In recent months the job market has taken a battering, with many people being made redundant, put on furlough with no end date given, or in some cases people have been asked to take a pay cut in order to help balance the books. The economic fall-out has made lenders extra cautious and have made it harder for buyers to find mortgages. But exactly how have mortgage approvals been affected by Covid-19?
Lenders are being stricter with who they’re lending money to, for fear of defaults and people not being able to pay due to job loss.
First time buyers have been hit especially hard by the reduction in mortgages offered, as data from financial information company Moneyfacts shows that between 1st June and 1st July 2020, the number of deals at 90% loan-to-value (LTV) fell from 183 to 70.
Some of the larger lenders have even made the decision not to lend to people who have been put on furlough with no date set for return, which has caused problems for those who were previously ready to buy, but who don’t currently have a back-to-work date.
Although the UK property industry has seen an increase since lockdown, with many people attempting to get mortgages and forge ahead with buying property to take advantage of the Stamp Duty Holiday which is running until March 2021, the general consensus is that this will be short-lived, as job losses become more widespread, stretching household finances as they coincide with the end of the government’s financial support schemes.
Although it is going to be harder to get a mortgage whilst lenders are acting on their caution, if you’re looking for a new property don’t be disheartened – there’s no need to abandon your search just yet.
Launched back in 2013, the scheme looked to help first time buyers and those who do not currently own a property who were struggling to save for a deposit, to get on the property ladder.
The idea is, buyers will receive an equity loan of up to 20% of the value of the property they’re buying (up to 40% in London) in order to increase the amount they’re able to put down as a deposit.
You can learn more about the scheme in detail here.
Chancellor Rishi Sunak, also introduced the measure of a stamp duty holiday in England, in order to help get the property market moving again after everything stopped at the beginning of lockdown. This involved raising the stamp duty threshold to £500,000 for everyone, as long as their sale was completed between the 8th July 2020 and 31st March 2021.
For more information on this, and how it applies to second home buyers or landlords, read our more in depth post here.
Selling and/or purchasing a home is always a big life event, but we know situations caused by current times can make this process more stressful. If you’re reading a lot about mortgage options and stamp duty, and confusing market updates at the moment, it’s always worth chatting through it all with a friendly voice who will be able to help you make sense of it.
You can get in touch with us via our website live chat in the bottom corner of this page, or we’re just at the end of the phone on 020 8740 6622.