The second national lockdown in England, currently running until 2nd December, is likely to keep lenders’ attention focused on assisting their struggling customers.
With the announcement from the government that economic support will continue and mortgage holidays will be extended, lenders across the country are likely to be using their resources and staff to keep on top of helping their customers who find themselves in a difficult financial situation due to the coronavirus pandemic.
As the summer months progressed, lenders were starting to assess the resource levels they were attributing to dealing with payment deferral requests as they expected the scheme and uptake to slowly taper off. Instead, the announcement of a second lockdown has brought with it a new batch of customer requests to deal with.
The uptake levels of financial aid such as mortgage holidays and bounce back loans has been one of the main reasons given by lenders to justify their current scaled-down product offering and cautiousness around bringing new products to market. With staff already re-deployed to other service areas, many lenders are reluctant to overwhelm them with too much work.
This redistribution of staff resources can also impact a lenders Loan to Value (LTV) risk curve, as the re-deployed staff may ordinarily be working in a department which would be able to service a greater level of applications, allowing lenders to move up the curve.
With workers working remotely, it has also allowed lenders to move them from one department to the next, depending on where the service need is.
The second national lockdown is already providing a different landscape for lenders than the first, in particular, the housing market remaining open for the four-week period. Despite the damage caused by March’s lockdown and the decision to drop maximum LTV levels, lenders across the board are suggesting that they are on track to meet 2020 targets.
Thanks to elements such as the stamp duty holiday and home people re-evaluating their homes as they were forced to spend so much time in them this year, the housing market has experienced an unpredicted boom over recent months, something which is likely to carry on in the short term. With the stamp duty holiday set to end on 31st March 2021, unless the government decides to extend it, buyers can’t afford to be too relaxed and delay their search if they want to make the most of the price cut.
Lenders on the whole are also more prepared for the second lockdown than they were the first time around. For instance, there’s little requirement to handle paper documents from borrowers now, with lenders converting most, if not all of their systems digitally and many lenders are also taking a stricter approach to who they offer loans to as financial aid such as the furlough scheme and taking out mortgage holidays impact borrowers’ future lending chances.