Bank of England mortgage approvals (February)

ended 29. March 2021

On Monday morning (29th March) @ 9:30am the Bank of England is publishing mortgage approvals data for February. We're after mortgage experts to send us comments on the state of the mortgage market. For example:

  • What are the major trends you're seeing in the mortgage market right now?
  • Do you think the Government's guarantee of 95% LTV loans will support the mortgage market in 2021 and beyond?
  • What are the main hurdles facing borrowers in the current market?
  • With the mass vaccination roll-out proving successful, are lenders starting to get more comfortable at higher LTVs?

Any other observations you think might be of use to journalists writing up their stories tomorrow, send them over! 

3 responses from the Newspage community

Premium
Langley House Mortgages
Over the past month or two, lenders have become much more comfortable at higher loan-to-values. Underlining the growing confidence among lenders, this has happened before April when the 95% loan-to-value Government-backed scheme begins. We have seen four lenders return to 95% lending without using the scheme, although none are lending beyond £500,000. More 90% loan-to-value-products have also been introduced by lenders in recent weeks, many with more competitive rates than before. The tougher criteria on many 90% loan-to-value loans, such as a maximum term of 25 years, not lending to self-employed people or on flats and new builds, have also been lifted. Today, there are 90% LTV rates available such as a 2-year fixed rate at 3.05% with a £399 fee. At the start of the latest national lockdown, rates were much higher. At the moment, the self-employed and furloughed applicants are still the hardest hit, with lenders applying the biggest restrictions and scrutiny to them. The majority of lenders will ask any self-employed applicant for their most recent business bank statements to ensure that trading levels are in line and consistent with previous years' tax returns and income. The majority of lenders will not take any applicant's income into account if there is even an element of furloughed income. There are some exceptions, for example if a return to work date and return to full pay have been confirmed by the employer.
Premium
Magni Finance
There is a lot of confidence in the housing market right now. Due to the extension of the Stamp Duty relief scheme and the success of the vaccination programme, more and more people see now as a great time to move. Crucially, there are more higher loan-to-value products in the market, a sign that lenders are making tentative steps to their pre-Covid offerings. We have seen an influx of clients looking to buy second properties outside London. Most have been looking at areas such as the Cotswolds and New Forest, where they can have a holiday retreat or even their primary residence going forward if they are predominantly working from home. We have even seen some clients looking further abroad, such as the South of France. For wealthy clients, they see a lot of opportunity as the cost of borrowing is extremely low if you have a sizeable deposit.
Following the economic 'credit crunch' induced by the pandemic of 2020, many mortgage providers restricted their lending criteria and product options. Most have returned to pre-pandemic lending activities, with one glaring omission - 95% LTV loans. As with the help-to-buy mortgage guarantee - launched by the George Osborne in 2013 and mothballed in 2016 - the Government is not stepping back in to offer lenders support in provider high LTV loans, which inherently contain more risk for the lender. This should certainly be helpfully for first time buyers, many of whom can struggle to raise larger deposits. Interestingly, both Skipton Building Society and Accord Mortgages launched 95% LTV products for first time buyers last week - without the need for Government support. The main hurdles facing borrowers in the market right now are, as always, proving affordability and having the necessary funds in place for deposit, stamp duty, fees, etc. The latter of of which is likely to become less of an issue with the Government guarantee, however for individuals whose income has been impacted by the pandemic (particularly the self-employed) the ability to evidence their financial capacity for maintain mortgage payments have greatly diminished.