The Mortgage Market Place – November 2020

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The real issues we are facing at present, as mortgage brokers, are the ever-increasing demand for mortgages, fuelled by the Stamp Duty Land Tax holiday and coupled with the fact we have demand outstripping supply.  Estate Agents continue to talk up the property market and this is fuelling increased property values and thus creating an artificial price bubble. We also have buyers desperate to purchase a home, maximise their borrowing power due to so much uncertainty, or simply looking to move to an area with less COVID reported cases or away from the Cities.

Unprecedented demand brings with it several issues, especially when you then add in a worldwide pandemic, as lenders are struggling to cope with the business levels they are receiving. As a result, lender service standards are worsening due to lack of staffing capacity and the fact the majority of lenders have set staff up to work from home due to COVID restrictions.

Most lenders are reporting service levels of application to offer in excess of 20 working days, in fact, most lenders are stating at least 20 working days before they will even get to check a fully submitted mortgage application. This, of course, is then further extended should a query arise. We also have lenders simply switching off their phone lines and saying we can only email for case updates or queries and response service levels are 5-7 working days.

This creates extra stresses and pressures for every party involved and unless we are able to manage clients’ expectations from the outset we will simply be adding to their stresses.  Estate Agents also have to realise it is not business as normal, applications aren’t moving to offer in 10 – 15 working days and completions aren’t taking 8 – 10 weeks. Setting unrealistic time scales to would-be buyers is madness and solicitors who are already at breaking point can’t be expected to work miracles to get a completion over the line in the current climate.

 

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So what are lenders doing to counteract this demand? 

Well, most appear to simply be continuing to push interest rates upwards to stop business coming in or capping lending limits whilst adopting very cautious underwriting rather than actually trying to streamline underwriting.  Applications are therefore being rejected which pre-COVID would never have happened or there is a continued request by the lender for further information & explanations. This, of course, drags out the application to offer process and creates undue concerns for applicants.

I have also noticed lenders are now looking to request clients to provide further information at application on their income going forward due to the new pending lockdown on Thursday 5th November and this is being retrospectively applied to some cases already in and fully packaged (not yet offered). This worries me as lenders would effectively be looking to apply a restricted lending policy to already fully packaged cases and whilst I understand the reasons for this, it seems to me, a simple way of rejecting business and streamlining their pipeline to get on top of applications. In the first lockdown, lenders never went back and retrospectively applied furloughed policy which would have caused a lot of cases to fall out of bed. If this becomes a trend then we could see in the coming months a lot of applications simply stopping until lockdown is lifted and clients are back to work and out of furlough.

How can we help in these very uncertain times: 

  • We offer a free mortgage consultation service.
  • We are available by telephone, email or other social medial platforms such as Zoom or Facebook should you need any mortgage advice.  Unfortunately, face to face meetings currently cannot take place although our offices are open for clients to drop paperwork in.
  • We fully advise and recommend the right mortgage solution, whilst this would normally be based on total cost we will also factor in and discuss lenders present service standards as well as ensuring the client is fully aware of the amount of information a lender may look to obtain in order to underwrite a case.
  • We have a team of staff that are dedicated to managing your application through to completion, therefore we try our best to take the stress away from you.
  • We are up to date with lenders lending policy so this ensures we have the confidence clients mortgage applications go to offer and completion.

We are here to help, please contact us for more information and stay safe.