Mortgage News

[loanarranger]

Skipton Building Society have withdrawn from accepting purchase applications for both Residential and BtL Loans, however as is shown Remortgage will be considered along with product transfers.
Clearly the only mode of valuation will be the AVM which it’s algorithms are prone to be slightly below the Open Market valuations so please don’t kick up if the original loan is adjusted to reflect this.

” Following the market suspension of face to face property valuations, we're making the following changes, which will come in effect at 5pm today:

• the suspension of new purchase Residential and Buy to Let mortgage lending.
• all Buy to Let and Residential remortgages will be limited to a maximum of 75% LTV.
• however, products will continue to be available for existing customers who are looking to switch their mortgage deal.

[loanarranger]

Virgin Money has joined those lenders already reported on amending their current lending criteria, so far as valuations are concerned reliance will be made on AVM’s.

’

Residential applications Remortgage only • Loan-to-value up to 60% • Loan size up to £300,000 • Minimum property value of £80,000 • Maximum property value of £500,000 Buy-to-Let applications

• Remortgage only • Loan-to-value up to 60% • Loan size up to £300,000 • Minimum property value of £80,000 • Maximum property value of £500,000 • • • • •

• We’re unable to accept personal income cases

[loanarranger]

With everything going on and my multiple postings regarding changes being implemented by various lenders I thought the following summary might help all forum readers.

Lenders who have paused accepting new mortgage applications: The Mortgage Lender (TML) on just Residential (Buy to Let remains unaffected) Skipton Intermediaries on both Residential and Buy to Let on - Purchases Only Virgin Money on both Residential and Buy to Let on - Purchases Only Pepper Money are still accepting new applications still BUT as they don’t accept AVM’s, desktop or drive-by valuations, all applications will be put on hold for the next 3 weeks awaiting further guidance from the government around movement Lenders who have put in place occupation or status restrictions: United Trust Bank are no longer accepting applications from those in Leisure, Travel, Hospitality or Retail Sectors on Second Charges LendInvest are no longer accepting applications from First Time Landlords LTV Restrictions as of 26th March Residential Family Building Society have reduced their maximum LTV to 60% Halifax have reduced their maximum LTV to 60% on purchases and remortgages (no change to Product Transfers or Further Advances) Leek United Building Society have reduced their maximum LTV to 80% Nottingham Building Society removed products above 85% LTV Octane Capital have reduced their maximum LTV to 65% Skipton Building Society have reduced their maximum LTV to 75% on Remortgages Virgin Money have reduced their maximum LTV to 60% Buy To Let BM Solutions have reduced their maximum LTV to 60% on purchases and remortgages (no change to Product Transfers or Further Advances) Leek United Building Society have reduced their maximum LTV to 65% LendInvest have reduced their maximum LTV to 75% Skipton Building Society have reduced their maximum LTV to 75% on Remortgages Virgin Money have reduced their maximum LTV to 55%

[loanarranger]

Clydesdale is another lender to amend its criteria albeit for residential mortgages.

Remortgage only
• Loan-to-value up to 60%
• Loan size up to £300,000
• Maximum property value of £500,000

[blinko]

Thanks for this loan arranger very much appreciated for keeping us in the loop during this difficult time. Can i ask why do you think they are restricting LTV to 60% at the momement? also when do you think the mortgage market will go back to normal ?

[loanarranger]

In times of uncertainty, lenders ideally want to be seen to continue lending but at conservative loan to values since if there were to a significant reduction in buyer confidence then Open Market Values will naturally fall and bring about the regrettable risk of negative equity, unfortunately it’s like shutting the stable door after the horse has bolted since until one week ago mortgages were being completed with mortgages of up to 95% for residential and between 75% & 80% for BtL. Therefore new lending reflects a prudent level of lending, unfortunately the majority of lenders as shown in the data I have provided are only accepting Remortgage business so in effect they are shutting up shop.

As a general manager I well recall the days when borrowers surrendered their keys when interest rates went sky high and economic troubles pulled the rug of many hardworking people and it certainly took over a year for the confidence level to improve from both a lending and willingness to borrow perspective. No one wants to see repossessions occur even with the initial 3 months No evictions etc.

Many of the relatively new lenders in the market are solely reliant upon Institutional funding and here is the rub , when times are difficult then they either withdraw new investments or price their investment monies with a high risk bias. This has already led to three lenders withdrawing from any type of mortgage lending and will remain closed until the country is over the Coronavirus and normal services are resumed.

