to Coronavirus pressures”.
With potential borrowers facing large scale financial uncertainty and with default payments expected to increase, providers are exercising caution in relation to how much they’re willing to lend. It’s led some experts to suggest that this credit squeeze could prove tighter than the aftermath of the financial crash a decade ago.
To put that into some context, before the Coronavirus outbreak in March, there were 137 ‘two-year fixed-rate mortgages’ available for those looking to borrow with a 5% deposit. Post-COVID; that’s now down to just one. And while there may be more choice for those offering 10% deposits, costs continue to rise and products continue to dwindle for that group too. You can read more, here.
'We're busy chasing your applications'
It’s a concern for those whose applications are pending, let alone those who may be looking to buy or borrow later in the year. To get some perspective, we put the issue to Sharon Kennedy, our Mortgage and Protection Specialist. And, whilst she acknowledges that this is indeed a tricky period for the market, Sharon remains cautiously optimistic:
“If I’m being honest, the return to the market has not been as quick or as fluid as I would have hoped for from the lenders,” she said. “Supply is not meeting demand.”
“The higher loan-to-value lending we saw earlier in the year has not returned post-lockdown. And, on the rare occasion that a lender has brought out a deal on the higher side, it’s been removed within days. Either that, or it has so many caveats that so few clients actually fit the criteria.”
“Processing times are longer at the moment too. So, I think it’s important that we manage expectations. A lot of lenders are not taking calls at present and, in some cases, the time taken to assess and process documents has been a matter of weeks, not days.”
“My message to you would be to ensure you have all your information - such as payslips, bank statements, ID, etc. - prepared and ready to go, so we can access it more easily. This means that if there’s a limited time deal, for example, we can take advantage of it straight away.”
“At present, lenders have more guidelines in place than usual and they’re investigating applications in more depth, as well as taking things like furlough status into account. So, if we have this information upfront it’ll make us more equipped to find the lenders that are likely to be co-operative.”
“What I really want to say though is, don’t panic. It’s certainly not all doom and gloom out there - it’s just taking that little bit longer for banks and lenders to get their ducks in a row as we emerge from lockdown.”
“I know it’s difficult but patience is a virtue in these extreme circumstances. Lenders will return, the outlook will improve and, in the meantime, we’re busy in the background chasing your applications along. Sometimes it really can just be a waiting game.”
Accessing the best deals swiftly & efficiently
At Danbro Financial Planning, we’re experts in mortgages and re-mortgages. Our specialist team have a unique knowledge of the market and successful, longstanding relationships with a host of existing lenders. So, we’re able to access the best deals for you swiftly and efficiently.
What’s more, we’re a key part of the Danbro Family. That means we can liaise with our partners in both accountancy and umbrella employment to provide holistic financial planning advice under one roof. In this post-COVID landscape, we’ll ensure your mortgage - and protection - plans complement your overall financial targets.
Your home may be repossessed if you do not keep up repayment on your mortgage or other debts secured against it.