COVID-19 and your mortgage, what happens now?
For many, it may have passed your notice that the first quarter of the year ended last week. The first quarter of the new decade has certainly been eventful…
Thoughts on COVID-19 and your mortgage
The start of the year had all the hallmarks of really strong year for the property market. Estate Agents were reporting the best viewing/applicant/offer figures for 10 years or more. Brokers were seeing an increase in mortgage approvals. With no major bumps on the horizon everyone’s tail was up and looking forward to a good year.
Then COVID-19 happened.
For me at least, it has equally been a huge shock to the system which is difficult to get your head around when you start to think about the numbers involved, but at the same time, I am strangely enjoying this time of focusing on what is truly important and having every meal with my family.
Surreal doesn’t even do it justice.
Everyone’s experience of this time will be very different. Last week I heard of the first people I knew who have lost family members to the virus which put it in perspective for me. Equally, if you are living on your own during this period that could be tough. While having 2 kids running around while you are working is challenging at times I am grateful to have them.
Ultimately, I am very thankful that all of my family & friends are safe and well, and even work is carrying on normally to a degree. We have been set up for remote working/video conferencing for a good while now. I miss seeing the team but we are checking in via video on a daily basis.
COVID-19 and your mortgage, how we can help
Specifically in the mortgage market, the main challenge we have had is that of lenders struggling to adapt. None of the major lenders are geared up to work remotely on scale. Couple that with the fact they are understaffed for obvious reasons. If that was not enough, they are busier than they have ever been with all the enquiries on mortgage holidays (I heard one of the biggest lenders in the UK was 40,000 applications BEHIND to asses these applications with more coming in every day). If that isn’t a cocktail for disaster I don’t know what is! Many of the criteria and product restrictions have come about purely to manage new business as opposed to deeper funding problems, but the press never take the time or effort to consider these things.
However, all is not lost. This is where brokers really are worth their weight in gold. We can access nearly all lenders back office systems directly, meaning we can still get applications through in a few weeks and still have senior contacts we can call on when needed. The only major challenge we have is around surveys which will remain very challenging until surveyors are allowed back on the road. I know many lenders are working very hard on getting more desktop and drive by valuations conducted.
Now is a time to work together. Brokers can help lenders by taking the burden off them, and brokers can engage with our clients like never before. If you have a query on lending, not just new applications, but existing loans, 9 times out of 10, we can answer that for you or help. Even if we can’t help you directly, we can tell you exactly who to contact at your bank and how. This will save everyone huge amounts of time in the long run. Contact us if you have questions on COVID-19 and your mortgage.
To those who are sat on the sidelines on furlough right now, this does present an opportunity. How often do you get weeks (months?!) to do whatever you want! In the internet age there is no reason to get bored as you have limitless information at your fingertips. Connectivity remains crucial through this period, so why not look at doing some volunteer work? Check in on your own network (by that I mean if you know elderly/vulnerable/isolated people) for anyone that needs help? You will both benefit from this. If everyone took this approach no-one would even be isolated in the first place.
So while this is a very strange time, and your perception of it will be heavily coloured by your own experience, don’t forget, it will pass. If we hold on to the positives we even come back a lot better for it. Until then, we are on hand for all our clients, prospects, referrals and partners. If we all do that little bit more to help one another, this time will be a lot easier for everyone.
Call us if you need us, we’re still here and happy to help at a difficult time of COVID-19 and your mortgage.
Money markets are now starting to stabilize. Rates seem to be settling around the 0.5% mark. This would indicate to me that markets are hedging on rates increasing in the next 12 months to this level, holding there for a good while. If that is the case, we may see the UK Base Rate go to 0.5%, which would be a 0.4% increase on where we are now. To my mind, that wipes out the benefit of taking a tracker now, I think the smart money will be on a fixed rate for a good while to come.
Anyone who is ‘waiting’ for lower rates following the Base Rate cut may well be disappointed. Our recommendation is to move now so that you can secure the current low rates. We are expecting mortgages rate to go UP not down in the short term as LIBOR has been creeping up in the last few weeks.
At 2nd April money market rates were:
3 Month Sterling Libor = UP by 0.086% to 0.638%
2 Year SWAP = UP by 0.010% to 0.488%
5 Year SWAP = DOWN by 0.006% to 0.507%
2 Year Variable from 0.84%
2 Year Fixed Rates from 1.14%
5 Year Fixed Rates from 1.39%
BTL Rates from 1.19%
The actual rate you will be offered will be dependent on your personal circumstance and deposit level. Please speak to one of our advisers so that they can guide you through this process
Source: Twenty7Tec April 2020
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