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Lenders return in week after lockdown

Lenders have reintroduced physical valuations and higher loan-to-value lending after the government gave the green light to restart the housing market in England last week after seven weeks of lockdown.

Accord Mortgages announced today (May 20) that it is accepting residential applications up to 90 per cent LTV following the renewal of physical valuations.

Buy-to-let remortgages are currently available up to 65 per cent LTV, although a spokesperson for Accord said an announcement on this was due on Friday.

Meanwhile, Virgin Money and Clydesdale Bank confirmed “a wider range of products supported with a mix of physical and non-physical valuations” would be introduced next week, including residential mortgages up to 90 per cent LTV and buy-to-let mortgages up to 80 per cent LTV.

Temporary limits on loan sizes and property values will also be withdrawn.

Additionally, physical valuations will be booked in England for pipelines cases with Virgin Money and Clydesdale Bank that require such a valuation.

Some lenders had already resumed offering high LTVs last month. Halifax Intermediaries reintroduced lending up to 85 per cent LTV in April, followed by BM Solutions’ return to buy-to-let lending up to 75 per cent.

Nationwide also extended lending via brokers up to 85 per cent LTV after focussing support on existing borrowers and processing ongoing applications.

Providers had previously withdrawn high LTV lending after the government announced a lockdown on March 23, which effectively brought the property market to a halt.

Additionally, Nationwide has confirmed that valuers will be able to resume physical inspections this week (from May 18) after the government published its new guidance on moving home.

Likewise, Santander announced the following day (May 19) its valuation partners would aim to contact intermediaries’ clients, or the property owner, by May 29 to arrange a date for cases in England that required a physical inspection and had been put on hold.

It anticipated that most valuations will be carried out before June 10.

Santander said it would be holding rates while increasing the maximum loan size to £1m on some residential products, and to £750,000 on its buy-to-let range.

This followed recent changes from Santander such as raising the maximum LTV for residential lending to 85 per cent, and for buy-to-let remortgage products to 60 per cent LTV.

Meanwhile Leeds Building Society is working with Countrywide to complete the “outstanding minority” of valuations on mortgage applications as physical inspections resume in England.

Jaedon Green, chief customer officer at Leeds Building Society, said desktop valuations will continue to be used where appropriate and “for homeowners particularly concerned about social distancing, we’re also piloting external inspections which mean a valuer will still visit their home but doesn’t need to enter it”.

Specialist lenders have also been adapting to market conditions. As well as resuming physical valuations, on May 19 West One Loans relaunched buy-to-let products at 70 per cent LTV, subject to a maximum loan size of £250,000.

For many brokers the renewal of physical valuations is likely to be welcome news.

Andrew Brown, managing director at Bennison Brown, said the main challenge during lockdown was that an estimated 60 per cent of their cases were not suitable for remote valuation.

Commenting on the return of physical valuations and viewings, Mr Brown said: “It is likely to take some time to clear the backlogs and for consumers to gain confidence but it is the first major piece of good news we’ve had for some time.

“We hope this is the start of the recovery of our sector.”

Some advisers had pointed to issues with undervaluations as remote valuations were carried out during lockdown.

Kevin Dunn, director at Furnley House, said some of his remortgage clients, who had properties valued remotely, felt they would have received a higher figure if a physical valuation had been carried out.

By Chloe Cheung

Source: FT Adviser

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Payment holiday is top search term in residential mortgages

The COVID-19 mortgage payment holidays introduced by Chancellor Rishi Sunak took top spot during March 2020 as the most searched for term among brokers within the context of residential mortgages, according to lending database Knowledge Bank.

Beyond the payment holiday, residential mortgage search terms continued as normal in March, with ‘maximum age at end of term’, ‘interest only’ and ‘self employed – one years accounts’ making up the rest of the top four.

Fifth on the list is ‘defaults – registered in the last three years’, which Knowledge Bank reports is likely to rise in the coming months.

For the buy-to-let market, ‘COVID-19 mortgage payment holidays’ was second on the list, but ‘lending to limited companies’ remained top for the third month running.

For second charges, brokers were most likely to search for the maximum loan-to-value ratio (LTV) or minimum loan amount, the latter arguably showing the increasing need to release cash during the current crisis.

The rest of the top five search terms related to second charges were ‘mortgage or secured loan arrears or defaults’, ‘debt management plan – ongoing/current’ and ‘internal/automated valuation model (AVM)/desktop valuations’.

The last option is a new entry, but one that is expected to appear across all categories as the lockdown continues to interrupt in-person valuations.

In the equity release market, the top five search terms were ‘early repayment charges’, ‘partial repayments’, ‘property with an annex/outbuilding/land/acreage’, ‘tenants in common acceptable’ and ‘second home/property’.

Fluctuations in this category are likely the result of fewer brokers searching for equity release.

Searches relating to bridging loans and commercial lending were not particularly disrupted; the top search terms here were ‘regulated bridging’ and ‘semi-commercial properties’, respectively, and both categories had ‘maximum LTV’ in second place.

However, these categories are expected to change significantly over the coming month, as many in these sectors are now unable to lend.

In addition to monitoring the most popular search terms, Knowledge Bank has established a ‘COVID-19 criteria live feed’.

This registered almost 500 changes to criteria among 14 lenders within just 48 hours last week.

Nicola Firth, founder and CEO at Knowledge Bank, said: “With the number of lender criteria changes increasing by the day there has never been a more important time to have subscription to a criteria search engine.

