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Borrowing is on the way to returning to healthy levels

Despite Bank of England figures that showed mortgage approvals hit a record low of 9,300 in May, there are signs that borrowing is returning to normal levels, according to Hometrack.

The Bank of England’s Money and Credit Report showed that households repaid more loans than they took out in May, but that there was still a small increase in mortgage borrowing.

On net, households borrowed an additional £1.2bn secured on their homes, higher than £0.0bn in April, but weak compared to an average of £4.1bn in the six months to February 2020.

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David Ross, managing director of Hometrack, said: “The data released by the Bank of England is encouraging and shows that borrowing, while not at pre-COVID levels, is certainly returning.

“On a more positive note our data for June shows continued growth and is up on the same period in 2019.”

For the market to return to normal, Ross added, providers must continue to innovate and focus on the customer.

He said: “Continued stimulus is key to maintaining this growth.

“We urge mortgage providers to focus on delivering the very best customer experience, removing complexity through digitisation and ensuring fewer barriers to borrowing.

“This in turn will help grow new lending, helping the economy get back on its feet after the shock of COVID.”

By Jessica Bird

Source: Mortgage Introducer

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Bank of Scotland sees huge rise in mortgage applications

Online mortgage application enquiries to Bank of Scotland have jumped 75% in the past week, ahead of the Scottish property market emerging from lockdown.

The imminent reopening of the property market means new lending appointments are also up, with an increase of 470% on the previous week.

Bank of Scotland data revealed that the majority of these enquiries and appointments are from first-time buyers.

As movers navigate the post-lockdown housing ladder, many will be looking for help on what this now looks like and what it means for them.

“It has left many people at a loose end”

Graham Blair, Mortgages Director, Bank of Scotland, said: “With the housing market slowing in the last few months, it has left many people at a loose end, whether that involved delaying plans to buy, extending rental agreements, or having to move in with relatives or friends.

“As Scottish estate agents look to reopen their doors, we are seeing an increase in mortgage applications and new lending appointments as more people want to get moving.

“Our branch-based advisers are also there to help people take the next step, but there’s plenty that people can do to get the ball rolling in the meantime.”

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Bank of Scotland advice on coronavirus home buying

First-time buyers

“If you are taking your first step on the property ladder, you should have a look at the First Home Fund which may be an option in helping you purchasing your first home,” the Bank said.

Start the ball rolling

The quickest way to find out how much you can borrow will be by checking online tools and calculators which can help you within minutes.

Keep documents up to date

Before speaking to a mortgage adviser, make sure all your income details, bank statements and pay cheques are up to date and you have them prepared before the first meeting.

The more accurate information you can provide from the offset, the smoother the process will be.

Be realistic

For those selling, there will be lots of speculation over the coming weeks about house prices going down, but we should remember we are in unprecedented times.

With market activity currently almost at a complete standstill, and therefore a more limited number of transactions, it will take time for the true trend to emerge.

Consider looking at a trusted house price website as well as talking to a number of local estate agents who can share local expertise on the area.

What if I have been furloughed?

“From a Bank of Scotland perspective,” it said, “our conditions largely remain the same for those applying for mortgages and we recognise furloughed income.”

Many people have changing circumstances which is why it is important to bring all the latest information with you.

By Conor Marlborough

Source: Scotsman

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BoE: New mortgage commitments up 6.1% in Q1

The first quarter of 2020 saw a 6.1% year-on-year increase in the value of new mortgage commitments (lending agreed to be advanced in the coming months) to £67.6bn, according to the latest figures from the Bank of England.

The BoE’s data also revealed that the outstanding value of all residential mortgages loans was £1,509bn at the end of 2020 Q1, 3.9% higher than a year earlier.

Overall the value of gross mortgage advances in 2020 Q1 was £65.8bn, 3.8% higher than in 2019 Q1.

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Tomer Aboody, director of property lender MT Finance, said: “Overall, and as expected, the lending market enjoyed a great first quarter with plenty of confidence, more lending done and higher loan-to-values offered by the banks, along with cheaper mortgage rates compared with the same period a year ago.

“This was set to be the trend for the year ahead after years of uncertainty created by Brexit.

“Then the pandemic hit and the picture in the second quarter will be very different. But what it ultimately shows is that the fundamentals are there.

“Lenders are keen to lend and now, as we wait for lockdown to end, we need some stimulus from the government to give the housing market the boost it needs.”

By Ryan Fowler

Source: Mortgage Introducer

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Strong mortgage lending in first quarter of the year

The first three months of 2020 saw a rise in mortgage lending before the coronavirus lockdown took hold.

