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Private Finance Weekly Mortgage Memo - 27th April 2020

This is our summary of news in the mortgage market over the last week that we thought was particularly interesting. Our views are often cited in several national publications, including; BBC News, The Times, Telegraph, City AM, FT Adviser and Daily Mail, as well as a number of key trade publications, so this should keep you ahead of the curve. If you have any questions on any of these stories, or would like further information, please do not hesitate to get in touch. 

At a glance:

  • Offer times outperform pre-COVID levels in some cases
  • Revolution in action – new normal for mortgage valuations
  • Almost 5 million mortgage loans on Standard Variable Rate (SVR) – costing wealthy owners ten of thousands of pounds

Offer times outperform pre-COVID levels in some cases

Last week, lenders worked fast.  Clients generally receive mortgage offers within 2 weeks.  That time frame has been slashed in some cases.  Several of our clients last week have received offers within 2-3 days (not a typo).  For example, one client’s mortgage was declined direct with their bank for a purchase and they needed to complete extremely quickly.  We worked with a lender who had short processing times and could do an online valuation and the offer was ready in two days.  This will allow him to complete in under 2 weeks as the legal work is already well underway.  That would be a slick turnaround even without the added pressures of COVID-19.

  • “Processing resource issues” are already a thing of the past.  Now lenders have so few new purchases to deal with, they have capacity to get new cases processed quickly.
  • Lenders and valuers have proved willing and able to adapt to life under lockdown.  This bodes well for a potential second or third wave of infection / more lockdowns.

Revolution in action – new normal for mortgage valuations

Valuers are using desktop valuations more often (i.e. undertaking research to value properties without physically visiting them).   They are working surprisingly well.

  • Mortgage valuation is set for a gale of creative destruction.  Covid-19 has demonstrated virtual valuations are viable – that they can be undertaken at scale.  Some mainstream lenders are prepared to lend at 85-90% loan-to-value (LTV) via desktop valuations now.  The adoption of desktop valuations will only become more widespread. Now some BTL lenders are proving resilient and are on board.  Where data is available online valuations will be used in all but the most complex circumstances – HMOs and multi-unit blocks, too, eventually.  The valuation industry will not go back to business as usual.  This is the new normal.  Schumpeter would be proud…
  • This will speed up the mortgage process, saving borrowers time.  It will save them money, too.
  • Crafty mortgage companies will soon start pitching this as a step taken to make their businesses greener – desktop valuations are more environmentally sustainable after all.

Almost 5 million mortgage loans on Standard Variable Rate (SVR)

Despite the recent uptick on remortgage activity, 4,750,000 mortgage borrowers are still on an SVR – the default mortgage people fall into when their initial mortgage deal ends (Experian: 44% of the UKs mortgages are on an SVR).

  • SVRs are currently more than double the fixed or discounted rates on offer at the time of application.  This will be costing mortgage holders thousands, if not tens of thousands of pounds in extra interest and could be heavily affecting those that need financial relief most right now without them realising.  With rates at historic lows, now is the time to remortgage.  If used correctly, mortgages, rather than being a burden, can be a valuable financial planning tool.

Private Finance Weekly Mortgage Memo - 27th April 2020

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© Private Finance Limited, 2020. Private Finance provides independent mortgage advice and arranges individual mortgage solutions for clients. Private Finance is a trading style of Private Finance Ltd, 29 Lincolns Inn Fields, London, WC2A 3EG, registered in England no. 3855776 and its Appointed Representatives. Private Finance Limited is authorised and regulated by the Financial Conduct Authority (FCA registration number 310566).

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It has been a pleasure to work with Edward, Conor and Donovan. While my mortgage application was caught in the middle of the Covid-19 crisis, they eventually found a way to navigate through the challenges and eventually deliver. I would highly recommend them.
I am a first time buyer and was in need of a mortgage offer quickly so the seller would retract their property from the market. James McCudden, Alex Aiton and Halcyon Griffith assisted me and were as knowledgable as they were expeditious. I had the mortgage offer within 2 weeks and was able to confirm the offer to the seller so I could secure the agreement to purchase. I would certainly recommend the guys above and Private Finance Ltd for expert and efficient mortgage advice.
Thanks to Edward and Donovan for being incredibly helpful in our remortgaging process. They were responsive, straightforward and available for any questions we had. The process was seamless!
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