There’s no denying that mortgages have taken a hit thanks to the coronavirus pandemic. The UK government has introduced steps such as temporarily removing stamp duty on houses up to £500,000 but unless borrowers have a large deposit, they’re likely still to struggle to get the mortgage they want. Lockdown saw many major lenders pull their mortgages, with small deposit options the first to go.
Whilst some major lenders including Nationwide and Metro Bank are bringing back their 90% options, borrowers are likely to face even more scrutiny and questioning during the application process. Since lockdown began back in March, the number of mortgages on the market has more than halved, with those looking for a 5% or 10% deposit choice facing the fewest options.
Low interest rates also mean that those saving for a deposit are seeing next to no growth on their money. Whilst the removal of stamp duty rates is welcomed, for many it will have no impact if they are unable to gain a 5% or 10% mortgage option. It’s not all bad news for borrowers however with some banks and lenders slowly reintroducing 90% mortgages, however things are a little different than before. HSBC for instance have limited the amount of applications they accept each day meanwhile Nationwide have promised there will be no limit on the number of applications they accept for their 90% mortgage which returns to the market this week.
For borrowers who do find a suitable mortgage option, they need to be prepared to face more scrutiny than they would have before. Those looking to re-mortgage will be asked if they chose to take a payment holiday on their current mortgage and borrowers who have been furloughed may find themselves facing extra investigation before getting the green light. Post-lockdown mortgages are also coming with new criteria such as at Nationwide where borrowers will need to have contributed to the raising of their deposit themselves and not just received a handout from family.
Meanwhile self-employed borrowers may find themselves having to provide evidence of the past three months of business bank accounts as well as the wider three years that lenders normally ask to see in order to prove how their business has traded throughout the pandemic. Whilst the mortgage market is slowly starting to make a post-lockdown comeback, many borrowers across the country will be hoping to see the return of 90-95% mortgages sooner rather than later.