The Covid-19 pandemic has clearly had a significant impact on the mortgage industry. Over the past few months, lenders have been grappling with a host of unforeseen challenges caused by an enforced lockdown.

 It’s also been a tough time for borrowers, particularly first-time buyers, who already found it hard to get on to the property ladder. The lockdown clearly exacerbated the problem, as many lenders withdrew higher loan-to-value (LTV) products from the market.

As the property market returns to some kind of normality, it’s an opportunity to reflect on how smaller building societies have performed during the lockdown period.

In particular, we should reflect on how the smaller lenders responded to the challenges presented by the Covid-19 outbreak.

Supporting first-time buyers

Many intermediaries feel that lenders could have done more to support the first-time buyer market during the lockdown period.

Frustration among brokers grew as more and more lenders removed their offers of higher LTV mortgages.

During lockdown, first-time buyers who had been saving for a deposit, saw the number of mortgage deals available to them fall drastically, with only a small handful of lenders offering 90% or 95% LTV products.

Lenders have cited a variety of reasons for pulling their higher LTV mortgages from the market.

Most of these centred around their ability to process mortgage applications being severely reduced due to social distancing (most lenders had to send staff home to comply with this).

This meant that there were fewer staff in the offices to do the work, combined with IT infrastructure and security issues when allowing staff to work from home.

What’s more, many staff were seconded to handle the huge volume of mortgage payment holiday enquiries.

Some smaller and medium sized building societies are to be applauded for playing a vital role in supporting first-time buyers through the lockdown period.

While the majority of the bigger players quickly withdrew from the market, a small number of building societies including the Tipton continued to offer 90% and 95% LTV products for an extended period of time.

The Tipton also kept its Family Assist mortgage available, which lends at 100% LTV and involves a family member providing support. This product is also available for new build homes.

Many lenders took a different approach to brand new homes, with some withdrawing from this market, and others ceasing to accept Help to Buy applications.

As some bigger lenders become more active in the higher LTV market, the small number of lenders that continued to offer their products deserve great credit for supporting brokers and their clients, during what was a challenging time.

Operations

At the Tipton we quickly adapted our working practices to meet the challenges presented by the lockdown.

With no furloughed staff, we invested in setting up staff to work from home. Our business development team continued as normal by processing mortgage enquiries while engaging with broker contacts via Zoom and other technology platforms.

Unlike the bigger players, who use automated scoring systems, smaller building societies employ human underwriters who will look at each individual case on its merits.

Relationships play a major role in any business transaction, but they are especially important when it comes to how underwriters interact with brokers.

During lockdown this relationship really came to the fore, as brokers, BDMs and underwriters worked together in order to try to find the right solution for the customer.

An example of this during lockdown was the part the Tipton played to actively help key workers, to obtain a mortgage.

This included making several criteria changes to support house purchase and remortgage customers with different employment circumstances to secure a mortgage as well as the introduction of desktop valuations to help brokers and their customers.

Outlook

The chancellor’s decision to reduce the stamp duty threshold is one of the most welcome changes seen in many years.

First-time buyers have enjoyed a version of this for a few years now but the cut will now benefit the majority of homeowners in the UK.

The £500k limit will encompass both first-time buyers and home movers, and that is likely to save purchasers up to £15,000 with a large number of purchasers benefiting.

The savings buyers can make could potentially be spent on furnishings, decorating and home improvements. This can only benefit local economies and hopefully help protect jobs.

The stamp duty cut is also a boost for the buy-to-let market, providing an opportunity for professional landlords to grow their portfolio whilst also helping ex pats to look to gain a foothold in the market.

I’m optimistic that the property market recovery will continue on an upward trajectory over the coming months.

According to Rightmove, the average asking price of property coming to market in Britain hit a record in July of £320,265, up by an average of 2.4%. The number of monthly sales agreed is also up 15% in England on last year.

Smaller building societies have a vital role to play in the housing market recovery as consumer confidence returns.

Most crucially, by creating innovative and flexible mortgage solutions, which meet the needs of customers at different stages of their life, while at the same time helping to keep the wheels of the mortgage market moving.

Cammy Amaira is sales and marketing director at the Tipton & Coseley Building Society