Criteria continues shifting as furlough returns

Essex Home Finance
Confidence is building in the mortgage market. Despite fears created by news of a second lockdown, LTVs steadily rose in November.
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Confidence is building in the mortgage market. Despite fears created by news of a second lockdown, LTVs steadily rose in November. Positive news of a vaccine perhaps contributed to a return to some semblance of normal, with more lenders back to pre-Covid levels and a few more testing the water at 90% LTV.

However, there were still elements of the ‘new normal’ in November as furlough was once again a hot topic for lenders due to the extension to the job support scheme. 

With these constant adjustments and higher LTV products popping up, it is crucial for brokers to stay on top of the rapidly changing criteria. As many are former mortgage brokers themselves, the team at Knowledge Bank understands the challenge that brokers are facing with the raft of changes, and are constantly working to ensure they are kept up to date and can give best advice to their clients.

WC 2nd November

The month started with news of a second national lockdown. Initial fears of the property market grinding to a halt were quickly allayed, as the Housing Secretary Robert Jenrick announced the housing sector could continue to operate. Newbury Building Society and Furness for Intermediaries, clearly mindful of the impact of another lockdown, paused lending temporarily. Newbury provisionally paused interest only applications and Furness temporarily withdrew their buy-to-let and holiday products. 

However, other lenders reinstated products, with Paragon Bank resuming accepting applications on buy-to-let properties for students. Nottingham for Intermediaries resumed offering mortgage products after they withdrew from the market back in September. LTV was also increasing. Pepper Money introduced a range of residential mortgage products with an increased maximum LTV of 85%. Accord Mortgages and Aldermore also both launched 90% LTV residential products for a limited time.

WC 9th November

The big news in the second week of November was the announcement of the extension to the furlough scheme. Lenders reacted quickly with the ‘Furloughed Workers’ category on Knowledge Bank recording over 30 updates to criteria in just a couple of days. Skipton for Intermediaries clarified they would not be accepting applications for those on furlough, unless they could show they would be returning to work in December.

Confidence appeared to continue to grow in the market with increases in LTV from the Melton Building Society and United Trust Bank. United Trust increased maximum LTV on residential and second charges to 80% and Melton launched a 90% LTV residential product, just for applicants in the East Midlands. Platform for Intermediaries also relaunched its mainstream and buy-to-let mortgage ranges for both new business and product switching.

The London School of Economics released its report into mortgage prisoners this week, making eight recommendations that the government should pursue to support those locked into mortgages through no fault of their own. These included government equity loans, partial write-offs and to cap standard variable rate for borrowers on closed books.

At Knowledge Bank we fielded a number of enquiries around supporting mortgage prisoners. So, to support brokers, we launched a new category in our residential search. The category has detailed information regarding which lenders are offering specific products for those classed as mortgage prisoners, along with in depth eligibility criteria.

WC 16th November

Confidence continued building in the third week of November, with Accord Mortgages, Dudley Building Society and Platform all increasing maximum LTV to 90% in the residential market. Lenders continued adapting to the extension to the furlough scheme, with NatWest confirming they would not accept furlough income for mortgage application purposes for employed customers.

The Financial Conduct Authority gave updated guidance to firms on the enhanced support that should be available to mortgage borrowers experiencing payment difficulties as a result of coronavirus. The guidance came fully into force from the 20th November and the FCA clarified that payment deferrals will only be available for a maximum of six months.

This week also saw the latest in our series of popular Question of Knowledge webinars take place, with housing schemes the topic of discussion. Roger Morris, group distribution director at Kent Reliance for Intermediaries and Liza Campion, head of key accounts at Precise Mortgages joined Knowledge Bank’s CEO Nicola Firth to discuss all the options to support people onto the housing ladder.

WC 23rd November

On the 25th the Chancellor’s spending review announced a National Home Building Fund which is set to invest £7.1 billion over four years to build more affordable houses. Of particular interest to brokers is that, included as part of this fund, is a new ‘Help to Build’ scheme, which will offer access to low deposit mortgages for those who want to build their own home.

In criteria news, TSB tightened terms for those who are self-employed, lowering the maximum LTV to 75% and loan to income to 4.25. Following the trend for increasing confidence across the market, Bluestone Mortgages confirmed it was returning to pre-Covid maximum LTV lending with 85% LTV available across its residential and buy-to-let ranges.

The month ended with another one of Knowledge Bank’s Criteria Clinics, which focused on interest only products with participants from Kensington Mortgages, Hodge Mortgages, Foundation Home Loans and Tipton & Coseley Building Society.

The overall trend of the month has been one of increasing confidence and lenders upping their maximum LTV. With a vaccine on the horizon, we appear to be heading towards some level of normality, however criteria are still constantly evolving and undoubtedly we will continue to see lenders adjusting to the latest developments in the coming months.

Original Article from Financial Reporter 17/12/2020

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Essex Home Finance

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Address : 8 Kingsdale Business Centre, Regina Road, Chelsmford, Essex, CM1 1PE

Essex Home Finance Ltd is an Appointed Representative of Mortgage Intelligence Ltd which is authorised and regulated by the Financial Conduct Authority under number 305330 in respect of mortgage, insurance and consumer credit mediation activities only.

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