Today marks exactly a year since the first Lockdown was called, and it still seems remarkable that we are still not out of this fully.
After first hearing about a little known virus, it seemed that in the blink of an eye, there we were locked down in the sunshine, with Mother Nature seemingly rewarding us for slowing down, clapping our NHS heroes and simultaneously worrying about our livelihoods whilst feeling guilty that we actually quite liked spending more time at home with family we rarely saw.
This was surely a fundamental turning point in history, where work/life balance would forthwith always be in harmony and where the daily commute seemed like a thing consigned to the history books where future generations would look at pictures of crowded trains and laugh at the madness and futility of it all.
A year on of working from home, of on and off home schooling, of learning new words like Furlough, learning to conjugate the verb “Zoom” and where the phrase, “You’re on mute” became our most uttered, where no longer commuting just means starting at the desk earlier and finishing later, with no proper breaks or meaningful holidays, work and home time merging in a cacophony of activity. We are now longing for a return to some kind of normality, although with a little bit more flexibility at least.
Meanwhile, the housing market has proved to be as resilient as ever, backed in no small part by Government support such as the Stamp Duty Holiday and the forthcoming 95% Mortgage Guarantee Scheme.
As we begin to emerge through the other side, lenders are still feeling their way carefully, tentatively easing their Covid restrictions and putting more products into the market.
As ever at times like this, it is those borrowers who have good, steady employment, decent levels of earnings and good deposits, between 25% to 40%, who fair the best. They are still able to obtain extraordinarily cheap mortgage rates without any real issue.
Lenders have begun to make available higher income multiples and are taking into account bonus payments where affordability is concerned once more which has boosted the borrowing power of good quality applicants.
There are, however, still large swathes of potential borrowers where lenders are more uncertain. Furlough is still a new concept and many lenders are reticent to lend to those still on furlough with no guarantee that their jobs will come back.
Likewise, whilst the routes open to the self-employed have improved, lenders are still concerned around how they work out which businesses are only hanging on due to Government funding and those which are using it as a buffer they don’t really need.
As such some lenders are just not willing to lend to a business that has taken Government loans unless they can prove their business has not really suffered due to Covid. Fortunately, there are some good specialist lenders around who take a more pragmatic approach, though with slightly more expensive products.
There are many people who have been negatively affected in the past year, many of whom may have missed payments on credit cards and loans which makes getting a mortgage tough. Where the High Street still struggles in these circumstances, again Specialist lenders have returned to the market to cater for this type of client. Even Metro Bank have just released their offering aimed at borrowers who have experienced mild credit issues, so choice is slowly returning to the market.
Although a new wave of 95% Loan-to-Value mortgage products are on the horizon with the new Government backed guarantee scheme, it remains tricky for borrowers who do not have a bigger deposit. The lenders who have released their own 95% LTV products so far tend to limit these products to First-Time buyers buying houses only, with a restricted 4.49 times income multiple policy and a good credit score required.
We are yet to see what the new Government backed 95% LTV products are like and whether their criteria will be any different, but one thing we do know is that once there is choice, things start to improve for consumers.
As an example we now have most lenders back offering 90% LTV mortgages and rates have already started to reduce in this area over the past few weeks, and will continue to do so.
Whilst choice in the mortgage market will improve as vaccinations start to take effect and the economy opens once more, there is a way to go yet before we can say that normal service for mortgage lenders has resumed.
The good news is that Coreco remain at the forefront of all the latest lender discussions and developments, pioneering new lenders and retaining extraordinarily strong relationships with others, able to get things through that elude others.
We will always be committed to providing great advice and good service to our clients and introducers. One year on, we know for certain that together we are stronger.
In terms of mortgage rates, for standard residential mortgages, borrowers can obtain 2-year fixes at 1.06%, (3.90% APRC) and 5-year fixes from 1.24%, (2.50% APRC) whilst variable tracker rates are around from 1.29%, (3.20% APRC).
Those looking at Buy-To-Let can now obtain products from 1.19%, (4.40% APRC) for a 2-year fixed or 5-year fixes are available from 1.64% (3.80% APRC).