Welcome to another column where, despite the efforts of Messrs Trump and Biden, the headlines have been stolen once more by the pandemic: Lockdown 2 – This Time It’s Personal!
The good news for everyone in the property industry is that, unlike the first instalment, the buying-and-selling process can continue. Valuers and removals can carry on if the usual social distancing rules are followed, so there is no reason to do anything other than conduct business as usual.
As ever, mortgage availability from lenders is key and the current lender behaviour looks like it will continue to be a feature of the market for some time, probably until the end of the stamp duty holiday in March next year.
We know the main issue is that mortgage lenders have had a continual struggle with capacity and people, given the nature of the pandemic. Unfortunately for many first-time buyers, the higher loan-to-value products continue to be a casualty of this as lenders also mull over the potential risks to the economy caused by the end of furlough and other measures.
I am also concerned about the effect on self-employed applicants, with some lenders being, in my humble opinion, overly cautious and lumping all the self-employed together as a big risk.
It is worrying that, several months in to the pandemic, we are still seeing severe service issues that lead to the culling of products and hiking of rates. I repeat: why oh why are product transfer rates increasing? This can’t be about capacity, or risk for that matter.
Entering this new lockdown, it is all about making sure that the pipeline we have worked so hard to build remains stable and can get through without delay.
Government action
As we get closer to the bottleneck of the end of the stamp duty holiday, this is a significant worry. Well done to those trade bodies and firms representing the property industry that have written to the chancellor, calling for the government to act now to avoid a cliff-edge event by extending the deadline or via some type of taper system.
Reports suggest average property transaction times have increased from an average of 12 weeks to 20 weeks, so something needs to be done to avoid the intense frustration that many may experience in March 2021.
Add to this the changes in the Help to Buy Scheme and the risk of people lashing out at lenders, conveyancers and brokers alike if the deadline is missed, and it is not a pleasant thought. It was interesting to hear housing minister Christopher Pincher state categorically that there would be no Help to Buy Scheme extension, so the changes will go ahead as planned.
There has also been an extension of the Mortgage Payment Deferral Scheme (it’s not a bloomin’ holiday!). On this point, I note that the FCA has been questioned by a Treasury select committee around why borrowers were not told that payment holidays would affect lending decisions.
To be fair to FCA chief executive Nikhil Rathi, who has only recently taken the job, the regulator is being explicit now, stating: “We’ve been clear that the credit file masking is there for three months.”
We need to continue to make sure borrowers get the message that this payment deferral is a need-to-have, not a nice-to-have.
In the markets, meanwhile, three-month Libor is down and now stands a smidge over zero at 0.04 per cent, while swap rates are still crazy low.
2-year money is down 0.01 per cent at 0.05 per cent
3-year money is down 0.05 per cent at 0.10 per cent
5-year money is up 0.03 per cent at 0.20 per cent
10-year money is up 0.07 per cent at 0.42 per cent
As usual, there has been so much for brokers to keep up with as far as products and criteria are concerned, and quoting a rate one day does not mean it is still there the next.
It is good to see Nottingham Building Society re-enter the mortgage market with a range of products up to 80 per cent LTV – welcome back!
Well done to Santander, the latest lender to say it will support applications from mortgage prisoners. As I have written before, we should see it as our pro bono work to help as many of these applicants as possible who have been treated as merely a commodity for too long.
NatWest has launched a Green Mortgage product range, which is refreshing, while Paragon has started to lend on student lets once more.
For those of you who have not seen it yet, Generation Home, a new start-up lender, is seemingly making waves with its innovative approach to lending and helping first-time buyers. I love to see something different on the market, so good luck to them.
Hero to Zero
HSBC has been excellent throughout the lockdown period
Accord – for extending its availability of 90 per cent LTV products
Ami’s excellent insight into the protection market
Lenders starting to dual price
The impending cliff edge in March – we need to ensure there is not chaos or recrimination
Lockdown 2 and the virus – please stay safe
Protection report
Another thing that is great to see is our very own Association of Mortgage Intermediaries getting stuck in to the protection market with its release of the Ami Viewpoint 2020 – The New Protection Challenge.
This is really revealing, and I urge everyone to take a look at it. It seems there is still a big mismatch between broker and customer perceptions on protection and there are some key areas we all need to address.
As Scott Taylor-Barr of Openwork eloquently put it: “The report highlights a real and vital need for better consumer education around protection insurance. However, this is something we need to tackle as an industry.”
What is disappointing is that we have started to see a couple of lenders offering cheaper products directly again, and not through brokers. In these times we need a level playing field so borrowers who want to use the services of a broker and get proper advice are allowed to do so and do not feel they have to go direct with no hand to guide them. Lenders, you know who you are!
Finally, let’s look out for each other during this new lockdown, which may be a bit tougher than the first in terms of mental health now that the novelty has worn off and the weather is, well, the weather.
We are an industry that thrives socially and when we work together. Whether lender or broker, conveyancer, valuer or competitor, we have to remember we are all in this together. We must look out for each other, provide help where needed, offer ourselves as someone to talk to, and always be kind.
Stay safe, healthy and prosperous.
What Really Grinds My Gears?
I’m really struggling at the moment to tear myself away from the CNN coverage of the US election; it is mesmeric, like some kind of stat porn.
It is interesting to watch how the two candidates conduct themselves. Contrast the statesman-like speech made by Biden with the allegations of fraud and threats of lawsuits by the man in orange. Obviously you know who I am rooting for, but that is not the point.
Even Twitter now is censoring some of Potus’s tweets on the grounds they are misleading and probably lies. Let that sink in. This is the president of the United States.
But you only have to look at Twitter and social media generally to see so many others playing the same game. So many people are using social media to push fake news and cause division; pretending to be one thing when actually they are something else.
We need to remember that sometimes social media can just be an echo chamber, that banter can sometimes be perceived as bullying, that stray comments can cause damage.
In our industry we are lucky to have so many good voices on social media, and I have always championed the notion that the more of us who are out there being authentic, being proud of what we do and not belittling others, the more this promotes how good we are as an industry.
Keep up the good work, social champions, and let’s not descend into the valley of the Trump!
