Here we go, the seemingly inevitable ‘second wave’, which has led to a semi lockdown from the 5th November (thank God there is childcare/schooling this time…). Rather than setting off fireworks, it has dampened things down considerably, but we have been here before and for that reason, the broker community is well placed to help our existing and new clients through this period to move home or remortgage.
Below are some key areas to consider and a reminder for what it is worth, that nothing lasts forever and we’ll certainly be focusing on things we can control, rather than worrying about things that we can not:
How prepared are brokers?
Very. We can work equally effectively from home or the office, as working remotely was always a feature of our work even pre the original lockdown.
I can’t speak for all firms, but we have a client portal so documentation can be shared securely, we have been using MS Teams for video meetings, multiple tools for tracking lender changes to both criteria and products and crucially, can still access all our usual contacts at lenders while their retail options may be much harder to access.
Will I be able to move home?
Yes. Housing Secretary Robert Jenrick Tweeted just a few hours after Boris Johnson’s address on Saturday saying
“Q: Can I still move house?
A: Yes – the housing market will remain open throughout this period. Everyone should continue to play their part in reducing the spread of the virus by following the current guidance.”
As ever, there is a lack of detail around how things like surveys will be conducted, but as so many lenders now have Desktop or Automated Valuation options, the need for a surveyor to actually visit a property is greatly reduced. The above would imply that if social distancing was observed, surveys and viewings can carry on and as happened in lockdown 1, if there are owners/tenants in the property they may be able to not be present at that time or in a garden etc. Also Estate Agents have really upped their game with more video tours/virtual viewings, so again, the need to actually visit a property is less than it used to be.
What impact will this have on the availability of mortgages?
Very little, if any, in the short term.
This is on the assumption that surveys can take place where needed to move home or remortgage, but even putting that to one side, this is only a 4 week lockdown, so with a bit of forward planning, any delays could be managed.
Lenders have been struggling more with service issues of late, so this clearly will not help, but if purchase activity does reduce during this time, which is highly likely, it may give them a chance to catch up over the next 4 weeks. If we then go back to ‘post-Covid normal’ in December, there is no reason why lenders would cut back criteria or products further.
With the extension of the furlough scheme that has at least kicked that issue into the slightly longer grass for now, but the wider economic impacts will have to be reassessed come end of November/December.
That said, I can’t see how or why lenders would get more restrictive than they are at present unless something significant changes. With mortgage lending hitting a 13 year high according to the Bank of England’s own figures in their latest Money & Credit Report, confidence in the market remains high despite all the headwinds we were facing prior to the announcement on Saturday.
Will this effect pricing of mortgages?
Unlikely, for the reasons outlined above.
Money markets have been pretty flat in recent weeks (see below for more on that) and it will be a week or so before any changes filter through into money markets and then it may be a few weeks still (if at all) for that to work their way into the mortgage world.
As we look at this every week we’ll flag any issues. The main risk as I see it is that if lenders do get under more pressure on service, some may price themselves up (increase the cost of their mortgages) to slow applications. That is a very real risk as with even more limited resources than they have at present, this could cause real issues and if that triggers a herd impact, even lenders that don’t ‘need’ to reprice upwards, may be forced to do so in order to stop them being flooded with applications.
So in that regard, whatever happens with money markets, that is likely to have a bigger impact on pricing – the simple ability for lender to process applications – as if they do get overrun, pricing will go up. One to keep a very close eye on over the coming weeks.
We would urge anyone who can, to secure their next mortgage deal as soon as they can.