Gross mortgage advances in the first quarter of 2020 totalled £65.8 billion, 3.8% higher than in Q1 2019, the latest figures from the Bank of England show.

This takes the outstanding value of all residential mortgages loans to £1,509 billion at the end of March 2020, which is a rise of 3.9% from a year earlier

The value of new mortgage lending agreed to be advanced in the coming months was 6.1% higher than the previous year, at £67.6 billion.

Almost three quarters (73.2%) of the share of gross advances had interest rates of less than 2% above Bank Rate in Q1 2020. This is 10.2% lower than a year ago and was driven by the 65bp cut in Bank Rate in March rather than any significant change in mortgage interest rates.

The share of mortgages advanced in Q1 2020 with loan-to-value ratios exceeding 90% was 5.2%,up by 0.7% from a year ago.

Buy-to-let lending, including house purchase, remortgage and further advance, represents a 14% share of gross mortgage lending, unchanged from Q1 2019.The value of outstanding balances with some arrears increased by 1.8% over the quarter to £13.7 billion, and now accounts for 0.91% of outstanding mortgage balances.

Commenting on the figures, Mark Harris said: “The Bank of England data relates to the first quarter of the year when the impact of Covid-19 had not yet been felt.

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“While this makes it feel very historic, it does show what might have been had the pandemic not hit, with an increase in gross mortgage advances compared with the previous year, as well as the value of new mortgage commitments.

High LTV

Harris continued: “The share of mortgages advanced to borrowers requiring a loan-to-value greater than 90% was 5.2%, an increase on the previous year, illustrating the level of demand for high LTV deals.

“With lenders including Accord, Clydesdale and Virgin Money pulling out of the 90% LTV market this week owing to high demand, after only recently returning when physical valuations were once again allowed, there is clearly a need for the big lenders to commit to this market.

“The number of people taking out high LTV mortgages in the second quarter is likely to fall considerably, not due to lack of demand but lack of products available.

A spokesperson for Virgin Money commented: “We’ve been one of only a few lenders offering 10% deposit products, however we have seen strong increases in demand from customers with small deposits.

“To protect the service for existing customers as well as pipeline applications, we are temporarily withdrawing our 90% LTV products. These products will still be available for existing customers looking to do a product switch. This change means we can continue to focus on providing existing customers with the level of service they’ve come to expect.

Buy-to-let

Referring to the buy-to-let figures, Harris said: “Encouragingly, buy-to-let lending was stable, even though the sector has come in for a lot of change on the tax and regulatory front. Investors are adapting to the new environment and tailoring their portfolios accordingly.

“The impact of tenants unable to pay their rent is providing a further challenge for landlords, although of course this won’t be apparent until the second quarter figures.’

By Joanne Atkin

Source: Mortgage Finance Gazette

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London and the south buck the trend as mortgage market flattened in Q1

The coronavirus pandemic may have flattened mortgage approvals across the UK but there are still hotspots of activity, UK Finance data has revealed.

A household finance review for the first quarter of 2020 by banking trade body UK Finance shows mortgage approvals slumped on average across the country but still increased in some parts for first-time buyers and home movers.

This suggests there could still be demand for estate agents to tap into now the market has reopened.

The figures show that mortgage approvals for first-time buyers fell across the UK but were up in the south east of England and London by 3% and 5% respectively during March when the market was on lockdown.

There were large drops elsewhere though, with approvals in Yorkshire down 16% and the north of England registering 20% drop.

The data also shows that while approvals for home mover mortgages were down overall, they rose in each month of the first quarter of 2020 in London, the south east of England and Northern Ireland.

Home mover approvals were also up annually in Wales, the south west of England and East Anglia during March but fell by more than 10% in the north of England and in Scotland.

There was some good news for the lettings sector as buy-to-let approvals rose 7% over the quarter.

UK Finance also warned of a modest pick-up in arrears towards the end of the quarter as the Covid-19 pandemic began to impact home owners, but said the level is still lower than a year ago.

The trade body said:

“It is likely that the significant disruption to activity over the quarter is creating some noise in the data and a clear picture of how trends have evolved in different parts of the country should become more apparent in the coming quarters.

“While regional house purchase year-on-year growth shows variances, the picture for the whole of the UK was fairly flat.”

By MARC SHOFFMAN

Source: Property Industry Eye

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Mortgage payment holidays extended for three more months

Those struggling to pay their mortgage due to coronavirus will be able to extend their mortgage payment holidays for three more months, or start making reduced payments, the financial regulator has confirmed.

The Financial Conduct Authority (FCA) published draft guidance last month with proposals for helping those with mortgages, including extending the application period for an initial mortgage holiday until 31 October 2020, so that customers who haven’t had a payment holiday and are experiencing financial difficulty would be able to ask for one up to this date.

