We are in an ever changing situation at present, with multiple updates every day from lenders. This makes every day a school day, even for the most experienced advisers in the marketplace.
Some lenders withdrew temporarily a few weeks ago and returned with new processes and policies, some have continued to stay away for now.
What we do know is that the market will return, we don't know when or how fast, but we see the lenders that are trying to lend, and working with us as intermediaries to still achieve positive results for our clients. It is just a case of sitting tight and monitoring changes.
What areas have seen the biggest changes?
Loan to Values
This is the amount of mortgage you have in relation to the overall property value, so if your mortgage is £100,000 and your property value is £200,000, your loan to value is 50%.
We have seen many lenders restrict their loan to values to 60% ,some at 75%, and a few still offering products at 95% loan to value.
Maximum Loan Sizes
The lenders lending at the higher loan to values have restricted the maximum loans for now, some at £300k maximum loan, others up to £350k for now. The higher the loan to value, the lower the maximum loan available.
Here are now, lenders need to balance their own exposure and risks, but also at the higher loan to values, they have to have more capital in reserves, so, higher loan to values are riskier in a volatile market for a number of reasons
We get asked this question a lot! What's happening with valuations?
Clearly at this time, valuers are unable to get out to properties to value them physically.
Some lenders have had Automated Valuations (AVM's) and Desktop Valuations for some time, but this situation has accelerated their roll out and scope for doing so.
This partly ties in to the maximum loan to values. If a lender can undertake a desktop or AVM on your property within a 'safe' loan to value, then everyone's interests are protected.
There are a few lenders in the market doing this very well at present, and we know where to place business at the moment to get a positive outcome for our clients.
The above hopefully gives you a 'feel' for what is happening, some of the why questions, and also that as professional advisers, we are monitoring this situation closely.
To give you some indication on the speed of change, since starting to write this blog, 2 lenders have issued updates. Both increasing loan sizes to £500k at different loan to values, and 1 lender reducing their arrangement fees. This is the pace of the market we work in right now!
As a professional adviser, we have our own knowledge and experiences, but we also have established contacts at the lenders, sit on Peer Group forums, and also actively involved in other social media forums with over 1,200 other advisers! We are actively staying on top of this changing market and will continue to update where we think we can add value with the information we put out!
Any questions on the above or your own personal situation, then just ask!