Our second monthly update takes a closer look at the housing market, as well as the impact that the UK’s post-COVID landscape is having on peoples’ personal savings. Hope you enjoy.
Lenders move to reduce Mortgage availability
The BBC’s Personal Finance Reporter, Kevin Peachey, recently warned that lenders were looking to ‘reduce the availability of mortgages, loans and other forms of credit’. According to Peachey, “mortgage and loan providers told the Bank of England that the supply of [mortgages, loans, credit] products will fall in the summer months owing to Coronavirus pressures”.
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.
To get some perspective, we put the issue to Sharon, 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. “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. 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.”
“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. Lenders will return, the outlook will improve and, in the meantime, we’re busy in the background chasing your applications along.”
To read what Sharon had to say in full, click here.
Your home maybe repossessed if you do not keep up repayment on your mortgage.
In the news…
From the buyers to the sellers, then. Despite the difficulty some are experiencing in relation to borrowing, according to leading property website, Rightmove, the country’s housing market is in the midst of a ‘post-lockdown mini-boom’. Fuelled in part by the recent cut in stamp duty, asking prices are soaring with estate agents reporting that enquiries are “through the roof”. Latest figures show that the average price of a property entering the market was just over £320,000 - that’s over £7,000 more than when the UK went into lockdown back in March! To find out more, click here.
As a result of the lockdown, there’s been a massive increase in people working from home (WFH) over the last few months, something which is continuing even after many of us have been given clearance to return to the office. If you’re one of the people forced into WFH because of the government’s lockdown rules - rather than, say, through choice - you may be entitled to claim a small reduction in tax for the time you’ve been working at home. Some employers give their staff an allowance to cover such costs, but that is their prerogative. If not, HMRC are allowing you to claim tax on certain expenses worth up to £6 per week without having to provide bills or paperwork. That equates to a saving of £1.20 per week, or £62 per year. Read more, here.
Elsewhere, it was revealed earlier this month that the amount of products available for savers was at its lowest ebb since before the financial crash over a decade ago. At the time of the ‘Moneyfacts’ report being published, there were a total of 1,398 ‘deals’ on the market. That’s the lowest amount since 2007 and is 370 short of the figure recorded at the start of March. This report coincides with record low interest rates, making it harder for savers to make their savings go further.
This Month’s Featured Article…
From the food we consume to the cars and clothes we buy, more and more of us are acknowledging the social, ethical and environmental impact that our purchases make. Investments are no different. Responsible investing is gaining traction, with ESG (Environmental, Social, and Corporate Governance) investing proving a popular strategy.
Investments carry risk. The value of your investment (and any income from them) can go down as well as up and you may not get back the full amount you invested.
ESG investing involves ‘researching and factoring in environmental, social, and governance issues, in addition to the usual financials, when evaluating potential stocks for your portfolio’. Find out more, below:
READ: ‘What is ESG Investing?’
On a lighter note…
These monthly items are putting an ironic twist on the title of this segment as, once again, it’s all about FOOD! The government’s ‘Eat Out to Help Out’ scheme came into force on Monday, giving a 50% discount to diners at participating restaurants across the country. The scheme, which runs for the entire month of August, is available on Mondays, Tuesdays and Wednesdays, and applies to food and non-alcoholic drinks up to a maximum of £10 per person.
For a full list of participating establishments near you, check out the article below and simply enter your post code.