The measures proposed have now been confirmed after a brief consultation and the guidance will come into force from this Thursday (4 June).

What the FCA expects mortgage lenders to do

Here’s a full rundown of the new rules being put in place by the FCA:

  • If you’ve not had a mortgage payment holiday, you’ll have until 31 October 2020 to apply. Customers who are making repayments now but get into financial difficulty later will be able to request a payment holiday until 31 October.
  • If your payment holiday’s ending, you can ask for another three months if you’re still struggling. Lenders should continue to support customers who have already had a payment holiday where they need further help, unless granting a further mortgage holiday would create its own financial difficulties. 

    Firms are expected to contact customers on mortgage payment holidays and find out what they can repay and, for those who remain in temporary financial difficulty, offer further support. As part of this, firms should consider a further three-month payment holiday.
  • If you can make full or partial payments, you should do so. At the end of a payment holiday, firms should find out if customers can resume payments, or part payments. If so, your lender should contact you to agree a plan on how the missed payments will be repaid, which could include spreading the cost of payments over the remaining mortgage term, or extending the mortgage term.
  • The current ban on repossessions of homes will continue until 31 October 2020.
     
  • Payment holidays and partial payment holidays won’t go down as a missed payment on your credit file. However, the FCA says that consumers should remember that credit files aren’t the only source of information that lenders can use to assess how creditworthy someone is. MSE revealed last month that taking a mortgage or other payment holiday could still have an impact on future credit applications. 

The FCA adds that these rules are minimum standards and that they don’t stop firms from going above and beyond, for example by offering reduced interest.

Buy-to-let mortgages aren’t technically covered as they’re not regulated by the FCA. Yet if a lender is regulated for its residential mortgage business, the FCA says it also looks carefully at how these firms carry out their unregulated buy-to-let business, so it’s hoped that some mortgage lenders will offer the extensions to their landlord customers too.

What does the FCA say?

Christopher Woolard, interim FCA chief executive, said: “The measures we have confirmed today will mean anyone who needs to can get help from their lender, if they are still struggling to pay their mortgage due to coronavirus.

“It is important that if a consumer can afford to restart mortgage payments, it is in their best interests to do so. Customers should talk to their firm about the best option available for them.”

By Callum Mason

Source: Money Saving Expert

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Majority of borrowers ‘could resume full mortgage payments’

The majority of customers could afford to start making full payments on their mortgage at the end of their payment holiday, according to UK Finance.

The industry body estimated that around 60 to 70 per cent of customers can demonstrate affordability to resume full payments at the end of their current payment deferral.

Last month (May 22) the government confirmed that homeowners struggling to pay their mortgage due to coronavirus can extend their payment holiday for three months, or start making reduced payments in proposals published by the Financial Conduct Authority (FCA).

In response UK Finance said the FCA’s draft guidance “contains a presumption that firms should offer all borrowers who have already taken a payment deferral a further payment deferral for three monthly payments”.

The industry body described the presumption as “unnecessary and may even be detrimental to a customer who is able to resume payments”. It suggested that a “more tailored approach would be more appropriate at this time”.

According to UK Finance, the draft guidance creates a risk that “customers who do not need a full payment deferral for a further 90 days nevertheless self-select to take a further deferral… when maintaining repayments, in whole or in part, would be more appropriate for the customer in the longer term, without creating short term financial hardship”.

Clayton Shipton, managing director at CLS Money, expressed concern over customers who may have taken a payment holiday without needing one.

He said borrowers who take a payment holiday for six months could experience a “shock to the system” when the support scheme ends.

UK Finance has previously said mortgage lenders were committed to supporting borrowers reaching the end of their three-month payment holiday to choose the next steps that best suited their needs.

Possible next steps include reduced payments, a move to interest-only payments for a period, extending the mortgage term to reduce payments or a further extension of the payment holiday, depending on the borrower’s circumstances.

The industry body said for customers “that have already taken a payment holiday on their mortgage, it may be appropriate in some circumstances for this to be extended”.

By Chloe Cheung

Source: FT Adviser

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Remortgage instructions back at pre-COVID levels

Remortgage instructions were up by 7.2% between the third and fourth weeks of May representing the highest activity since before the lockdown, according to the LMS remortgage tracker.

Completions fell slightly between the third and fourth weeks of May, in line with normal monthly trends. Completion volumes for the 15 working days of May so far are 18% higher than April, and 21% higher than March.

Total pipeline volumes are currently on track to be 16.3% lower than May 2019.

