The mortgage industry has learned its lessons from the first lockdown and has entered the second as well prepared as it could be, say many industry participants.
However, since Spring, the market has changed considerably, with increased demand being the most obvious. Some people say this, alongside other factors, mean fresh challenges that must be solved soon.
“The national stamp duty break has undoubtedly stimulated demand, but given uncertainty over lending prospects, mortgage providers seem to be stricter and more risk averse with who they’ll lend to,” says 360 Dotnet head of sales Dhaneer Popat.
“Many applicants on furlough are now being treated differently by lenders and coupled with the near-total removal of 95 per cent and 90 per cent LTV mortgages from the market, buyers may find they have less purchasing power than they originally thought.”
Vantage Finance managing director Lucy Barrett says, however, that, “Lenders have accepted the situation and formed their opinions, so I expect to see less reaction in terms of product and criteria.”
She adds: “The [payment holiday extension] will create some internal processing challenges for lenders again, but those who took one previously are not eligible this time around, so that will hopefully help to mitigate those volumes.
“Lenders are also better equipped to deal with payment holidays.”
On the conveyancing side, ONP managing director Adam Forshaw comments: “Across the sector, firms have been dealing with a huge increase in demand which will be pushing for Christmas completions. Those that spill over will have a deadline in place to complete before 31 March.
“This is going to put an unprecedented strain on a market that is already heavily under pressure from the surge we have experienced from the first lockdown.”
And from a broker’s perspective, Fosters Financial managing director John Foster says: “Lenders have an underwriting black hole which desperately needs to be addressed.
“With some quoting turnaround times of 30 working days from application to offer, managing client expectations is certainly proving challenging. If a client’s objective is speed, then we must advise them on which lenders will be able to deliver.
He adds: “Lenders not issuing offers quickly enough is also having a significant impact on the chain. I have spoken to numerous solicitors over the past few weeks, who have each advised that clients are becoming more reluctant to start any legal work until their offer has been received.”
However, operational changes made during the first lockdown are still in place and look set to make the second lockdown much smoother, agree most people Mortgage Strategy spoke to.
Forshaw says: “Our people have remained working from home since [the first lockdown], so we’re much better prepared to deal with the challenges of a second lockdown.
“There’s little need to handle paper documents from clients now, which makes it safer for our colleagues trying to avoid any potential source of the virus. But it’s also much more efficient to do these things digitally and it’s what most people would expect.”
MAB regional business partner Michelle Brook says: “Brokers, lenders and agents have all adapted really well to the previously introduced lockdown requirements and pragmatic changes introduced earlier in the year – including, for example, the increased usage amongst lenders of AVMs and desktop valuations at higher LTVs, thereby allowing more transactions to proceed without the need for physical inspections.”
Accord Mortgages director of intermediary distribution Jeremy Duncombe says: “Our people are used to working from home and have developed innovative ways to work together whilst being remote. Brokers are comfortable and confident in how they interact with us, checking turnaround times online, using our MSO portal for case updates or discussing queries on webchat.
Duncombe adds that, with the lockdown allowing the mortgage market to move this time around, he feels it unlikely that the market will see pent-up demand at the start of December.
“Our appetite to lend remains the same…what remains to be seen is how consumer confidence will be impacted and the industry needs to work together to ensure the market stays buoyant,” he concludes.
Barrett agrees with this assessment. She says: “With the housing market still open for business, and volumes still rising daily, I do not believe [the lockdown] will affect the industry as it did previously.
“I feel this industry has built up resilience and accepted a new way of working, which gives me confidence.”
And this could be a rare piece of good news. As Brook puts it: “The ability for the continuation of housing transactions to be undertaken is massively important for the industry and also for the wider UK economy due to the multiplier effect that housing has in generating further activity and spending in the wider economy.”
Let’s all just hope that we don’t see a lockdown trilogy.
