Covid-19 presents the biggest challenge to mortgage lending criteria since 2008

The world of mortgage lending has always had to adapt to changes in society. In 2008 the credit crunch turned the world of lending on its head as property prices slumped and many borrowers were left in negative equity. The impact of this squeeze was much tighter lending criteria and credit controls.

Tightening of the regulations since 2014 have already seen those applying for a mortgage placed under greater scrutiny with affordability assessments introduced to evaluate the incomings and outgoings of applicants.

Here Ipswich based Attwells Solicitors share their experience of the changing world of mortgages and their range of services and solutions:

“Where once home loans were mostly accessible to regular earners and the ‘job for life’ generation, lending criteria has adapted over time to provide accessibility to first time buyers, something that historically was reserved for couples; and to those on low incomes with the introduction in the 80s of the Right to Buy for council tenants scheme.

The country is once again in a period of unpredicted financial flux and Covid-19 presents the biggest challenge to lending criteria since 2008.

Just as borrowers were adhering to the strict assessment criteria that has become the norm, the pandemic has created a potential rise in unemployment, payment issues, and forced credit problems. This is without the effects that remain to be seen in the housing market once the stamp duty holiday comes to an end.

There is no doubt that lenders will have to review and reassess their lending criteria as the number of borrowers with adverse credit inevitably increases. If previous experience is anything to go by levels of self-employment could rise as employers reduce their workforces and people seek self-sufficiency.

Despite all of these considerations mortgage lenders have been quick to react. For example, recent research by Moneyfacts found that the availability of interest-only products has risen by 13% since March.

Longer term, fixed rate products are also proving popular – one high street lender is offering a 10 year fixed product.

There are also positive signs for self-employed borrowers, with some smaller lenders pledging help on a ‘case by case’ basis. One building society has even created its own ‘bounce back’ product allowing self employed borrowers to apply for a 75% mortgage with just one year of accounts.

For many time is of the essence in securing the best mortgage offer possible and, with so many issues already affecting the housing market, anything that further streamlines the process of buying and selling is a positive addition.

Our ‘Offer Ready’ and ‘Move Ready’ packages are designed to prepare much of the paperwork involved in a house sale and purchase to save valuable time, money and stress.

‘Offer Ready’ enables home buyers to ‘up front’ some conveyancing work free of charge. The pack verifies identity, provides evidence of deposit and proves funding – meaning that legal work can start immediately on sale agreed, (the only requirement is for the buyer to instruct Attwells pre offer).

Our ‘Move Ready’ service, allows homeowners to sell their home faster by up-fronting most of the conveyancing legal paperwork free of charge (provided Attwells are instructed to do the conveyancing). The service makes sure that various legal requirements are completed prior to accepting an offer – including ownership documents, planning, building regulations and guarantees. The usual enquiries of sellers are pre-empted along with anticipated enquiries of buyers and all relevant authority searches are completed.

Without a crystal ball there really is no way of telling how the housing and lending markets will be affected in the long-term. What is known is that it is in everyone’s best interests to find educated solutions to borrowing requirements and to keep the markets moving”.

If you’re buying, selling or need further legal support, contact Nick Atwell on 01473 229242, or email nick.attwell@attwells.com. Ready to start the conveyancing process today? Then get your free quote now.