“As the UK’s largest and most comprehensive mortgage criteria search system, the industry looks to us to provide up-to-date and accurate information on lending policy.

“At this time of change it is important to reflect the issues and the searches that brokers are carrying out as it reflects on the market as a whole.

“The number of broker registrations and searches has increased exponentially over the past three weeks and the a peek into those searches provides us with a fascinating insight.

“April will clearly be even more revealing as the broker searches could change more dramatically than anything we have seen to date.”

By Jessica Bird

Source: Mortgage Introducer

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BoE: Outstanding value of residential mortgage loans up 3.8%

The outstanding value of all residential mortgage loans was £1.499bn at the end of 2019, which is a year-on-year increase of 3.8% according to the latest Bank of England Mortgage Lenders and Administrators Statistics.

The value of gross mortgage advances was £73.4bn which remains broadly unchanged in comparison to Q4 2018.

New mortgage commitments, or lending agreed to be advanced in the coming months, was 4% higher than in 2018 at £70.6bn.

The share of mortgages advanced in Q4 2019 with LTV ratios exceeding 90% reached 5.7%, which is a rise on figures recorded the year previously.

The share of gross mortgage lending for buy-to-let purposes was 12.4%.

The value of outstanding balances with ‘some’ arrears fell by 2.1% over the quarter to £13.4bn, and now accounts for 0.89% of outstanding mortgage balances.

Mark Pilling, corporate sales managing director at Spicerhaart, said: “The Q4 arrears figures from the Bank of England are broadly positive, showing another fall on the back of previous quarters.

“There was also a small drop in high LTV mortgages and high loan-to-income ratios – although single-income borrowers with an LTI ratio above four actually rose slightly, which could be a cause for concern.

“With the coronavirus Covid-19 already beginning to cause real disruption to businesses and people’s livelihoods, it remains important that lenders have a flexible attitude and continue to seek outcomes that are right for customers.

“There is a strong likelihood that arrears will rise as a result of the virus, and the measures imposed to slow down its spread.

“Lenders need to be ready for a situation where people are facing real financial difficulties through no fault of their own.”

By Jessica Nangle

Source: Mortgage Introducer

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UK property market: Mortgage approvals dip from 26-month April high

The number of residential mortgages approved by banks dipped last month, easing back from a 26-month high in April but remaining above the monthly average.

Seasonally adjusted figures show that banks in Britain approved 42,384 house purchase mortgages in May, falling from roughly 42,900 in April but beating the consensus of 41,000.

The actual number of mortgages for home purchase approved by the main high street banks in May 2019 was also 9.1 per cent higher than in the same month in 2018, marking the highest annual level since June 2016.

According to UK Finance, which released the figures this morning, gross mortgage lending across the residential market in May 2019 was £21.9bn, falling 0.4 per cent compared with the same month in 2018.

“May’s mortgage approvals data support the view that housing market activity may well have got at least some temporary support from the avoidance of a disruptive Brexit at the end of March. It may very well also be that the housing market has benefited from recent improved consumer purchasing power and robust employment growth,” said Howard Archer, chief economic advisor at the EY ITEM Club.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The increase in mortgages for home purchase, rising to the highest level in three years, is hugely encouraging when you consider the political uncertainty which is causing many people to put decisions to move on hold.”

He added: “It suggests a much more resilient market than one might expect, and once a decision is made over Brexit, one way or another, we are likely to see a further uptick in transactions as pent-up demand is released.”

By Sebastian McCarthy

Source: City AM

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Mortgage rates on the rise

The cost of the most popular two, three and five year mortgages has increased over the past three months after two quarters of cost reduction, new data have shown.

With a current rate of 2.27 per cent (as of 1 November 2018), the cost of a typical 60 per cent LTV five-year fixed rate mortgage is now 2 per cent higher than it was in August, according to product analysis provider Mortgage Brain.

At the same time some two, three and five year fixed rate mortgages have recorded increases of 1 per cent.

The Bank of England increased the base rate of interest from 0.5 per cent to 0.75 per cent in the beginning of August and has kept it there since.

Since the start of August, the cost of a 70 per cent and 80 per cent LTV two year tracker has increased by 4 per cent, while its 60 per cent and 90 per cent counterparts have increased by 3 per cent over the same period, according to Mortgage Brain.

Based on a £150k mortgage, borrowers looking to take out one of these mortgages now face an annualised increase of up to £288, the provider said.

Mark Lofthouse, CEO of Mortgage Brain, said: “With the Bank of England maintaining the base rate at 0.75 per cent for the third consecutive month, it’s looking more and more likely that any future rate increases will be at a slow and gradual pace.

“A lot of the movement that we saw in our latest product analysis has happened since the start of September, however, so once again, the UK mortgage market could be on the verge of change where we revert back to seeing a period of increases in the cost of residential mortgages.”

For the first time in many months, Mortgage Brain’s longer term analysis also showed a number of annual cost increases.

The cost of the 70 per cent two year tracker, for example, is now 5 per cent higher than it was at the start
of November 2017, while a 2 per cent increase in cost has been recorded for some two and five year fixed rate mortgages too.

Kevin Roberts, director at Legal & General Mortgage Club, said despite the increases mortgage rates continued to remain at near-record lows and there was a growing number of innovative solutions, particularly for first-time buyers and retirees available on the market.

Andrew Montlake, director at mortgage broker Coreco, agreed. He said: “Specialist mortgage lenders, most of whom only go through brokers, have some really good offerings in this arena at present and there is no need for any borrower to feel that they have no options.”

Source: FT Adviser