On 31st March 2020, we read an article from the BBC titled ‘UK mortgage market goes into lockdown’, which stated that “Nationwide, one of the UK’s biggest lenders…has effectively pulled out of new lending, only offering mortgages to those who have 25% deposit/equity or more….which rules out First Time Buyers”.
We felt this article creates the very panic everyone in my industry is trying to avoid and leaves people wondering if this is due to Nationwide predicting a huge slump in house prices.
While we cannot guess what will happen with UK property market, we can explain the reasons why mortgage lending is becoming more restrictive directly as a result of the lockdown.
The main reason lenders are temporarily halting lending at higher LTVs, or Loan to Values, is due to the fact that mortgage lenders cannot rely on computer models or remote valuations of these applications and insist on an internal inspection to be carried out.
Given that surveyors are one of the many affected industries, they are not able to carry out any internal inspections until the government lifts the restriction – thus stopping ANY form of lending at higher LTVs. We believe such articles have been written in a way that would suggest it is Nationwide’s decision to pull from higher lending, rather than the fact their own hands are tied because they cannot complete the necessary steps to approve a mortgage application i.e. surveys.
Mortgage lenders are more willing to rely on computer models or remote surveys for properties with a lower LTV (where you have greater equity), which is why they are still able to offer mortgages for 75% or less.
As far as anyone in our industry has been led to believe, especially given the huge amount of communication we’ve had with mortgage lenders, as soon as the restriction has been lifted by our government and surveyors can get back to work (along with the mortgage underwriters, case handlers, administrators, call centre operatives), mortgage lenders will be able to reintroduce higher LTV mortgage products.
If you are coming to the end of your deal, lenders are still offering higher LTV Products to their existing customers….why you ask? Because they don’t need to carry out a valuation on your property!
If you are worried about your own mortgage, if your deal is coming to an end shortly – just get in touch with us. We’ll give you the right advice and put your mind at ease with any questions you may have.
Stay strong, Stay Safe.
Post from Thameside Mortgages