We’re into month six of the crisis and I still find myself using the word ‘unprecedented’ far too often!

But whereas the conversations I was having back in March were focused on the ‘unprecedented impact’ of the virus on our working lives and uncertainty about the future, today that’s been joined by the unprecedented demand we are seeing in the mortgage market.

The high volumes we have seen since lockdown ended is something few of us would have predicted back in March and April. Yet now there is a real feeling of positivity and resilience about the mortgage market. Thousands of consumers want to move home – they need a mortgage and, importantly, they need mortgage advice. In recent weeks, we have seen more lenders that had put new business on hold returning to the market.

But there are still challenges. Advisers are facing pressure from eager consumers who want answers to their mortgage applications. Supply versus demand and delays remain key sticking points.

What’s the issue?

As I said at the very start of this crisis, we are dealing with an operational crunch, which remains the core challenge for many lenders. Demand is clearly there, and lenders are eager to meet these needs, but operational challenges are preventing their return to high LTV lending and are lengthening the time from application to offer.

Lenders are continuing to deal with a range of impacts from the Covid-19 crisis. Thousands of borrowers remain on furlough, while self-employed consumers may be struggling and seeking support from the government’s income support scheme. For many borrowers, their incomes will have changed significantly over the last few months and responsible lenders need to take these changes into account.

The reality of this ‘new normal’ demands a rigid and careful approach to underwriting. Naturally, this means there is a need for experienced underwriters who are now having to manage a higher volume of work as they battle the levels of demand. One lender I spoke with recently was already writing ahead of its 2020 pre-Covid plan.

At the same time, providers are now communicating with and supporting borrowers who are returning from payment holidays. Not only does this require careful attention and support from lenders, but in many instances the offshore contact/processing centres which these businesses will use may not be back up and running to handle initial enquiries.

Together, these challenges are adding perhaps 20 per cent to 30 per cent of time onto each mortgage application and I understand that is causing frustration for advisers and their clients. Managing borrower expectations is critical, but we must also not lose sight of the positive nature of the demand we’re seeing.

Working as planned

The frustration from consumers is also being taken to a whole new level in the national press. I was disappointed to read an article in the Sunday Times this weekend, which took a critical view of Nationwide’s decision to “crack down on deposits from the Bank of Mum and Dad”.

In my opinion, these are cheap headlines. I really understand the challenges facing consumers and I sympathise with advisers who are caught in the middle, as they have to manage customer expectations.

However, we must remind ourselves, and our customers, that this is post-credit crunch regulation working as intended. In 2008, we had 125 per cent mortgages and self-certification – lenders were rightly accused of limited underwriting and risky business. Now, all the regulation and changes that came into place in the years following that crisis are being adhered to.

We cannot criticise lenders for acting responsibly, protecting service levels and meeting their regulatory commitments. This is ultimately protecting their businesses and, importantly, borrowers too. Lenders are doing the right thing by the current regulatory framework.

This lender-bashing in the consumer press is misdirected as well. Nationwide remains one of the few providers offering 90 per cent LTV mortgages. It is in the high-LTV sector to meet demand and, like others in this part of the market, is finding creative ways to do this.

I do have an ask of lenders though: Please, please give advisers more time when making changes to your products. Providing just a few hours for advisers to submit cases is unhelpful, leaving advisers frantically trying to arrange payments for valuations, organising paper and getting ahold of their client. We understand the need to protect service and volumes – however, more warning will help to maintain consumer and adviser support.

Frustration is to be expected in these challenging times. Yet it’s important we remember that the mortgage market is in a better place than we could have expected. This is a situation we never expected to be in after the devastating effects of this global pandemic, so let us keep calm and keep positive and long may it last.

Kevin Roberts, director, Legal & General Mortgage Club