Rob Starr, CEO of Seico Insurance and Mortgages provides an overview of how mortgages and lending has changed now that furlough has ended. Additionally, he talks about the potential risks and what this means for buyers.
Unprecedented times called for unprecedented measures – during the lockdown this was true to almost every industry you can think of; the mortgage market was no different.
- Property valuations all but stopped
- Mortgage offers were withdrawn or held up for months on end
- Your income came under greater scrutiny than ever before
- Help was out there but preservation of your credit record suddenly became the reason to perhaps not take needed help
But despite these challenges, we saw the interest rates reach their lowest level ever. We saw some lenders take a more personal approach when looking at your income position, especially for the self-employed and contractors. We even saw government grants being given out and then allowed as proof of income. Interesting times for sure.
However, now the lockdowns have eased and the pandemic seems to be under better control, what does it mean for people wanting to buy, or wanting to remortgage, or simply wanting to rate swap. In simple terms, the end of furlough actually means a return to normal lending. Lenders are once again treating your income correctly and not asking if you are about to lose your job. Property valuations have now caught up, and with new remote valuations possible, the turnaround is quicker than ever. With business having paused for so long, lenders now really do want to lend. So interest rates remain low, income multiples are at their most generous for years, and lenders are issuing offers quicker than ever before.
So all good news, or is it?
Well there are some things which possibly are a cause for concern. What the recent petrol crisis has shown us is that there remains a lack of supply in the country, or as we keep being told, perhaps a lack of ways to complete the supply chain. Either way it does mean that prices go up, which means inflation could be on the rise, which in turn could mean an increase in interest rates. Also, it is not only petrol and the Christmas turkey that are lacking in the supply chain, but property agents are also currently working harder than ever to get new properties onto the market, which in turn forces the property values up and up.
So, what does all this mean? Well as I say, in simple terms the end of furlough actually means a return to normal business. So, despite the ups and downs and the constant changes the normal mortgage market delivers, there remains nothing more exciting than buying your first home or moving to your dream home or even just reducing your payments, so you can start putting away money for that dream holiday. So, let’s welcome back the normal and crack on.
To find out more about Seico Insurance and Mortgages, please visit www.seicogroup.co.uk.