What will make any lending problematic is the absence of valuers physically inspecting property and providing comparables to support their assumed valuations , instead and irrespective of the maximum loan to value being offered reliance has to be placed on Automated Valuation Mechanisms who work on algorithms which take property sales within a radius of say0.25 miles but from experience such valuations seldom mirror the prices being sought and the consequence leads to the loans being adjusted down to bring it into the Max LtV.

What is deeply troubling for BtL borrowers is the risk that even allowing for the current 3 month payment / rental holidays , the time will come when the economics may prove challenging particularly for tenants to pay the existing agreed rent and pay the rental Arrears over even 6 or 9 months, so the potential of longer rental voids could place Landlords in some difficulties with their lenders. The same however doesn’t apply with residential loans as lenders will do their very best to facilitate solutions where borrowers are experiencing payment problems , certainly the amortisation of mortgage payments arising from the Payment holidays will not make significant payment hikes even though the total amount which is eventually paid will be much higher that the Illustration one received whenthe application was submitted.

How long the current situation will take to allow normal services is hard to gauge , even being the optimist and assume that this should occur by July I would expect lenders may only start increasing the maximum loan to Values in late Summer or early autumn but for BtL Loans this could be slightly longer. I don’t have a crystal ball so this is my personal assessment, ideally I like everyone hope that we can get back to normality much sooner than mentioned but the market needs to get comfortable that there are no nastiesin the economy which might upset the intent.

Sorry for the length of the reply

[loanarranger]

The two elements of One Savings Bank have today announced the temporary withdrawal from the lending market, this is disappointing as the criteria particularly from Precise offered many advantages to Buy to Let borrowers .

"One Savings Bank (OSB) and Precise Mortgages are not accepting new applications and putting all applications which have not yet progressed to offer on hold."

[loanarranger]

Coventry has just announced the removal of any lending above 65% Loan to Value.

I am fearing that the announcements from lenders are gathering momentum and whilst I hope my expectations are proved wrong I suspect that many of the key lenders will follow in the coming days. I will keep the forum updated.

[loanarranger]

Zephyr Home Loans have advised that they in common with other lenders have restricted lending across its entire funding range to 60%, they make a strange comment in so far as mention that mortgage sourcing systems like Mortgage Brain or Trigold and others may quote a higher figure , as these are automatically updated at least once a day it is down to Zephyr to ensure that the info is indeed correct.

[loanarranger]

Very sad and bad news for BtL with The Mortgage Works, they have just announced the following :-

Temporarily pausing new lending at 80% LTV and for HMOs. I am seeking information whether HMO’s are completely out for the present.

[loanarranger]

Nationwide have also confirmed that for the present their maximum loan for purchase and Remortgage residential home loans will be restricted to a maximum of 75%

[loanarranger]

I am pleased to report that Halifax are introducing tomorrow a limited range of residential mortgage products up to a maximum of 80% and BM hopes to launch revised loans beyond those previously announced.

[loanarranger]

I thought I had closed the day on an optimistic note but sadly I have received a communication from Foundation Home Loans that they have withdrawn from lending across its entire range until the situation returns to normality.
This is disappointing as they were in the minority for providing funding on HMO’s & MUFB using investment valuations , an essential ingredient to extracting release of equity from properties that fell within this category.

Time now for a glass of wine to recover from the numerous announcements from a number of lenders.

[loanarranger]

The following lenders have today made announcements governing future lending at least whilst the uncertainty continues because of the Coronavirus and Institutional funding:

Virgin Money has suspended all new purchase applications across its mortgage range and Remortgage Applications have a maximum LtV of 60%

Atom Bank Ltd has withdrawn from all elements of mortgage lending

Platform Home Loans (Owned by Cooperative Bank) is restricting residential mortgages to 80% LtV and withdrawing all Tracker Rates and suspending acceptance of any type of Buy to Let applications.

[loanarranger]

I thought I would share with you a set of stats relating to the dramatic changes occurring within the Residential & Buy to Let Mortgage products.
On 16th March there were 20000 mortgage schemes available but on 30th March this had shrunk to approximately 11500; a number of lenders have suspended the receipt of new business or amended criteria to allow staff, who are working remotely, to work and provide as best possible to applicants whilst others have been affected by a current change in appetite from Institutional investors , it is the latter that may take time before they are prepared to commit funding to these lenders but hopefully a semblance of normality will return in the coming weeks and for my parti will do my best to keep the Forum appraised of any significant changes,

Keep well and Stay Safe