The world of mortgage lending has always had to adapt to changes in society. In 2008 the credit crunch turned the world of lending on its head as property prices slumped and many borrowers were left in negative equity. The impact of this squeeze was much tighter lending criteria and credit controls.
Tightening of the regulations since 2014 has already seen those applying for a mortgage placed under greater scrutiny with affordability assessments introduced to evaluate the incomings and outgoings of applicants.
Where once home loans were mostly accessible to regular earners and the ‘job for life’ generation, the lending criteria have adapted over time to provide accessibility to first time buyers, something that historically was reserved for couples; and to those on low incomes with the introduction in the 80s of the Right to Buy scheme for council tenants.
The country is once again in a period of unpredicted financial flux and Covid-19 presents the biggest challenge to lending criteria since 2008.
Just as borrowers were adhering to the strict assessment criteria that have become the norm, the pandemic has created a potential rise in unemployment, payment issues, and forced credit problems. This is without the effects that remain to be seen in the housing market once the stamp duty holiday comes to an end.
There is no doubt that lenders will have to review and reassess their lending criteria as the number of borrowers with adverse credit inevitably increases. If previous experience is anything to go by levels of self-employment could rise as employers reduce their workforces and people seek self-sufficiency.
Despite all of these considerations mortgage lenders have been quick to react. For example, recent research by Moneyfacts found that the availability of interest-only products has risen by 13% since March.
Longer-term, fixed-rate products are also proving popular with one high street lender offering a 10-year fixed product.
There are also positive signs for self-employed borrowers, with some smaller lenders pledging help on a ‘case by case basis. One building society has even created its own ‘bounce back’ product allowing self-employed borrowers to apply for a 75% mortgage with just one year of accounts.
You Can Start Your Conveyancing Before Making An Offer For Free
With so many issues already affecting the housing market, anything that further streamlines the process of buying and selling is a positive addition. Our ‘Offer Ready’ and ‘Move Ready’ packages are designed to prepare much of the paperwork involved in a house sale and purchase to save valuable time, money, and stress.
Offer Ready enables home buyers to ‘up front’ some conveyancing work free of charge. The pack verifies identity, provides evidence of deposit and proves to fund – meaning that legal work can start immediately on sale agreed.
Our Move Ready service, allows homeowners to sell their homes faster by up-fronting most of the conveyancing legal paperwork free of charge. The service makes sure that various legal requirements are completed before accepting an offer – including ownership documents, planning, building regulations, and guarantees. The usual inquiries of sellers are pre-empted along with anticipated inquiries of buyers and all relevant authority searches are completed.
Both services are free providing you instruct Attwells for your conveyancing.
Without a crystal ball, there is no way of telling how the housing and lending markets will be affected in the long term. However, what is known is that it is in everyone’s best interests to find educated solutions to borrowing requirements and to keep the markets moving.
