LTV returning to pre-pandemic levels as confidence grows

Essex Home Finance
The mortgage market is still constantly adapting to the changes caused by the pandemic.
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The mortgage market is still constantly adapting to the changes caused by the pandemic. In December, news of the approved vaccines helped confidence in the residential market with lenders across the board increasing loan to value (LTV). We are now approaching pre-pandemic LTV levels and these appear to be here to stay, with the flash sales at the top end of LTV now looking to be a thing of the past.

Employment was a key area for lenders in December with adjustments made for those on furlough and self-employed. Understandably, lenders have restricted criteria for both of these groups, with those on furlough required to have returned to employment by most lenders. Also, one lender adjusted criteria for those who are self-employed, restricting the income they would take into account.

With these constant adjustments and higher LTV products returning to the market, 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. The team is constantly working to ensure brokers are kept up to date and can give best advice to their clients.

WC 30th November

The month started with Knowledge Bank’s popular annual twelve days of Christmas promotion, with gifts given out to Knowledge Bank users each of the first twelve days of December.

The Association of Mortgage Intermediaries (AMI) announced the appointment of Andrew Montlake, managing director of Coreco, as its new chair as of 1st January 2021. This is interesting news for the broker community as Montlake is the first practicing mortgage broker that has fulfilled this role. This will provide AMI with an even greater understanding and insight into the issues that brokers and their clients face.

In product news, criteria shifted around occupation. Furlough once again was a crucial topic, as NatWest announced it would no longer accept a letter from employers confirming applicants return to work. They now require applicants to provide one full month’s proof of income via a payslip. Platform also restricted criteria for first-time buyers who have been in their jobs for less than six months. Saffron Building Society also changed criteria for those who are self-employed, excluding the pandemic months from income calculations.

Perhaps the most interesting news came from Pepper Money, who announced that from 1st December that valuations can be instructed by the broker once applications have been assessed. This move was clearly designed to support those looking to push through completions in time for the stamp duty holiday and other lenders may look to follow suit.

LTVs continued steadily returning to pre-pandemic levels. Aldermore and Halifax returned to the 90% LTV market, with the latter relaunching products for first-time buyers.

WC 7th December

This week Moneyfacts released data showing the number of mortgage products on the market had increased by 16% in a month to 2,782, marking the most substantial monthly jump for six years. As each of these products have myriad individual criteria, this rapid increase demonstrates the need for a criteria search system to keep on top of what is available and appropriate for individual clients.

Buckinghamshire Building Society announced they were pausing lending and Kent Reliance for Intermediaries withdrew its 100% and 95% mortgage share value, shared ownership products. However, Leeds Building Society reintroduced a range of fee-free buy-to-let mortgages.

LTVs continued to increase as confidence built in the market, with Barclays and Furness Building Society increasing maximum LTVs to 90% for residential mortgages. In the buy-to-let arena, Landbay increased its maximum LTV to 80%. Paragon also released a new large loan product with a maximum loan size of £1m for buy-to-let landlords.

WC 14th December

This week saw a rush for brokers to get applications in for the Help to Buy loan scheme as the deadline was 15th December. A new updated version was launched the day after, however the revised version has regional caps and is now only available to first-time buyers.

Vernon Building Society relaunched its mortgage range for brokers, including a wide range of mainstream and specialist lending solutions. In buy-to-let news, Fleet Mortgages increased its maximum loan size to £2m with a maximum LTV of 65%.

Maximum LTV was again on the rise in the residential market, with Saffron for Intermediaries launching two new first time buyer products at 90% LTV, NatWest increased its maximum LTV to 90% and Together raised its maximum LTV to 70% across first and second charge mortgage products.

As 2020 drew to a close, the year ended in a similar fashion to the previous 11 months. Over the year, criteria has continued to shift at a pace never seen before. The pandemic has caused lenders, brokers and clients to adapt and these changes continued in December. The pace of change looks set to continue into 2021, with lockdown and the end of the stamp duty holiday in sight, brokers will need to use a criteria search system to ensure they are on top of every development.

Original Article from Financial Reporter 13/01/2021

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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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