‘Frozen’ mortgage market thaws as lenders raise LTVs, embrace desktop valuations, hunt for business
It’s been less than a month since lenders reportedly called on the government to “freeze” the property market as they grappled with the disruption caused by the outbreak of Covid-19.
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Faced with the closure of many international processing centres, skeleton staff, a clamour among customers for payment holidays or tracker mortgages, and restrictions on movement that rendered conducting in-person valuations on a large scale impossible, the banks tightened their lending criteria en masse in an attempt to control the flow of incoming business.
For some that meant cutting loan-to-value ratios they were willing to lend at, often down to as little as 60% or 70%, and introducing caps on loan sizes. Others began turning away new business entirely.
However, there are now signs of a thaw underway.
After three weeks of steep falls in the number of mortgage products available, last week the data stabilised at 7,425 products – down almost half compared to pre-pandemic levels, according to lending data company Mortgage Brain.
More lenders competing for business again. In recent days Halifax and Clydesdale have been among banks that have raised the loan-to-value ratios they will lend at. Santander has increased its maximum loan size, Metro Bank has extended all mortgage offers by three months to allow customers to take longer to complete.
Perhaps most notably, HSBC is now accepting desktop valuations up to 90% loan-to-value.
That follows steadily increasing willingness among the private banks to accept remote and desktop valuations.
As lenders edge back towards normality, it should be noted that some continue to tighten up their lending criteria, particularly the income multiples at which they are willing to do business.
The property market will continue to face some form of disruption for many weeks, however it is clear lenders are adjusting to the new conditions, albeit slowly.