My musings on the mortgage market… August/Sept 2020

What strange times these are.

I wrote back in April that on a personal note if House and Holiday Home Mortgages could be back working in a month with a “J” in it, I felt we had a good chance of getting the business back on to an even keel after a quiet April and May.

Little did I realise just what was going to happen.

Early in June it was made ok to sell houses again. Probably what we did not realise was there was such a strong demand to sell and move, but things seemed to return to normal quite quickly.

Or did they?

What happened was that people tired of being home bound or seeking a change post lockdown quickly set about selling and buying houses.

However, to be honest, the mortgage lending industry and the valuation companies were not ready for such activity. No blame is apportioned here. After all, lenders have many staff working from different locations, some furloughed, and many helping existing customers with the payment break requests.

We quickly saw that lenders had the money but not the capacity to do the 90%/95% deals that they were doing back in February. This means that 85% loan to value mortgages are what 95% were before. At end of August, it’s even difficult now to get that 85% loan to value mortgage.

It’s been tough for valuation firms, they need to keep their valuers safe. So, this has meant making sure their people on the ground adhere to very strict Covid procedures and of course they had a spring backlog to catch up on. Houses have had to be empty of people and doors left open. The no touching rule being king!

What of lenders lending?

Well I won’t lie; it is not easy.

Underwriters and criteria are tough.

We warned our readers about the unnecessary taking of the payment break. Yes, the credit agencies are fine with the breaks, but lenders are now looking long and hard where breaks were taken. (I still refuse to call them payment h…days, as you know!)

Questions are inevitably asked about customers on furlough or self-employed who took government support. There is no such thing as a free lunch in this world!

Many mortgage lenders want to see more business bank statements than before and now lenders are starting to say that they will not help still furloughed staff any longer.

At this moment in time, what lenders that are left in the 85% space are raising their rates little by little it seems. From their point of view, they are stemming demand but all that happens is that demand increases on other lenders and they either pull out or increase their rates.

Brokers then struggle in many cases to get these deals even to application stage.

We ourselves spent more days than we should have signing on to one lenders application site before 8 a.m., pressing send, send, send only to be shut off 25 minutes later as the lender has used that day’s allocation of funds.

In other words, they could cope with no more applications.

It looks now for a while as if we were going to have to get used to 85% loan to value mortgages being the highest out there perhaps with sporadic 90% deals appearing here and there for a short while.

One major lender told us they were very concerned about the prospect of major job losses coming in October/November time. Understandably they did not want to see, in many cases, new first-time buyers perhaps falling into negative equity with high loan to value mortgages.

To be fair this lender is now trying to lend at 90% LTV again but under very strict criteria.

There are a tiny-few lenders in the 90% LTV space lending directly to their own customers but there is a similarity with hens teeth to be fair.

In all honesty, they need the support of many other providers, to do the same in order to take the pressure off each other, otherwise for quite a while we’re going to see lenders enter the market do some business, get swamped, and then retreat back out until they have another go.

This is just because they cannot cope with the number of applications. It is a viscous circle. As one top lender said to me last week “Come on other lenders, give us a hand here!”

What I am saying, and what I’m seeing, is that demand is outstripping supply.


It is a mixture of factors.

Firstly, there are all the people who wanted to move in the months of March April and May. Many of them have returned to the marketplace to sell or buy.

Then there are the people whose lives have been changed by the Covid crisis 2020. I have customers in London who need more space because their home working environment which they will be in for quite some time is just too small.

I have customers who, now they can work from home, have decided to move to out to places such as Oxford.

We have many existing new holiday home and holiday let customers and, for reasons that are fully understandable, they are choosing to invest in the well-known British holiday areas.

It is getting harder and harder and in many less desirable to holiday abroad at the moment. This will only add fuel to the British stay at home holiday and our investors in this marketplace will be more assured they’re doing the right thing.

There is no doubt the inquiry level to our business for holiday lets has now gone up to levels we have never seen.

Accompanying this, we are working with a number of mainly young buyers in the residential market.

This is making for a busy time of course.

Then, of course, the stamp duty holiday announcement really poured petrol onto an already burning fire. Could that announcement have been delayed until November? Not if you are a buyer of course, but food for thought!

Personally, I hope that the changes will remain after March the 31st.

If they don’t, there will be a real scram through the months of February and March. And some people will undoubtedly get left off the bus and will be unhappy as their intended purchase or sale might not happen for legal reasons or because they couldn’t get the mortgage they needed.

So, what of this much talked about downturn in October/November?

We speak to customers, business owners and read opinion maker’s articles every day.

The big question is are we living in furlough cuckoo land and will it all come crashing down in the Autumn of 2020?

Undoubtedly, we have seen businesses rationalise and change and sadly having to let staff go. The big names appear on our news screen almost every day it seems. Like you, I am sure, I just hope at the economy can pick up through the next two months and help to encourage as many employers to keep on as many employees as possible.

It is hard to have great words of wisdom at this stage.

It seems many of us in many facets of life in this strange summer all almost working against government guidance.

House buying and selling certainly follows that trend. We really do not want that dreaded second wave if we are to get through to the Spring of 2021, when the suggestion is things hopefully will get easier and better. But I have seen so many strange ideas and happenings and musings it is hard to know what to expect or believe.

What we can tell you is that there all a lot of people at this moment in time moving to a new house or buying investment property.

Good luck to them.

If you know anyone thinking of moving, tell them not to dally on their decision. March will soon be upon us!