Nick Chadbourne, CEO of LMS, said: “It’s promising to see that the instructions spike in the third week of May continued into the fourth week, as the housing market builds momentum.

“A wider range of available products and loosening restrictions are giving borrowers more freedom to choose the right option for their individual circumstances.

“Together with a consistent volume of completions and falling cancellations, we’re seeing a slightly better picture of the future pipeline than last week, and hope to see this continue as confidence, demand and choice keep coming back to the market.

“Borrowers are likely to be looking for a speedy remortgage, and Fee Assisted Remortgaging (FAR) offers the best option to secure efficiently a good deal in good time.

“It’s also the most secure, especially at a time when fraud risks across the whole economy are higher than normal.

“Managing increasing demand while retaining high standards of service will mean cross-industry collaboration is as important as ever, and we’re committed to leading these efforts as a firm.”

By Ryan Fowler

Source: Mortgage Introducer

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Broker confidence holding up

Some 71% of brokers are confident in the mortgage market’s prospects in the next 12 months, despite the difficult few months they have encountered.

The research, from Masthaven, found that only 3% of intermediaries are not confident.

Rob Barnard, director of intermediaries at Masthaven Bank, said: “Broker confidence is holding up well and that’s such an important part of the market, as it directly feeds through into the conversations intermediaries are having with customers.

“Now that the housing market has reopened and with the news that mortgage payment relief may be extended to help those customers in need, it’s good to see positive sentiment for the next twelve months from the intermediary community.”

More than half (51%) of specialist lending intermediaries are using video calls to liaise with their customers, while 42% are sending regular email updates.

Nearly a third (32%) of specialist lending intermediaries said that they are recommending lenders based on their access to reliable funding.

BY RYAN BEMBRIDGE

Source: Property Wire

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Lenders pledge ongoing support for those affected by Covid

Mortgage lenders are committed to supporting borrowers who are reaching the end of a three-month payment holiday to choose the next steps that best suit their needs, according to UK Finance.

This comes after HM Treasury confirmed last week (May 22) that mortgage customers, who were struggling to pay due to the coronavirus, can extend their payment holiday for an additional three months or begin to make reduced payments.

Figures from UK Finance showed that an equivalent of one in six mortgages are currently covered by a payment holiday, with more than 1.82m payment holidays having been issued as of May 20.

The industry body said it was “important that customers receive the support that is right for them” and for those who had already taken a payment holiday, an extension “may be appropriate in some circumstances”.

It encouraged borrowers who are concerned about their ability to pay to contact their lender and consider the “full set of options available to them”.

These include reduced payments, a move to interest-only payments for a period, extending the term of the mortgage to reduce payments, taking a payment holiday if the customer has not already done so or a further extension of the payment holiday.

Stephen Jones, UK Finance CEO, said: “Mortgage lenders are committed to providing those borrowers nearing the end of their three-month payment holiday with help and flexibility in choosing the next steps which best suit their needs.

“The industry looks forward to regulatory guidance being finalised swiftly to ensure both borrowers and lenders can plan over the coming weeks.

“Meanwhile those borrowers who have already taken a mortgage payment holiday and can afford to make payments are encouraged to do so, as this will reduce the level of their repayments in the long run.”

In response, Vim Maru, retail director at Lloyds Banking Group, said: “We are already proactively contacting our customers who will be reaching the end of their repayment holidays to support them in restarting their payments.

“For those who may continue to be financially impacted, we will offer a range of support based on their current financial circumstances.”

But Dominik Lipnicki, director at Your Mortgage Decisions, said he would welcome a “more uniformed approach from lenders when it comes to the ease of application [of a payment holiday] and how these borrowers are looked at in the future when remortgaging or buying a new home”.

Research from YouGov for Nationwide found that 21 per cent of homeowners in April were worried about not being able to keep up with mortgage payments, and 14 per cent feared losing their home.

Lenders have also committed to continue suspending involuntary repossessions for residential and buy-to-let customers until October 31, as set out in the Financial Conduct Authority’s draft guidance for lenders published last week (May 22).

On the day the FCA published its draft guidance, Nationwide pledged that none of its mortgage customers, who fell into arrears as a result of Covid-19, would see their home repossessed until the end of May 2021, if they worked with the provider to “get their finances back on track”.

Joe Garner, chief executive at Nationwide, said: “As a mutual, founded to help people into a home of their own, this is what building societies have always been about. We hope this additional support will provide extra flexibility to those who most need it, to help get them back on track.”

Mr Lipnicki added: “The fact that repossessions are on hold is a very welcome relief for affected borrowers and I am sure that more flexibility will need to be applied even after October 31”.

By Chloe Cheung

Source: FT Adviser