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Private Finance's Weekly Mortgage Memo - 1st February 2021

This is our take on recent news in the mortgage market. 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:

  • Purchase market slowing down…
  • Lender hit by Covid outbreak amongst underwriting staff
  • Professional mortgages seeing new player with increased loan-to-income ratios

Purchase market slowing down…

We have seen a significant decline in purchase enquiries in the last couple of weeks. ​We believe this is due to the end of the SDLT holiday approaching and buyers holding off to see what happens and whether it is extended or not. There are calls from across the industry for an extension as there are fears the end of the holiday could see a cliff edge fall in transactions. However, with prices having risen so significantly and eroded any savings it may not be worth buyers worrying too much about the deadline…

  • There are other factors at play, including a lack of supply, with the new stock of homes down 12% in the first 2 weeks of 2021 according to Zoopla which will keep prices high for the foreseeable, until people are comfortable with having potential buyers in their homes.
  • The timescales to beat the SDLT deadline, unless extended, are now too short for most purchasers even with lenders returning to normal processing times… If the holiday is extended, we can expect an increase in purchase enquiries almost immediately.
  • We believe that the next couple of months will be slow until lockdown eases and people become more comfortable with both putting their houses on the market and in viewing property and with the optimism generated by the vaccine, we expect we will see a boom in purchases in the summer months, very similar to 2020 in terms of a tumultuous year of peaks and troughs in demand.

Lender hit by Covid outbreak amongst underwriting staff

A lender we work closely with has recently suffered from a Covid outbreak within its underwriting team and thus had had to withdraw all sub 80% products on account of reduced capacity. This highlights just how difficult the situation is facing lenders at present as they try to manage an enormous workload with staff safety and is indicative of why we have seen longer processing times in recent months.

  • We wish everyone involved a speedy recovery.
  • It remains important that buyers understand that this situation remains fluid and to maintain expectations for increased processing times when making a purchase.

Professional mortgages seeing new player with increased loan-to-income ratios

Platform, the Co-op’s intermediary lending channel has recently announced increased loan-to-income multiples for newly qualified professionals, i.e., those with professional qualifications such as accountants and the like, to 5.5x income.

  • Other lenders like Clydesdale and some specialist building societies already do the same, however it is good to have another lender to join them.
  • This highlights the way in which lenders are competing for the lowest risk propositions available and are rewarding these types of borrowers accordingly. Ultimately, in this post-pandemic lending landscape with employment under greater scrutiny, those who can easily show that their employment is secure in the long term are in a better position.
  • We believe with rates already low and not much margin to decline further, we will see criteria and product innovation becoming more prevalent in 2021 as lender ease restrictions tightened at the beginning of the pandemic and look for niche areas to operate within and make a good margin.

Private Finance's Weekly Mortgage Memo - 1st February 2021

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© Private Finance Limited, 2021. 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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