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UK Lenders attempt to revive stalled mortgage market

Nationwide, Halifax, Virgin and Santander are some of the UK lenders bidding to kick-start the home loans market that has been in limbo since the coronavirus outbreak.

The British lenders are trying to make it easier to get a home loan amid an on-going nationwide lockdown.

This week Nationwide resumed loans at 85% loan-to-value (LTV) on Wednesday, while Halifax raised its LTV level from 80% to 85%.

As UK businesses closed down and people were urged to stay home in an effort to curb the spread of coronavirus, the UK government rolled out several initiatives to ease the financial burden on tenants and people with existing mortgages.

 

Deals drying up in March

This had seen the UK mortgage market grind to a halt last month, leading to almost a third of all deals being pulled from the market in just three weeks. At the end of March There were some 3,654 total residential mortgage deals on offer from banks and building societies in the UK, compared to 5,239 deals that were available on 11 March, according to finance experts Moneyfacts.

Under the government plan, mortgage holidays of up to three months for struggling households were offered. These apply to both landlords of buy-to-let properties and homeowners. The mortgage holiday has to be agreed with the lender allowing for a temporarily stop or reduction in monthly mortgage repayments.

Now, in an effort to adapt to the current situation, lenders are changing the way they operate to cope with the lockdown and are now much more reliant on their IT systems. They are introducing new models for valuations, as properties can’t be visited by lenders’ staff to be inspected.

“Lenders are using system-generated valuations to get property purchases and remortgages agreed,” Mark Harris, chief executive of mortgage broker SPF, told the BBC.

These are known in the industry as “drive-by valuations”.

 

Confidence in valuations

Sorting out the problems and gaining confidence in the use of these valuations has encouraged lenders to reopen temporarily-closed doors.

Henry Jordan, director of mortgages at Nationwide said: “As the UK’s second-largest mortgage lender, it is right that we still play an active role in the market, while maintaining the levels of service expected of us, during what are unprecedented and evolving times.”

Interest in mortgages and remortgages has not subsided amid the coronavirus pandemic, although lenders will be cautious to check if people’s income has reduced as a result of the coronavirus. But that doesn’t mean borrower will be turned down.

“There is a little more caution in the underwriting process, but even if a borrower is furloughed, the lender will often take their full income into account if it can be proven that the employer is topping up the salary,” said Mr Harris.

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Galina Mikova

Galina is a Hubspot-certified Technical Writer with over 10 years of experience in working with Fortune 500, private investment, banking, FOREX and niche tech companies as well as crypto and blockchain startups. She has a solid background in FinTech and blockchain technology.