Mortgages in lockdown

04/06/2020

Where are we now?

Physical valuations are now possible, subject to the owner and surveyor being satisfied it is safe to do so. This means that lots of lenders have been able to get surveyors back out to properties again.

As the lockdown continues, the availability of mortgages with smaller deposits of 5% & 10% have remained very low. There are in fact less than 20 products available at 5% in total, with most lenders still offering 85% as the highest loan to value.

The biggest impact of the continuing shortage of funding is on higher-risk borrowers, including first-time buyers. They are likely to continue to find it more difficult and expensive to get mortgages while current conditions persist.

What has this meant for new mortgage products?

More products are coming back to the market and becoming available again, we are nowhere near to the levels two – three months ago but availability is on the increase.

It is worth noting that although the loan to values are becoming more available, although still incredibly limited, lots of the lenders have tightened their criteria and background income multiples. This means that you may not be able to borrow the same amount as you could in pre lockdown times.

The surveyors valuing properties for the mortgage lenders are also in a bit of a sticky situation. As they usually use comparable properties that have sold recently in order to effectively appraise a property they are at a disadvantage as there really hasn’t been any property completions. In this situation it would not be unsurprising if the surveyors are cautious when valuing for the foreseeable future.

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